Sri Lanka’s US$ 800 Mn Export Opportunity with India 📈

Sri Lanka has the potential to increase global exports by 50%, with India representing the single largest untapped market. Despite being the 3rd largest export destination, trade remains restricted by outdated agreements and high barriers. • The Opportunity Gap Sri Lanka holds US$ 6.0 Bn in unrealized global export potential. US$ 800 Mn of this potential lies specifically with India. Nominal exports grew only 16% (2015-2024), trailing regional peers. • Current Trade Constraints Only 60% of exports to India currently utilize ISFTA (Free Trade Agreement) preferences. Major exports like apparel, tea, and spices (pepper) face restrictive tariff-rate quotas. High concentration: Over 50% of exports rely on the US, EU, and UK, leaving the economy vulnerable to market shocks. • Sectoral Focus & Growth Drivers High-potential sectors: textiles and garments, tea, rubber products, and ICT/BPM services. Integration: Strategic proximity to South India (Tamil Nadu) offers a gateway to global value chains. Barriers: Para-tariffs, complex rules of origin, and lack of digitalized customs procedures (National Single Window) inflate transaction costs. • Key Recommendations Upgrade the ISFTA to include services and investment beyond basic goods. Phase out para-tariffs to boost competitiveness of intermediate goods. Harmonize technical standards and certifications to ease market entry. _Note: Analysis based on ADB provisional data and regional trade briefs._