Deputy Minister of Finance and Planning Anil Jayantha Fernando has cautioned that the newly concluded European Union-India Free Trade Agreement could change the competitive landscape for Sri Lankan exports, even as the Government works to protect the country’s preferential access to the EU market.
Fernando said Indian exporters are expected to gain preferential or duty-free access to the EU similar to the benefits Sri Lanka currently enjoys under the GSP+ scheme, which could challenge the advantage Sri Lankan exporters have long relied on. Negotiations on the EU-India FTA concluded on January 27, 2026, but the agreement has yet to enter into force pending internal approvals on both sides. Sri Lankan authorities are already assessing the likely impact on key export sectors, particularly apparel, which depends heavily on European markets.
He noted that Sri Lanka currently benefits from regional accumulation provisions under the EU GSP framework, which allow manufacturers to source fabrics and raw materials from India while still qualifying for preferential tariffs. These arrangements could change once the EU-India agreement takes effect, potentially affecting long-established supply chains. However, a two-year transition period will allow Sri Lankan exporters to keep using the existing arrangements after implementation, and the Government plans to work closely with trade chambers and industry bodies, including the Joint Apparel Association Forum (JAAF), to keep exporters competitive.
On GSP+, Fernando sought to reassure businesses that Sri Lanka’s preferential access is expected to continue beyond 2027. The EU has adopted a new GSP framework for another ten-year cycle starting January 1, 2027, but Sri Lanka must reapply between January 2027 and December 2028 and secure EU approval to retain the benefits. The Government has already begun preparations for a smooth transition.
Policymakers are also looking further ahead. With Sri Lanka recording upper-middle-income status in 2026, its eligibility for concessionary trade schemes could eventually change, and authorities are exploring long-term options, including deeper economic partnerships and comprehensive trade agreements with the EU, to secure sustainable market access if the country graduates from GSP+.
