By: Staff Writer

August 25, Colombo (LNW): CEAT OHT Lanka Ltd. yesterday announced that it has signed an agreement with the Board of Investment (BOI) of Sri Lanka to formalise a landmark investment of $171 million, one of the largest inflows from India in recent years, aimed at strengthening the island’s manufacturing and export profile.

The investment follows CEAT Ltd.’s global acquisition of Michelin Group’s Construction Compact Line business, including the Midigama plant and the Casting Product facility in Kotugoda.

With this, CEAT will assume worldwide ownership of the Camso brand after a three-year licensing period. The acquisition process is still being finalised but is set to embed Sri Lanka at the centre of CEAT’s global Off-Highway Tyre (OHT) expansion strategy.

The company emphasised that Sri Lanka’s role as an OHT hub will be reinforced by this move, even as the country struggles with inconsistent government policies and a lack of private-sector facilitation.

Industry stakeholders note that while the tyre sector has shown resilience, rising input costs, energy prices, and the absence of a coherent industrial strategy have placed significant strain on private manufacturers—traditionally recognised as the engine of economic growth.

As part of its long-term commitment, CEAT OHT Lanka has signed a tripartite Memorandum of Understanding (MoU) with Michelin Lanka and the Inter Company Employees’ Union (ICEU) to safeguard the future of 1,483 employees. The MoU guarantees full retention of service, seniority, benefits, and salaries, ensuring no retrenchments during the transition.

BOI Chairman Arjuna Herath welcomed the investment, stating: “This is among the largest Indian investments in recent years and strengthens Sri Lanka’s position as a global export hub.”

CEAT Specialty CEO Amit Tolani described the agreement as a “new chapter” in the company’s partnership with Sri Lanka, adding that the investment would create “exciting new opportunities” for the local industry. CEAT CFO Kumar Subbiah reiterated the company’s commitment to a seamless transition, job security, and positioning Sri Lanka as a “world-class OHT manufacturing hub.”

Despite such milestones, analysts point out that Sri Lanka’s tyre industry—spanning passenger, truck, bus, and specialty tyres—continues to face bottlenecks, particularly in accessing raw materials, competing with cheaper imports, and managing high operational costs.

While private investors such as CEAT have injected capital and global expertise, the government has been criticised for offering little policy clarity or incentives to sustain competitiveness.

CEAT’s latest venture highlights how foreign direct investment can accelerate industrial growth and exports, but also underscores the urgent need for the government to create a more supportive ecosystem for the private sector, which remains the backbone of economic recovery.

By: Staff Writer

August 25, Colombo (LNW): Sri Lanka’s tea industry, the island nation’s largest agricultural export earner, recorded an encouraging recovery in July 2025 with shipments reaching 24 million kilograms (Mnkg), a 13% increase from 21.3 Mnkg in the same month last year. According to Siyaka Research, which analysed Customs data, this was the highest monthly export volume in 42 months, last seen in December 2021.

Exports for the first seven months of the year have totalled 150 Mnkg, up 7% compared to 140.4 Mnkg in 2024, marking the strongest performance since 2021. Earnings too have hit a record, with Rs. 263 billion (approximately US$884 million) generated in January–July. The average Free on Board (FOB) value of $5.87 per kilogram is the highest-ever recorded for Ceylon Tea.

Value-added tea exports have risen to 58%, the best in six years, reflecting Sri Lanka’s gradual shift toward higher-value branded teas. Among markets, Iraq remains the largest buyer with 22.3 Mnkg, while Libya’s imports surged from 3.7 Mnkg to 13 Mnkg. Russia matched Libya at 13 Mnkg, followed by the UAE (10.6 Mnkg) and Turkey (10.3 Mnkg).

Yet, despite this export performance, the industry continues to grapple with deep-rooted structural problems. The absence of a clear policy framework from the government has left both private and state-owned plantations struggling with rising costs, inconsistent productivity, and mounting labour issues.

Wage negotiations with estate workers have dragged on for months, with plantation unions demanding significant increases to cope with cost-of-living pressures. While the government has promised to implement a revised wage structure, progress has been slow. Analysts warn that without fair wages and investment in
mechanisation, Sri Lanka risks losing competitiveness to regional rivals such as Kenya and India, which continue to modernise their plantation operations.

State-owned plantation companies, which account for nearly one-third of the tea cultivated area, are in particular distress. Many remain burdened with poor management, outdated infrastructure, and weak productivity levels, despite repeated calls for restructuring or partial privatisation. Productivity on these estates is estimated to be 20–30% below that of well-managed private plantations.

Industry experts note that although global demand for orthodox Ceylon Tea remains strong—especially in Middle Eastern and Russian markets—supply bottlenecks and policy uncertainty could undermine long-term growth. Exporters have also expressed concern over inconsistent government decisions on fertiliser imports, taxation, and energy costs, all of which directly affect plantation operations.

By: Staff Writer

August 25, Colombo (LNW): Sri Lanka’s industrial sector has welcomed progress in tariff negotiations with the United States, though concerns are growing over hidden conditions and the possibility of tougher measures if Washington’s demands are not met.

Ceylon National Chamber of Industries (CNCI) Chairman Kevin Edwards said manufacturers were “broadly satisfied” with the Government’s efforts to cut reciprocal tariffs on US imports to 20 percent from the earlier 44 percent. However, he cautioned that the business community remained in the dark over the full scope of trade concessions and the impact of future US policy shifts.

“We are happy with the progress made by the Government to reduce US tariffs further, but we do understand there is some give-and-take. At the moment, we are in the dark about what is being negotiated and what the Government plans to offer the US,” Edwards added.

The uncertainty is heightened by speculation that former US President Donald Trump—who has already threatened higher tariffs on trading partners who fail to comply with undisclosed conditions—may push for tougher terms if Sri Lanka is perceived to be uncooperative.

Analysts warn that Sri Lanka, whose exports to the US account for nearly 27 percent of total merchandise earnings, could face severe shocks if tariff preferences are withdrawn or reversed.

Textiles and apparel, which represent over 40 percent of exports to the US, would be the most vulnerable sector. Even a modest 5–10 percent hike in tariffs could erode Sri Lanka’s competitiveness against Bangladesh, Vietnam, and Cambodia, all of which enjoy preferential access to US markets. According to industry estimates, a 10 percent increase in US duties could wipe out more than USD 600 million in apparel earnings annually.

Edwards further noted that Sri Lanka’s export-oriented manufacturers rely on cost-effective raw materials and energy inputs from Asian suppliers. Imports from the US, he warned, not only take longer to ship but also raise costs significantly. With global oil prices remaining volatile, distance-based freight charges from the US could place additional pressure on local industries already facing thin profit margins.

The CNCI, representing over 400 domestic manufacturers, has urged the Government to maintain transparency in its negotiations and safeguard energy affordability. “For the moment, we will be patient, knowing there is no choice in the matter, and drawing comfort that the bigger industries are also working closely with the Government,” Edwards said.

While tariff relief offers temporary breathing space, experts caution that Sri Lanka’s trade dependence on the US leaves the economy highly exposed to Washington’s shifting political winds. With Trump hinting at punitive tariff hikes for non-compliant countries, Colombo faces the delicate task of balancing industrial protection with the demands of its most important export market.

August 25, Colombo (LNW): In a significant development poised to reshape Sri Lanka’s manufacturing and export landscape, CEAT OHT Lanka (Private) Limited has entered into a formal agreement with the Board of Investment of Sri Lanka (BOI) to establish an investment worth US$ 171 million.

This deal represents one of the most substantial capital infusions from India into Sri Lanka in recent years, underscoring a strengthening of economic ties between the two nations.

The agreement follows CEAT Ltd.’s recent acquisition of the Construction Compact Line business from the Michelin Group. As part of this transaction, CEAT has also taken control of key manufacturing facilities in Sri Lanka, including the Midigama plant and the Casting Product plant situated in Kotugoda.

This acquisition also paves the way for CEAT to eventually gain full and permanent ownership of the globally recognised Camso brand, following a transitional three-year licensing period. The full closure of this acquisition is currently in progress.

The BOI highlighted that this partnership not only represents a milestone investment but also strategically elevates Sri Lanka’s standing as a pivotal hub in the Off-Highway Tyre (OHT) sector. With export-driven industrial expansion as a national priority, this initiative is expected to contribute meaningfully to economic resilience and international competitiveness.

As part of its broader commitment to social responsibility and sustainable employment, CEAT OHT Lanka, in collaboration with Michelin Lanka and the Inter-Company Employees Union (ICEU), has signed a Tripartite Memorandum of Understanding.

This agreement guarantees the continued employment of approximately 1,483 workers, ensuring that existing employment terms—such as length of service, seniority, salaries, and benefits—will be fully preserved. Importantly, there will be no job losses as operations transition, signalling a stable and inclusive integration process.

Chairman of the BOI, Arjuna Herath, welcomed the development, noting, “This investment not only signals CEAT’s confidence in Sri Lanka’s manufacturing capabilities but also highlights the country’s emergence as a globally significant production base. We believe this move will catalyse further high-quality foreign investments.”

Amit Tolani, CEO of CEAT Specialty, remarked that the investment marks a new era in the company’s partnership with Sri Lanka, expressing optimism about the opportunities it will bring both to CEAT and the nation. “We are embarking on a new journey of growth, and Sri Lanka is central to that vision,” he said.

Adding further insight, CEAT Ltd.’s CFO Kumar Subbiah stated that the company’s immediate focus is on ensuring a smooth transition, maintaining job security, and enhancing operational capacity. “This investment reaffirms our enduring commitment to Sri Lanka and its workforce, and our ambition to build a world-class base for OHT manufacturing and exports here,” he said.

This strategic move not only solidifies CEAT’s stature in the global off-highway tyre and tracks market, but also positions Sri Lanka as a key node in the company’s international expansion strategy. At the crossroads of industrial development, workforce protection, and export excellence, the initiative is in alignment with the BOI’s vision of fostering high-impact foreign investment and driving sustainable national growth.