📈 Sri Lanka’s Trade Growth Trajectory: Lessons & Future Roadmap

Sri Lanka was a pioneer in open trade in 1977, but export momentum stagnated due to policy inconsistency, anti-export tariffs, and narrow integration into global value chains. • Export Performance & Comparisons • 2025 Milestones: Merchandise exports reached US$ 13.6 Bn; total exports (including services) hit a record US$ 17.3 Bn. • Regional Gap: Compared to Sri Lanka’s US$ 13.6 Bn in merchandise exports, Bangladesh reached US$ 48.3 Bn and Viet Nam recorded US$ 473 Bn in 2025. • Historical Decline: Goods exports fell from 33% of GDP in 2000 to under 15% by 2021. • Key Economic Barriers • High import protection: Average simple import duty stands at ~19%, with 11 percentage points from para-tariffs (CESS and PAL). • Reliance on narrow export bases like tea, rubber, and basic apparel & textiles, without deep integration into high-value global networks or foreign direct investment (FDI). • Proposed Reforms & Outlook • Phased removal of CESS set to begin in 2028 under the National Tariff Policy (4-band structure: 0%, 10%, 20%, 30%). • Removing para-tariffs is estimated by the World Bank to boost household consumption by an average of 3.1%. • Urgent call for a unified, binding National Trade Policy and Trade Development Strategy (2026–2030) to align tariffs, FDI, ICT/BPM, and global supply chain integration.