By: Staff Writer
July 18, Colombo (LNW):The Sri Lankan government is finalizing a comprehensive National Tariff Policy aimed at streamlining trade procedures, improving export competitiveness, and enhancing investment appeal, Trade Ministry Secretary K.A. Vimalenthirarajah announced recently .
Speaking to the media, Vimalenthirarajah said the new policy seeks to move away from fragmented trade decisions and create a unified, consistent, and standards-aligned trade environment. “This isn’t just about adjusting tariff rates,” he explained. “It’s about improving efficiency, reducing clearance times, and eliminating institutional trade barriers.”
The broader aim is to eliminate sectoral biases and encourage innovation and competitiveness in niche markets. The policy supports trade facilitation, low financing costs for businesses, and simpler procedures to help Sri Lanka position itself more effectively in global markets.
The idea of phasing out para-tariffs—additional levies like CESS and PAL—has been part of Sri Lanka’s economic reform agenda for decades. However, consistent implementation has been a challenge. While significant progress was made between 2016 and 2018, including the removal of duties on over 1,200 tariff lines, further reforms stalled due to political and economic instability.
In June 2024, the Cabinet approved the National Tariff Policy, to be implemented in three phases starting January 2025. It proposed a simplified four-band tariff structure: 0%, 10%, 20%, and 30%. This reform was also a prerequisite under the World Bank’s RESET Development Policy Operation, aimed at stabilizing the economy and enhancing resilience.
Although the initial deadline was missed due to political changes, the current administration has renewed its commitment. A National Tariff Policy Committee, headed by a Deputy Secretary to the Treasury, was recently established to oversee implementation, underscoring the Finance Ministry’s crucial role—especially given the fiscal implications of tariff reforms.
Experts note that while industrial policies originally drove para-tariffs, their continuation has been largely tied to government revenue needs. Thus, any liberalization must balance trade openness with fiscal sustainability.
The policy also comes in the context of global trade uncertainties. Increased protectionism, geopolitical fragmentation, and foreign policy shifts could disrupt trade and foreign direct investment, elevate inflation, and strain Sri Lanka’s balance of payments.
Officials emphasize the importance of agility in monetary policy and stress the need for parallel strategies—such as export promotion, FDI diversification, and workforce development—to ensure resilience and inclusive economic growth amid global challenges.
