Arutha is a policy think tank focused on economic research and communication with a special interest in public debt and taxation.
Sri Lanka
Joined August 2023
- Tweets1.2K
- Following9
- Followers789
- Likes22
Everyone talks about Port City Colombo’s tax breaks. But is that what really attracts investors? Maybe not.
A quarter of Sri Lanka’s exports risk losing preferential access to the European market via the GSP+ scheme due to new anti-terror laws.
The EU makes up about 24% of Sri Lanka’s merchandise exports, with almost half of this being apparels. Over 80% of Sri Lanka’s exports to the EU qualify for the scheme, and in 2024 about 59% of eligible exports entered at preferential rates.
Losing GSP+ would hit the apparel sector the hardest. Apparel exports could face EU tariffs of around 12%. One estimate puts the number of apparel jobs at risk at ~73k, mostly held by women and low-skilled workers. This is a serious risk in a sector that earned US$1.58 billion from the EU in 2025.
The new India-EU trade deal compounds the risk. The India-EU free trade agreement, concluded in January 2026, removes duties on nearly 99.5% of Indian exports. Indian apparel previously faced EU tariffs of 8.5% to 12%. Once the agreement takes effect Indian garments will compete with Sri Lanka’s on equal terms, so Sri Lanka’s tariff advantage will matter less even if it keeps GSP+.
The current GSP+ period ends in late 2027, and the legislation now being drafted will be part of what the EU weighs when considering renewal. The EU has already expressed concerns over the proposed Protection of the State from Terrorism Act. In addition, it has called for the amendment or repeal of the Online Safety Act.
Ceylon Chamber urges review of proposed laws to safeguard GSP+ benefits
Full Story: newswire.lk/ywug
TIN එකක් නැද්ද? දැන්ම ලියාපදිංචි වෙන්න 👇
නොවැම්බර් 1 ඉඳන් බැංකු ගිණුමක් අරින්න, ක්රෙඩිට් කාඩ් එකක් ගන්න, වාහනයක් ලියාපදිංචි කරන්න, ඉඩමක් රෙජිස්ටර් කරන්න වගේ ගොඩක් දේවල් වලට TIN සහතිකය අනිවාර්යයි. අවුරුදු 18 පිරුණු, ලංකාවේ පදිංචි හැමෝටම TIN එකක් ගන්න එක අනිවාර්යයි,
හොඳම දේ තමයි මේක IRD e-Services හරහා online කරන්න පුළුවන් වීම. ඒක හරියටම කරන හැටි ගැන මේ විඩියෝ එකෙන් බලන්න.
Are you able to think and work independently? Do you want to drive impactful policy work and research? We want to hear from you.
Apply now! arutharesearch.org/about
Deadline - 13th of November 2026.
Read our latest Lanka Dispatch publication to find out more on the future of Colombo Port as it navigates critical crossroads.
buff.ly/PKtNj37
Decoding Sri Lanka's Delayed State Restructuring:
As Budget 2027 approaches, the government’s 2026 budget proposals on state owned institutions remain unmet. This is similar to proposals by successive governments on the reform and restructuring of state-owned institutions since the 2022 economic crisis.
In November 2025, budget 2026 proposed;
▪️ The closure of 33 state-owned institutions that perform no commercial, regulatory or administrative functions,
▪️ Reorganisation of 21 state owned institutions,
▪️ Merging of 14 research-based institutions,
▪️ Conversion of 9 institutions to be financially independent, and
▪️ Liquidation of 13 institutions which were redundant.
Budget 2026 further proposed that the bill to establish a holding company to take ownership of the commercially oriented state-owned institutions - The Public Commercial Business Management Act - would be presented to Parliament in the first quarter of 2026. To date, this bill has not been presented to Parliament nor for consultations.
Strong business relationships start with meaningful conversations.
Snapshots of Yolani Fernando, Executive Director at Arutha moderating the discussion on "How We Can Build The Next Generation of Partnerships in Innovation-Driven Sectors", at the recent Sri Lanka–Nordic Business Council Members’ Day at Port City.
#Arutha #LK #Growth #Innovation
Kachchatheevu is a small, uninhabited island located in the Palk Strait between Sri Lanka and India. Its economic value comes from the fishing grounds that belong to Sri Lanka, by mutual agreement between both countries. These waters support a large share of Sri Lanka’s fishing economy.
According to the Ministry of Fisheries’ latest statistics for 2024, the four districts of Jaffna, Mannar, Kilinochchi and Mullaitivu in the Northern Province –
i. Accounted for 52,500 marine fishing households - ~28% of the national total ii. Accounted for 58,080 active fishers – ~26% of the national total
iii. Produced ~70,900 metric tonnes of fish - 23% of Sri Lanka’s total marine catch of 308,430 metric tonnes
iii. Supplied 61% of the country’s wild-caught shrimp and 74% of its crabs, high-value products for both local and export markets.
India has ruled out any intention of reopening its agreements with Sri Lanka around Kachchatheevu and maritime fishing rights. This provides legal certainty over the fishing grounds around Kachchatheevu. The economic benefit to northern fishing communities, however, will depend on how effectively illegal trawling in Sri Lankan waters is controlled.
More than 1,000 Indian trawlers, mainly from Tamil Nadu, cross the maritime boundary into the Palk Bay and Gulf of Mannar, engaging in illegal fishing. Many use the bottom trawling method, which is banned in both countries. Northern fishers report reduced catches and depleted fish stocks as a result, which affects both their current incomes and future catches.
#srilankaeconomy #srilanka #india
India is worried about a food crisis. So should we.
Read our latest Lanka Dispatch Memo to find out more - arutharesearch.org/post/indi…
Excited about making operations and finance accessible and strategic for a growing team, we want to hear from you.
Apply now- arutharesearch.org/about
Deadline - 26th of October 2026.
Independence in name only? 🇱🇰
🔒 Time to lock our elections budget.
Read more in our latest Solutions Brief: arutharesearch.org/post/solu…
#srilanka #srilankaeconomy
"As geopolitical competition intensifies and Western governments become more deeply involved in major conflicts, through direct participation or support for allies, they are increasingly viewed not as impartial mediators but as parties with vested interests. The result has been the emergence of a more diverse set of diplomatic actors, with regional and middle powers such as Qatar, Turkey, and Saudi Arabia taking on mediation roles. Pakistan is among the latest to join this group."
Read more in our latest article: Meet the Newest Player in International Conflict Mediation - factum.lk/regional-geopoliti…
What should taxing wealth in Sri Lanka look like? 🇱🇰
Well-designed taxes, such as a property tax, can help ensure land and property are used efficiently across the island.
Read more: themorningmoney.com/articles…
For a deeper dive, check out our report, "Understanding Wealth Taxation in Sri Lanka." - arutharesearch.org/post/unde…
A preview of what you get every morning when you subscribe to The Macro Digest!
A daily dose of Sri Lankan economic news, delivered straight to your inbox!
Subscribe now - arutharesearch.org/subscript…
"Port City’s success was not guaranteed because Sri Lanka offered generous tax incentives previously, nor will it fail simply because those holidays have been shortened. Its prosperity depends on offering investors a space that is commercially viable, efficiently governed, and protected from unpredictable policy shifts."
Read more in our latest article: ft.lk/columns/Less-generous-…
The National Export Development Plan 2026-2030 has an ambitious target of increasing export revenues by 80% within 5 years. Export revenue from goods and services amounted to US$ 20 billion in 2025 and the NEDP aims to reach US$ 36 billion in export revenue by 2030.
Sri Lanka’s previous national export development plan from 2018-2022 was 42% below target with revenues in 2022 at only US$ 16 billion. The 2022 target was US$ 28 billion.
The NEDP 2018-2022 failed due to many reasons;
- Shocks such as the 2019 Easter Sunday attacks and the Covid-19 pandemic created major disruptions to the business environment.
- The deterioration of the economy from 2021 onwards due to the debt crisis continued to affect the business environment.
- Inter-agency coordination was weak and fragmented leading to delays and blocks on many policy initiatives.
- Sri Lanka did not secure any major trade agreements during this period to expand its market access successfully.
- The export sector struggled with high production costs and low productivity.
The success of the NEDP 2026-2030 would therefore depend on comprehensively addressing these barriers through systematic reforms.
#lka #srilanka #srilankaeconomy
