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President pursues deeper trade engagement with the US following revised tariffs

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July 13, Colombo (LNW): President Anura Kumara Dissanayake has affirmed his administration’s commitment to strengthening trade relations with the United States, emphasising that ongoing talks are aimed at securing further economic advantages for Sri Lanka.

Speaking during a high-level meeting with representatives from the export sector at the Presidential Secretariat this morning, the President highlighted recent progress achieved through diplomatic engagement.

He noted that negotiations with U.S. counterparts had already borne fruit, resulting in a significant reduction of a previously imposed reciprocal tariff—from 44 per cent down to 30 per cent.

This adjustment, he said, marks a meaningful step towards easing the burden on Sri Lankan exporters and enhancing the country’s competitiveness in international markets.

President Dissanayake underscored the government’s intention to continue policy reforms that deliver tangible benefits to local enterprises, while also safeguarding the broader interests of the national economy and improving quality of life for citizens.

“Our goal is to create an environment where Sri Lankan businesses can thrive globally,” he stated, adding that sustained dialogue with strategic international partners is essential in achieving long-term economic resilience.

The meeting also addressed key concerns raised by stakeholders regarding the anticipated shifts in U.S. trade policy, including the possible implications of the revised tariff framework. Participants explored strategies to adapt to emerging challenges while maximising new opportunities for growth in exports.

The President concluded by reaffirming his administration’s openness to feedback and collaborative decision-making, assuring the export community that their insights would play a central role in shaping future trade negotiations and economic reforms.

Severe weather alert issued for southern and western coastal waters

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July 13, Colombo (LNW): The Sri Lanka Meteorological Department has issued a high-level weather warning, cautioning of turbulent sea conditions and powerful winds expected to impact southern and western maritime regions over the next 24 hours.

The advisory applies in particular to coastal stretches between Galle and Pottuvil, passing through Matara and Hambantota, where sea conditions are anticipated to become extremely rough, with gusts ranging between 55 to 65 kilometres per hour.

Winds are also expected to intensify along sea areas from Galle to Puttalam via Colombo, where waters will likely be fairly rough, accompanied by wind gusts peaking between 50 and 55 kilometres per hour. Mariners are being urged to exercise heightened caution, as the adverse conditions could pose significant dangers, especially for small and medium-scale fishing vessels.

Forecasters warn of the potential development of strong swell waves along affected coastal belts, particularly from Puttalam to Pottuvil via Colombo, Galle and Hambantota. These swells may reach heights of 2.5 to 3 metres, bringing the risk of coastal surges and wave inundation in nearshore areas.

In light of the prevailing conditions, the Meteorological Department has strongly advised fishing and naval communities to suspend all activity in sea zones from Galle to Pottuvil, as the combination of gusty winds and large waves could threaten both vessels and crew.

Those operating in other parts of the island’s western and southern seas, particularly between Galle and Puttalam, have been urged to remain alert and monitor further weather updates.

Sri Lanka launches nationwide campaign to combat fraudulent investment scams

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July 13, Colombo (LNW): The Central Bank of Sri Lanka (CBSL) is set to roll out a comprehensive, week-long public awareness initiative from tomorrow (July 14), aimed at tackling the growing threat of pyramid investment scams across the country.

Branded as the ‘Anti-Pyramid National Awareness Week’, the campaign will run until July 18 and is spearheaded by the Financial Consumer Relations Department of the CBSL.

Under the slogan “Pyramid is a trap – don’t get into the wrong track”, the campaign seeks to inform and educate the public on the dangers of illicit financial schemes disguised as legitimate investment opportunities.

These deceptive operations, which often promise quick returns, have ensnared thousands of unsuspecting individuals in recent years, leading to financial hardship and loss of trust in the broader financial system.

The awareness drive is expected to reach a broad demographic, including students, educators, public sector workers, police personnel, military and civil defence officers, and everyday citizens.

In an ambitious outreach effort, awareness sessions will be conducted through more than 6,000 schools and over 14,000 Grama Niladhari divisions, ensuring deep penetration into both urban and rural communities.

Participants will be educated on the legal framework that prohibits such schemes, the tell-tale signs of fraudulent investment models, and the harsh consequences faced by those who fall victim. Real-life stories from individuals affected by these scams will be shared to highlight the human and financial toll.

To maximise engagement, the campaign will be supported by a wide-ranging media strategy that spans traditional and digital platforms. This includes advertisements in print media, targeted social media messaging, informative posters, live-streamed discussions, as well as dedicated radio and television programmes. Public seminars and community meetings will also form a core part of the outreach.

The CBSL has called on citizens to stay informed and take an active role in the campaign, emphasising that public awareness is the most effective tool in curbing financial fraud.

Surge in overseas remittances bolsters Sri Lanka’s foreign income

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July 13, Colombo (LNW): Sri Lanka witnessed a notable rise in remittances from citizens working abroad, with foreign inflows reaching US$ 635.7 million in June 2025 alone.

This marks a substantial 22 per cent increase compared to the same month in the previous year, according to figures published by the Central Bank of Sri Lanka (CBSL).

From January through June this year, the total amount sent home by Sri Lankan migrant workers climbed to US$ 3.7 billion. This represents an 18.9 per cent year-on-year growth, reflecting a steady upward trend in foreign currency earnings through worker remittances.

These transfers remain a critical pillar of the nation’s external income, helping to stabilise the economy amid ongoing fiscal challenges.

For the entirety of 2024, remittances totalled US$ 6.57 billion, highlighting the consistent and vital contribution of Sri Lanka’s overseas workforce. The country’s labour migration continues at a significant pace, with 312,836 individuals officially recorded as having left Sri Lanka for employment opportunities abroad in 2024.

Officials attribute the rise in remittance flows to a combination of policy incentives, improved transfer mechanisms, and a gradual recovery in global labour markets, particularly in the Middle East and parts of Europe.

Several provinces to further witness showery trend (Jul 13)

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July 13, Colombo (LNW): Showers will occur at times in the Western and Sabaragamuwa provinces and in Nuwara-Eliya, Kandy, Galle and Matara districts. Several spells of showers may occur in the North-western province.

Showers or thundershowers may occur at a few places in Uva and Eastern provinces during the afternoon or night.

Strong winds of about (40-50) kmph can be expected at times over Western slopes of the central hills and in Western, Sabaragamuwa, Southern, North-western and North-central provinces.

The general public is kindly requested to take adequate precautions to minimize damages caused by temporary localized strong winds and lightning during thundershowers.

Marine Weather:

Condition of Rain:
Showers will occur at several places in the sea areas off the coast extending from Colombo to Matara via Galle.

Winds:
Winds will be Westerly to South-westerly and wind speed will be (30-40) kmph.

Wind speed can increase up to (55-65) kmph at times in the sea areas off the coast extending from Galle to Pottuvil via Matara and Hambantota.

Wind speed can increase up to (50-60) kmph at times in the sea areas off the coast extending from Galle to Vakarai via Colombo, Puttalam, Kankasanthurai and Trincomalee.

State of Sea:
The sea areas off the coast extending from Galle to Pottuvil via Matara and Hambantota may be very rough at times.

The sea areas off the coast extending from Galle to Vakarai via Colombo, Puttalam, Kankasanthurai and Trincomalee may be fairly rough to rough at times.

The wave height (about 2.5 – 3.0 m) may increase in the sea areas off the coast extending from Puttalam to Pottuvil via Colombo, Galle and Hambantota. Therefore, there is a possibility that nearshore sea areas extending from Puttalam to Pottuvil via Colombo, Galle and Hambantota, may experience surges due to sea waves.

Naval and fishing communities are advised not to venture into the sea areas extending from Galle to Pottuvil via Matara and Hambantota for next 24 hours.

The naval and fishing communities engaged in fishing and naval activities in the other sea areas are requested to be vigilant in this regard.

How Drone Technology Could Have Reshaped the Sri Lankan Conflict

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  • Drones would have made the LTTE deadlier
  • Sri Lanka must invest in drones, cyber-tech and awareness programmes

It’s important to approach hypothetical scenarios with careful consideration, especially when discussing sensitive historical events and their potential alternate outcomes. Predicting the exact trajectory of a conflict under different circumstances is inherently complex. However, we can analyse the potential impact of drone technology on a hypothetical prolonged conflict between the Sri Lankan armed forces and the LTTE, assuming the conflict continued past 2009 into the present day.

The year is 2025. For sixteen long years, the echoes of war have continued to reverberate across Sri Lanka. The Liberation Tigers of Tamil Eelam (LTTE), far from being a distant memory, remain a formidable force, their red and yellow flag still flying defiantly over swathes of the northern and eastern provinces. The Sri Lankan armed forces, once on the cusp of a decisive victory in 2009, find themselves locked in a brutal stalemate, their conventional superiority increasingly nullified by a silent, deadly revolution in warfare: drone technology.

Had the Sri Lankan military not delivered the crushing blow to the LTTE in May 2009, ending a conflict that spanned nearly three decades, the narrative of the war would undoubtedly be starkly different today. The world of military technology has undergone a profound transformation since then, and the proliferation of affordable, sophisticated drone technology would have fundamentally reshaped the battlefield, potentially tipping the scales in favour of a well-adapted, insurgent force like the LTTE.

In 2009, drone technology, while nascent, was already demonstrating its potential in theatres like Afghanistan and Iraq. However, its widespread availability and ease of use were still limited. Fast forward to 2025, and the landscape is unrecognisable. Commercial drones, once toys for hobbyists have evolved into highly capable platforms. Equipped with high-resolution cameras, thermal imaging, and even the ability to carry small payloads, they offer unprecedented surveillance, reconnaissance, and even strike capabilities to non-state actors. The cost of entry has plummeted, making them accessible even to groups with limited budgets.

For the LTTE, a force historically known for its adaptability and willingness to innovate, the advent of this technology would have been a game-changer. Imagine a scenario where, instead of relying solely on human intelligence and limited aerial assets, LTTE commanders had a constant, real-time overhead view of Sri Lankan military positions. Swarms of modified, off-the-shelf drones, for military use, could have provided invaluable intelligence on troop movements, supply lines, and defensive fortifications. This granular understanding of the battlefield would have allowed for more precise and devastating ambushes, undermining the Sri Lankan military’s operational effectiveness and inflicting higher casualties.

Beyond mere reconnaissance, the true disruptive potential lies in weaponised drones. While replicating the sophisticated UCAVs of major powers might be beyond the LTTE’s capabilities, the concept of ‘attrition warfare’ takes on a new dimension with cheap, disposable drones carrying improvised explosive devices. Small, agile quadcopters, difficult to detect and intercept, could be used to harass and demoralise troops, target vulnerable supply trucks, or even carry out precision strikes against high-value targets like command centres or VIP convoys. The psychological impact of an unseen, buzzing threat constantly overhead would have been immense, eroding troop morale and creating an atmosphere of perpetual unease.

Furthermore, the LTTE’s historical proficiency in naval operations, particularly their use of suicide boats, could have evolved dramatically with drone technology. Unmanned surface vessels (USVs) or even aerial drones capable of dropping mines or delivering explosives could have posed an even greater threat to the Sri Lankan Navy, which played a crucial role in interdicting LTTE arms shipments in the latter stages of the war. Imagine USVs, controlled remotely, attempting to breach naval blockades or launch kamikaze attacks on larger vessels, forcing the Navy to dedicate significant resources to counter a multitude of agile and difficult-to-detect threats.

The Sri Lankan armed forces, designed and trained for conventional ground combat and counter-insurgency operations against a conventionally armed foe, would have faced an unprecedented challenge. Their traditional strengths—superior firepower, armoured vehicles, and air support—would have been partially negated by the asymmetric nature of drone warfare. Deploying expensive fighter jets or attack helicopters against swarms of cheap, commercially available drones would be economically unviable and tactically inefficient. Ground troops would find themselves constantly exposed to overhead surveillance, their movements tracked, and their positions vulnerable to sudden, localised drone attacks.

Counter-drone technology, while rapidly developing, still lags behind the proliferation of drone capabilities. Jamming signals, spoofing GPS, or employing directed energy weapons against a multitude of targets simultaneously presents significant logistical and technological hurdles, especially for a developing nation like Sri Lanka. The sheer volume of potential drone threats would overwhelm traditional air defence systems, designed to counter larger, more sophisticated aerial threats. Investing in and deploying effective counter-drone measures on a national scale would have diverted significant resources, potentially crippling other vital military operations and straining an already burdened national economy.

The economic implications for Sri Lanka would have been dire. A protracted war, fuelled by the LTTE’s adoption of drone technology, would have continued to cripple the nation’s tourism industry, deter foreign investment, and drain national coffers. The constant threat of drone attacks on infrastructure, such as power plants, ports, or vital transportation hubs, could have further destabilised the economy and created widespread panic among the populace. The human cost, already immense by 2009, would have continued to mount, with casualties on both sides and a civilian population trapped in a perpetual cycle of violence.

Moreover, the international dimension would have become increasingly complex. While the availability of commercial drone technology blurs the lines of accountability and supply. It would be exceedingly difficult to track the acquisition and modification of these readily available devices. The narrative of the conflict might also have shifted, with the LTTE portraying itself as a technologically advanced, resilient force, capable of challenging a conventional military, potentially garnering a new wave of international sympathy or at least prolonging the conflict through political pressure.

The decision to decisively crush the LTTE in 2009, while controversial to some, appears, in hindsight, to have spared Sri Lanka an even more harrowing and protracted conflict. The rapid advancement and proliferation of drone technology in the years since would have provided the LTTE with a revolutionary set of tools, capable of transforming their insurgency from a conventional guerrilla war into a far more complex and dangerous asymmetric conflict. The Sri Lankan armed forces, while formidable in 2009, would have been forced to adapt to an entirely new paradigm of warfare, one where their traditional advantages might have been significantly eroded. The image of the Sri Lankan military losing due to drone technology isn’t a far-fetched dystopian fantasy; it’s a plausible counterfactual, a testament to the ever-evolving nature of modern warfare and the profound impact of technological innovation on the battlefield. The skies above Sri Lanka had the war continued, would have become a new, deadly front, forever changing the course of the nation’s history.

Recommendations for the Sri Lankan Armed Forces in the Age Of Drones

Given the transformative impact of drone technology on modern warfare and understanding the hypothetical scenario outlined above, the Sri Lankan armed forces must proactively adapt to this evolving threat landscape. Here are several key recommendations:

· Invest Heavily in Counter-UAS (C-UAS) Capabilities: This is paramount. Sri Lanka needs a multi-layered C-UAS strategy.

· Detection Systems: Advanced radar, acoustic sensors, and RF (radio frequency) detection systems capable of identifying small, low-flying, and fast-moving drones.

· Soft Kill Measures: Electronic warfare (EW) jammers disrupt drone control signals and GPS navigation, forcing drones to land or crash. Cyber capabilities to potentially hack into and take control of enemy drones.

· Hard Kill Measures: Anti-drone guns (e.g., directed energy weapons like lasers, and specialised projectiles), net guns, and even dedicated counter-drone UAVs designed to intercept and neutralise hostile drones.

· Training: Rigorous and continuous training for personnel in identifying, tracking, and neutralising drone threats across all units, from frontline troops to specialised air defence teams.

· Develop Indigenous Drone Capabilities and Doctrine: The best defence is often a good offence. Sri Lanka should invest in developing its own drone technology for:

· Reconnaissance and Surveillance: To enhance situational awareness, border security, and intelligence gathering.

· Targeting and Precision Strikes: For surgical operations with minimised collateral damage.

· Logistics and Support: Drones can be used for delivering supplies to remote areas or evacuating casualties.

· Swarm Technology: Exploring the potential of coordinated drone swarms for both offensive and defensive purposes.

· Doctrine Development: Creating comprehensive doctrines for integrating drones into all aspects of military operations, from special forces to conventional units.

· Enhance Cyber Warfare and Intelligence Gathering: Understanding the adversary’s drone capabilities, acquisition networks, and operational methods requires robust cyber intelligence. 

Investing in cyber warfare capabilities will be crucial to:

· Disrupting Supply Chains: Identifying and interdicting the flow of drone components to potential adversaries.

· Exploiting Vulnerabilities: Finding weaknesses in adversary drone systems and control mechanisms.

· Predicting Threats: Analysing open-source intelligence and technical data to anticipate future drone-related challenges.

· Foster Research and Development (R&D) and Public-Private Partnerships: The drone landscape is evolving rapidly. Sri Lanka must prioritise R&D in drone technology and C-UAS solutions, collaborating with local universities, technology companies, and international partners to stay ahead of the curve. This includes exploring AI-driven solutions for autonomous drone operations and counter-drone systems.

· Strengthen International Cooperation and Information Sharing: Engaging with nations that have significant experience in drone warfare and counter-drone operations can provide invaluable insights, training opportunities, and access to advanced technologies. Sharing intelligence on emerging drone threats and best practices will be vital.

· Public Awareness and Civil-Military Cooperation: Educating the public about the dangers of unauthorised drone use and establishing clear reporting mechanisms for suspicious drone activity will be crucial for national security. This can help prevent the acquisition of drones by non-state actors and enhance early warning systems.

The hypothetical scenario of a prolonged conflict marked by widespread drone usage underscores a critical lesson: military advantage is not static. While Sri Lanka achieved a decisive victory in 2009 through conventional means, the future of warfare demands a constant re-evaluation of threats and a proactive investment in emerging technologies. By embracing innovation, developing robust counter-drone capabilities, and fostering strategic partnerships, the Sri Lankan armed forces can ensure they are prepared for the challenges of 21st-century warfare, preventing any future adversary from leveraging the unseen threat of drones to undermine national security.



High Time for Sri Lankan Armed Forces To Act



The proliferation of cheaply available drones poses a significant and evolving threat to Sri Lanka’s national security. These easily acquired and modified devices can be weaponised for surveillance, reconnaissance, or direct attacks, bypassing traditional security measures. The Sri Lankan armed forces must urgently invest in advanced counter-drone technologies, including detection, tracking, and neutralisation systems. This proactive approach, coupled with enhanced intelligence gathering and inter-agency coordination, is crucial. Without immediate action to visualise and mitigate this growing threat, Sri Lanka remains vulnerable to devastating incidents, making preventative and preemptive measures paramount to safeguarding its people and critical infrastructure.

The writer is an Infantry officer who served the Sri Lanka Army for over 36 years, a former Security Forces Commander of the Wanni Region and Eastern Province, and he holds a PhD in economics. He can be reached at: [email protected]

Sri Lanka Targets Pharmaceutical Exports amid Industry Growth

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In a renewed push to expand its export base, Sri Lanka is turning its focus towards pharmaceuticals, aiming to establish the country as a credible player in the global pharmaceutical market. This goal was at the heart of a recent high-level dialogue between the Sri Lanka Export Development Board (EDB) and the Sri Lanka Pharmaceutical Manufacturers’ Association (SLPMA), as stakeholders came together to outline strategies to strengthen the industry and overcome key regulatory and operational bottlenecks.

The local pharmaceutical manufacturing sector, classified as an emerging industry, has already attracted investments exceeding Rs. 100 billion over the past decade. Sri Lanka now hosts around 25 manufacturers, meeting approximately 15% of the country’s domestic pharmaceutical requirements. More than 80% of their production is directed to the Government’s Medical Supplies Division. In 2023, pharmaceutical exports totaled $8.07 million — a modest figure, but one that signals increasing global interest.

The discussion brought together several key industry players including SLPMA President Nalin Kannangara, Senior Vice President Dinesh Athapaththu, Vice President Viraj Manatunga, and executives from leading firms such as Navesta Pharmaceuticals, Sands Active Ltd., and Gamma Interpharm Ltd.

Highlighting the sector’s potential, Kannangara noted that the 23 member companies of SLPMA collectively supply around 35% of the pharmaceutical needs of government hospitals and locally produce over 235 products. However, he cautioned that global expansion is constrained by the need to comply with rigorous international regulatory standards — a major hurdle in the highly controlled pharmaceutical landscape.

To tackle this, Kannangara called for the extension of the Government’s buyback agreement, which had enabled the dramatic scale-up from just 15 locally made products in 2015 to 235 by 2025. Extending this agreement would help boost production volumes, lower unit costs, and significantly improve global competitiveness.

The stakeholders also highlighted the complexity involved in exporting pharmaceuticals compared to other goods. Exporting medicines typically requires time-consuming and costly registration processes with foreign medical regulatory authorities. Additionally, documentation such as Good Manufacturing Practices (GMP) certificates and product registration papers must be authenticated by the respective embassies in Sri Lanka. To ease this process, the industry called for stronger institutional support from the government.

Vice President Manatunga, who also chairs the EDB’s Pharmaceutical Advisory Committee, emphasized the need for a clear and cohesive national strategy for the sector. He noted the EDB’s collaboration with the Ministry of Health and the World Health Organization (WHO) in crafting a strategic roadmap — now in its final stages — under an Asian Development Bank (ADB)-funded initiative.

He stressed that swift implementation of this strategy is essential to unlocking the industry’s potential for export-led growth.

Concluding the meeting, EDB Chairman and CEO Mangala Wijesinghe urged industry players to submit their key challenges for consideration at the upcoming Export Development Council of Ministers (EDCM) meeting, chaired by President Anura Kumara Dissanayake. This, he said, would ensure high-level policy intervention to elevate Sri Lanka’s pharmaceutical industry onto the global stage..

South Asia’s Premier Fight League Heads to Colombo, Boosting Sports Tourism

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Sri Lanka is set to become the regional hotspot for combat sports as Karma Fight League (KFL), South Asia’s largest K-1 fight league, returns with its fifth major event on July 25 at Cinnamon Life, Colombo’s premier lifestyle and entertainment hub.

The high-octane evening will unfold at the Lumina Ballroom, featuring a thrilling lineup of male and female fighters from Sri Lanka, India, Nepal, and Australia. In a bold new addition, the event will launch the KFL Extreme Championship, a new category dedicated to showcasing the most promising young Sri Lankan fighters, offering them a powerful platform to step onto the international stage.

This event marks a pivotal moment not just for Sri Lanka’s growing combat sports scene, but also for the country’s ambitions to emerge as a sports tourism destination. With international athletes and fans expected to attend, the event aligns with broader efforts to brand Colombo as a lifestyle and entertainment capital in South Asia.

Cinnamon Life, part of the visionary “City of Dreams” project, will serve as both the venue and hospitality partner, initiating a strategic partnership with KFL. “We are thrilled to be part of this groundbreaking event,” said Sanjiv Hulugalle, CEO and General Manager of Cinnamon Life. “Just as KFL is redefining combat sports in Sri Lanka with bold innovation, Cinnamon Life is reimagining authentic Sri Lankan hospitality. This collaboration brings both experiences together, promising a truly unforgettable night.”

The Karma Fight League has quickly gained a reputation for delivering world-class production and high-intensity matches. With increasing viewership and participation across the region, its expansion to Sri Lanka underscores the island’s potential to become a regional hub for action sports.

 The upcoming event is expected to attract sports enthusiasts, tourists, and media attention, creating economic ripple effects in the hospitality, travel, and entertainment sectors. Tickets are now available online, with strong demand anticipated in the lead-up to fight night.

As Colombo continues to host major international events like this, it reinforces Sri Lanka’s place on the global sporting map—blending competition, culture, and commerce in one adrenaline-filled spectacle.

Bold Reforms Critical to Sustain Sri Lanka’s Economic Recovery, New Report Warns

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Sri Lanka must act urgently to implement bold economic reforms or risk sliding back into crisis, according to a new report by the Independent Growth Study Group.

The study identifies deep structural weaknesses in the economy and emphasizes that short-term gains such as reduced inflation and successful debt restructuring will remain fragile unless transformative policies are enacted swiftly.

The report is particularly relevant as Sri Lanka prepares to face a severe setback with a 44% U.S. tariff set to take effect on August 1—threatening to wipe out 50,000 jobs in the export sector.

Titled “Sustaining Transformative Growth in Sri Lanka 2025-2030”, the report provides a comprehensive roadmap for rebuilding the nation’s economy after its most severe economic crisis in decades.

The study was compiled by nine prominent economists and development experts, under the guidance of ODI Global and the Centre for Poverty Analysis (CEPA).

The report lays out six interconnected policy pillars essential for long-term growth: maintaining macroeconomic stability, deeper global trade integration, reforms to labour and capital markets, targeted sectoral strategies, poverty alleviation, and achieving political consensus.

While recognising recent progress in stabilising inflation and public finances, the study highlights Sri Lanka’s vulnerability due to limited exports and low productivity. Dr. Ganeshan Wignaraja, ODI Global Visiting Senior Fellow and convenor of the study group, stressed the need for proactive leadership. “Sri Lanka has shown resilience, but prosperity requires bold action. This report offers a blueprint for growth that benefits all Sri Lankans,” he said.

The study identifies four key growth sectors—tourism, the digital economy, modern agriculture, and niche manufacturing—as drivers to boost exports, create employment (especially for youth and women), and attract foreign investment.

However, looming trade barriers threaten this progress. Dr. Wignaraja raised alarm over the incoming 44% U.S. tariff on Sri Lankan exports, warning it could result in the loss of 50,000 jobs. “This is a serious blow to thousands of families and underscores the urgency for reform and global trade diversification,” he noted.

CEPA Executive Director Prof. Sirimal Abeyratne echoed concerns over Sri Lanka’s poor export performance. “An entrenched anti-export bias and complex regulations are stifling growth. Removing these barriers is critical for attracting investment and enhancing global competitiveness,” he explained.

The report also draws international attention. Prof. Dirk Willem te Velde of ODI Global said Sri Lanka’s recovery process can serve as a model for other emerging economies. “This is a moment for bold, pragmatic leadership and decisive reforms. With development partner support and internal political will, Sri Lanka can realise sustainable prosperity,” he said.

The final chapter of the report underscores the importance of implementing the recently passed Economic Transformation Act, enhancing the capacity of public institutions, and targeting at least 5% annual growth over the next five years to reduce poverty and avoid another debt crisis.

To reach a broader audience, the report will soon be published in Sinhala and Tamil and distributed across Sri Lanka. A digital version is currently available on the ODI Global website: www.odi.org/publications/sustaining-transformative-growth-in-sri-lanka-odi-cepa.

UK Duty Relief Offers Respite from US Tariffs on Lankan Apparel Sector

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Sri Lanka’s apparel sector has received a significant boost from the United Kingdom at a critical time, as the industry faces mounting pressure from a looming 30% US tariff.

With apparel being the island’s top export earner, the duty-free access granted by the UK under its new Developing Countries Trading Scheme (DCTS) offers much-needed relief.

This development provides a vital counterbalance to the potential negative impact of US trade actions, opening up a clearer path for the industry’s recovery and growth.

The UK announced on July 10 that Sri Lanka will enjoy duty-free access for apparel exports under its “Trade for Development” initiative.

The scheme introduces liberalized “rules of origin” starting in early 2026, allowing Sri Lankan manufacturers to source more inputs from a broader range of Asian and African countries while still qualifying for tariff-free exports to the UK.

This shift means that garments produced in Sri Lanka can now incorporate materials from more countries without losing duty-free status—an enormous advantage for a sector that depends heavily on imported fabrics and accessories.

 The UK’s DCTS replaces the earlier GSP+ system post-Brexit and extends benefits beyond garments to a range of Sri Lankan exports, with over 99% of eligible products qualifying for zero tariffs.

British High Commission officials stressed that this move supports both trade and development. “This scheme is not just about boosting trade; it’s about supporting sustainable development,” said Mara Waters, Director of Trade at the British High Commission in Colombo. “For Sri Lanka, it’s about building economic resilience, creating jobs, and ensuring that the benefits of trade reach the entire community.”

Between July 2023 and May 2024, goods worth £571 million were exported from Sri Lanka to the UK, with £304 million benefiting directly from DCTS concessions—demonstrating the scheme’s immediate impact.

Yet, challenges remain. The Joint Apparel Association Forum (JAAF) has raised concerns that the current rules of origin under DCTS, though improved, still resemble the restrictive framework of GSP+, limiting full utilization of duty-free privileges.

JAAF advocates for “extended cumulation,” a mechanism that would allow more flexible sourcing of raw materials across multiple countries. Currently, only about 50% of Sri Lankan apparel exports qualify for zero tariffs. A shift in these rules, such as eliminating the “double transformation” requirement, could dramatically expand duty-free access.

Sri Lanka’s apparel sector, especially SMEs, also struggles with capital constraints and rising sustainability standards demanded by markets in the UK, EU, and US. These firms need support to modernize operations, invest in clean energy, and enhance supply chain transparency.

Nevertheless, the DCTS presents a timely opportunity. As Sri Lanka recovers from economic crisis, boosting apparel exports is vital. With strengths in ethical sourcing and design, the country is well-placed to meet shifting global demand—provided it can fully leverage schemes like the DCTS while navigating challenges posed by other markets like the US.