Sri Lanka’s tea industry entered 2026 on visibly shaky ground, despite official assurances of recovery and growth. Market data from Forbes & Walker Research shows that tea prices have softened across all elevations, raising questions about whether government optimism aligns with ground realities faced by growers, factories, and exporters.

The National Sales Average (NSA) in January 2026 declined both month-on-month and year-on-year, settling at Rs. 1,164.54 per kilogram. This marked a notable drop from December 2025 and undershot January 2025 levels as well. More importantly, when measured in dollar terms, all elevations recorded negative year-on-year variances, reflecting pressure from global market conditions and currency dynamics.

High Grown teas averaged Rs. 1,143.12, recording a monthly decline though posting a modest rupee gain over last year. Medium Grown teas showed the steepest deterioration, falling sharply from December and registering declines on both rupee and dollar comparisons year-on-year. Low Grown teas, traditionally a strong performer, also recorded consistent declines across both metrics.

These price movements come against the backdrop of supply disruptions caused by cyclone Ditwah, which halted production for nearly a week in December 2025 and resulted in losses of over one million kilograms. Despite this, Sri Lanka Tea Board Chairperson Rajpal Obeyesekere maintains that the industry is on track to achieve between 290 and 300 million kilograms of production in 2026, provided weather patterns remain favourable and fertiliser subsidies continue.

Production figures show that Sri Lanka produced 264.12 million kilograms of tea in 2025, a modest increase from 2024 and a stronger rebound compared to 2023. However, the Department of Census and Statistics reported an 8.1% contraction in tea production volumes in the third quarter of 2025, citing rising input costs, labour shortages, and delayed replanting efforts structural challenges that predate cyclone impacts.

Export performance has offered some relief. Tea exports in 2025 rose by 11.65 million kilograms, while export earnings climbed 4.8% to $1.506 billion. The average Free On Board price remained largely unchanged, signalling that volume gains, rather than price improvements, drove revenue growth.

Authorities and industry bodies remain focused on long-term interventions such as replanting and mechanisation. While these initiatives are underway, their benefits will take years to materialise. Meanwhile, less than 7% of factories have adopted mechanisation, leaving labour shortages unresolved.

As prices soften and dollar earnings remain under strain, the contrast between market indicators and policy optimism suggests the sector’s recovery may be more fragile than official narratives imply.

Sri Lanka’s Central Bank has launched investigations into at least 18 entities accused of illegally collecting public deposits through plantation-based investment schemes, exposing a fast-growing shadow financial sector that thrives on regulatory loopholes and investor ignorance.

These schemes, often marketed as long-term investments in teak, mango, or wallapatta plantations, promise unusually high and “guaranteed” returns backed by land assets. However, the Central Bank of Sri Lanka (CBSL) has warned that such assurances are legally and financially unsustainable. Accepting public deposits with a promise of repayment is a regulated financial activity, and entities engaging in it without authorisation are operating outside the law.

CBSL Governor Dr. Nandalal Weerasinghe has publicly cautioned investors against land-backed, high-yield investment ventures, describing them as inherently risky and frequently deceptive. Unlike Licensed Finance Companies (LFCs) or Licensed Specialised Banks (LSBs), these plantation-based entities are neither regulated nor supervised by the Central Bank. As a result, investors have no legal protection if the schemes collapse.

Financially, many of these companies display classic red flags. They typically lack audited financial statements, rely on continuous inflows of new investor funds to meet earlier payout commitments, and offer returns that far exceed yields achievable from genuine agricultural production. In several cases, projected profits are based on unrealistic assumptions about land appreciation, crop survival rates, and export prices.

The CBSL has clarified that Specialised Leasing Companies (SLCs), which are sometimes used as a front to lend credibility to these schemes, are strictly prohibited from accepting public deposits. SLCs may raise funds only through approved instruments such as debentures or commercial paper and only with prior Central Bank approval. Any deviation constitutes a violation of financial law.

The legal implications are severe. Entities found to be illegally mobilising public funds face prosecution, asset seizures, and potential imprisonment of directors. More importantly, investors risk losing their entire capital, as funds placed in unauthorised schemes are not covered by any deposit protection mechanism.

The ongoing crackdown has also exposed a regulatory blind spot surrounding alternative investments. While agriculture and land development are legitimate economic activities, combining them with deposit-taking without oversight creates fertile ground for financial abuse.

The CBSL has urged the public to independently verify whether an investment scheme is legally recognised and to demand transparent explanations of how promised returns will be generated. As the investigations continue, authorities warn that financial literacy—not attractive brochures or celebrity endorsements remains the strongest defence against plantation-themed investment scams.

Sri Lanka’s Finance Ministry has taken a decisive institutional step by formally establishing the Tax Policy Analysis Unit (TPAU) under the Department of Fiscal Policy, signalling a move away from ad hoc tax policymaking toward a more rules-based fiscal framework. The initiative comes at a critical juncture as the country seeks to consolidate post-crisis revenue gains under its IMF-supported reform programme.

The operational launch of the TPAU was accompanied by a two-week technical training programme conducted by the International Monetary Fund from January 19 to 30, focused on strengthening analytical capacity in tax policy design and reform evaluation. Senior IMF officials subsequently engaged with Treasury Secretary Dr. Harshana Suriyapperuma and fiscal policy leadership to discuss how the Unit would be integrated into the Government’s decision-making process.

According to the Finance Ministry, the TPAU has been mandated to conduct revenue forecasting, economic and distributional analysis of tax measures, evaluation of tax expenditures, stakeholder engagement, and work on international taxation and cross-border tax cooperation. These functions address long-standing gaps in Sri Lanka’s fiscal architecture, where tax policy decisions were often fragmented across institutions or driven by short-term political considerations.

The Unit’s creation follows a year in which Sri Lanka recorded historic highs in income tax and duty collections, achieved largely through rate increases and base-broadening rather than administrative reform. Economists have warned that without a permanent analytical mechanism, such gains risk erosion through exemptions, poorly costed policy reversals, or politically motivated concessions.

IMF guidance has consistently emphasised the importance of dedicated tax policy units within finance ministries, particularly in low- and middle-income countries. In its Fiscal Affairs Department recommendations, the Fund argues that durable revenue mobilisation depends on technical capacity for forecasting, equity analysis, and expenditure review—functions that temporary commissions or external consultants cannot sustainably provide.

From an investor perspective, the establishment of the TPAU is seen as a credibility-enhancing reform. By institutionalising tax analysis within the fiscal framework, the Government may reduce uncertainty around revenue projections and signal greater commitment to policy continuity, a key concern following Sri Lanka’s history of abrupt tax changes.

However, analysts caution that the Unit’s effectiveness will depend on political buy-in and its ability to influence final decisions. Without insulation from short-term pressures, even technically sound analysis risks being sidelined. Nonetheless, the TPAU represents a structural reform aligned with IMF benchmarks, aimed at anchoring fiscal management in evidence rather than expediency

The Cabinet’s approval of the Renewable Energy Resources Development Plan 2025–2030 marks a significant policy milestone in Sri Lanka’s long-term energy transition. The framework sets out an ambitious target of meeting 70 percent of national electricity demand through renewable energy sources by 2030, while aligning the power sector with the country’s broader commitment to achieve carbon neutrality by 2050.

The plan was submitted to the Cabinet by Energy Minister Eng. Kumara Jayakody and developed by the Sri Lanka Sustainable Energy Authority (SLSEA) in accordance with the National Policy on Renewable Energy and statutory obligations under the Sri Lanka Sustainable Energy Authority Act of 2007.

The legislation mandates the preparation of a long-term renewable energy development roadmap, positioning the newly approved plan as both a policy requirement and a strategic response to growing energy security concerns.

According to Cabinet Spokesman Dr. Nalinda Jayatissa, the plan focuses on three core pillars of renewable energy development. These include the identification and prioritisation of suitable land for projects, the establishment of a structured implementation timeline, and the advancement of a comprehensive Renewable Energy Map to guide future investments. The proposal also introduces the concept of Renewable Energy Gardens centralised zones designed to streamline project development and grid connectivity.

A notable feature of the plan is the inclusion of floating solar panel projects, aimed at diversifying generation sources while reducing pressure on land availability. This reflects a growing recognition of land scarcity and competing land-use demands, particularly in environmentally sensitive areas.

From a policy standpoint, the framework is intended to bring greater coordination to renewable energy deployment, reduce dependence on imported fossil fuels, and strengthen energy security amid volatile global fuel markets. Supporters argue that a clearly defined roadmap could also improve investor confidence by offering greater clarity on timelines, locations, and government priorities.

However, analysts note that the plan’s success will depend heavily on execution capacity, grid readiness, and regulatory consistency. Sri Lanka’s renewable ambitions have previously faced delays due to grid congestion, procurement bottlenecks, and shifting policy signals. Without parallel investments in transmission infrastructure and institutional coordination, the scale of expansion envisioned may prove difficult to achieve within the stated timeframe.

Nonetheless, the Cabinet’s approval represents a clear political endorsement of a renewables-led energy future. If implemented effectively, the plan could reshape Sri Lanka’s electricity mix, lower long-term generation costs, and anchor the country’s climate commitments within a structured policy framework.

New Democratic Front (NDF) MP Ravi Karunanayake told Parliament yesterday (5) that expanding port capacity and regulating container depot operations are essential to improving efficiency and enhancing Sri Lanka’s international competitiveness in port operations.

He said these objectives could be achieved through the proposed Container Depot Operators Licensing Act, which would formalise the sector and ensure the State receives due revenue. MP Karunanayake noted that container depot operators currently function without proper regulation, do not pay taxes, and channel significant earnings without benefiting the national economy.

“For this, some fixed income needs to be generated. Through that, the container operations sector can be developed. An opportunity Sri Lanka once had has been lost to Singapore. We must acquire technology from developed countries,” he said, adding that the proposed legislation would enable the Government to secure rightful income while adopting modern technological practices used internationally.

The MP pointed out that Sri Lanka’s ports are currently ranked 25th globally, recalling that when former Minister Lalith Athulathmudali initiated port development, Sri Lanka had held a leading global position. He stressed that proper regulation could help the country regain that standing.

Highlighting operational challenges, MP Karunanayake said delays in cargo handling are costing the country millions of rupees, noting that losing even one hour at the port results in significant financial losses. He observed that while work on the East Container Terminal is underway, greater attention must be paid to optimising the existing port area.

“There is no proper space for anchoring, and ships are now diverting to other countries instead of calling at Sri Lankan ports,” he said, adding that while India clears goods in about 0.9 days, Sri Lanka takes considerably longer, undermining its competitiveness in regional maritime trade.

Sri Lanka’s tea industry is expected to record growth of between 10 and 12 percent in 2026, despite weather-related losses and persistent structural challenges, industry officials said.

Chairman W. L. P. Wijewardene said the sector remains optimistic even after losing nearly one million kilograms of tea due to Cyclone Ditwah. He noted that favourable weather conditions in the coming months could help the industry achieve its annual production target of 300 million kilograms.

Tea production in 2025 increased to 264.12 million kilograms, up from 262.69 million kilograms in 2024, reflecting a growth of 1.43 million kilograms. Mr. Wijewardene attributed the improvement largely to the government’s fertilizer subsidy, adding that 2025 output was also 8.03 million kilograms higher than production recorded in 2023.

However, he pointed out that the Department of Census and Statistics’ third-quarter report for 2025 indicated an 8.1 percent decline in tea production volume. This downturn was attributed to supply-side challenges, including rising input costs, delays in replanting and labour shortages.

On the export front, tea shipments increased by 11.65 million kilograms in 2025 to reach 257.4 million kilograms. Export earnings rose to USD 1.506 billion during the year, while the average export price remained stable at around USD 5.85 per kilogram, Mr. Wijewardene said.

The Supreme Court on Thursday (05) ordered the University Grants Commission (UGC) to immediately admit a Sri Lankan student to a state university medical faculty, ruling that his earlier rejection amounted to a violation of his fundamental rights.

The Court found that the student, who had completed a Russian examination equivalent to Sri Lanka’s GCE Advanced Level and fulfilled the required qualifications, had been unfairly denied admission.

The petitioner, a resident of Borella, had passed the GCE Ordinary Level examination in Colombo before relocating to Russia due to his father’s diplomatic posting. While in Russia, he completed the Senior School Certificate Examination, an examination sat by students from India, Pakistan and Bangladesh, which he contended was equivalent to the GCE Advanced Level.

He had applied for admission to a medical faculty through the Ministry of Foreign Affairs, but his application was rejected on the grounds that he did not meet the admission criteria. The petitioner subsequently challenged the decision, claiming it infringed upon his fundamental rights.

Delivering the judgment, Justice Arjuna Obeysekera, with Justices Janak de Silva and Sobhitha Rajakaruna concurring, observed that the petitioner had satisfied all relevant requirements and that the Ministry of Foreign Affairs had no authority over university admissions. The Court therefore directed the UGC to grant him immediate admission to a state university medical faculty.

President Anura Kumara Dissanayake met members of the Sri Lanka national cricket team at the NCC grounds following their practice session, in a move aimed at boosting player morale ahead of the ICC Men’s T20 World Cup.

Sri Lanka will enter the home World Cup under pressure after a series of recent defeats and ongoing criticism from fans over the team’s performances.

Against this backdrop, President Dissanayake visited the squad to personally address the players, offering encouragement and reassurance as they prepare for their opening match of the tournament, scheduled to be played on February 8.

As part of ongoing reconstruction efforts following Cyclone Ditwah, India has dispatched a consignment of 10 Bailey Bridges to Sri Lanka to assist in restoring critical connectivity infrastructure in affected areas.

The shipment arrived in Colombo from Visakhapatnam onboard INS Gharial, and was formally handed over by the Acting High Commissioner of India to Sri Lanka, Dr. Satyanjal Pandey, to Deputy Minister of Ports and Civil Aviation Janitha Ruwan Kodithuwakku at a ceremony held on February 5.

The additional Bailey Bridges have been provided under India’s USD 5 million grant assistance for post-Cyclone Ditwah reconstruction, aimed at strengthening transport links and access in disaster-affected regions. Another shipment carrying the remaining bridge components is expected to arrive shortly.

The supply of Bailey Bridges forms part of the USD 450 million Reconstruction and Rehabilitation Packageannounced by India’s External Affairs Minister Dr. S. Jaishankar during his visit to Sri Lanka following the cyclone.

The newly supplied bridges will be installed at selected locations across the country, with technical assessments currently being conducted by Indian Army engineers in close coordination with the Sri Lankan Army and the Road Development Authority (RDA).

India had previously supplied four Bailey Bridges to Sri Lanka, two of which were installed in the Kilinochchi Districtand two along the Kandy–Ragala Road. These bridges have played a vital role in restoring connectivity in difficult terrain, improving access for communities and supporting the resumption of essential services, livelihoods and economic activity.

India has reaffirmed its commitment to supporting Sri Lanka’s recovery, resilience and long-term connectivity through timely, targeted and people-centric assistance.