Sri Lanka’s software and computer hardware market is facing growing disruption from the rapid expansion of shadow import goods entering the country outside official regulatory and tax frameworks. According to warnings from the Federation of Information Technology Industry Sri Lanka (FITIS), illegally imported, counterfeit, and used computing devices are now exerting significant pressure on the formal IT ecosystem, with long-term consequences for businesses, consumers, and national digital security.
Industry discussions hosted by FITIS reveal that in some product segments, nearly half of all laptops, desktops, monitors, and accessories sold locally originate from informal channels. These products often enter Sri Lanka with under-declared values, unpaid duties, or through passenger luggage in commercial quantities, effectively bypassing customs oversight. As a result, they are sold at prices 25–30 percent lower than those offered by authorised dealers, creating an uneven playing field.
From a consumer perspective, the lower prices represent a clear short-term advantage. In a cost-sensitive market, especially amid economic pressures, affordable access to technology can support education, remote work, and small enterprises. Shadow imports also increase product availability at times when official supply chains face delays or foreign exchange constraints.
However, FITIS cautions that these apparent benefits mask serious drawbacks. Many devices sold through informal channels do not include genuine operating systems and instead rely on pirated software installed locally. This exposes users to cybersecurity threats, unstable system performance, and potential legal issues related to software licensing. In addition, consumers frequently discover that these products lack valid manufacturer warranties or authorised after-sales support, leaving them vulnerable when faults arise.
The repercussions for legitimate businesses are increasingly severe. Authorised importers and retailers comply with tax obligations, quality standards, and service investments, yet struggle to compete with untaxed competitors. This imbalance is already leading to reduced capital investment, shrinking margins, and the risk of job losses within the formal IT sector. Over time, it may also erode service quality and weaken Sri Lanka’s reputation as a reliable technology market.
Environmental risks add another layer of concern. A significant portion of shadow imports consists of used or near end-of-life equipment. Without a comprehensive national e-waste management system, these devices are often discarded prematurely, contributing to Sri Lanka’s mounting electronic waste problem.
FITIS has highlighted gaps in import monitoring, including the absence of a clear mechanism to identify authorised brand importers. In response, the organisation is collaborating with global technology brands, distributors, and retailers to assess the scale of the issue and push for coordinated regulatory, enforcement, and consumer-awareness solutions.
