## 📈 Sri Lanka to Slash Import Duties via Para-Tariff Phase-Out

Sri Lanka’s planned removal of the Ports and Airport Development Levy (PAL) and CESS by 2029 will significantly reshape the manufacturing landscape and boost household purchasing power, according to the World Bank. • Key Duty Reductions: Para-tariffs currently account for 11 ppts of the nation’s 19% average import duty. The phase-out will result in an overall 9-ppt cut in simple average import duties. • Sector Impact: Food & Beverage: Set for the steepest decline, with duties potentially falling by up to 28 ppts. Rubber & Plastics: Expected input tariff drops of 7-8 ppts, improving cost competitiveness. Apparel & Textiles and Mining: Minimal impact, with cuts projected below 5 ppts. Tea: Already operating under low tariffs, this sector remains stable. • Household & Labor Gains: Real household consumption is projected to rise by 3.1%. Rural poor stand to benefit most, as they allocate ~31% of spending to food manufacturing. The reform impacts sectors employing one-third of the workforce, necessitating labor mobility to maximize gains. • Strategic Shift: Unlike regional peers, Sri Lanka’s unilateral reform applies to nearly all imports, creating broader domestic welfare effects and pushing firms toward productivity gains in sectors with weaker comparative advantages.