By: Staff Writer

April 17, Colombo (LNW): Sri Lanka is preparing to send a high-level delegation to Washington next week for direct negotiations with the United States Trade Representative (USTR) following the Trump-era decision to impose a steep 44 percent tariff on Sri Lankan exports. The move, however, has drawn criticism from economists and trade experts who describe the government’s approach as delayed, fragmented, and lacking strategic foresight.

The U.S. currently accounts for nearly 25 percent of Sri Lanka’s total exports, with the apparel and textile sectors most at risk. The newly imposed tariffs threaten to severely disrupt this key export channel, potentially destabilizing employment and economic performance.

Despite the gravity of the situation, Sri Lanka’s response has been notably sluggish compared to other developing countries. Nations such as India, Vietnam, and Bangladesh engaged U.S. officials promptly, mounted strong diplomatic offensives, and made evidence-based appeals for relief or exemption. In contrast, Sri Lanka failed to act decisively, missing the opportunity to influence U.S. policymakers at an early stage.

Export Development Board (EDB) Chairman Mangala Wijesinghe confirmed the upcoming visit, stating that the delegation would present Sri Lanka’s concerns and attempt to chart a path forward to protect the country’s economic stability. He noted that the initiative follows a series of virtual meetings with U.S. authorities and the appointment of a special presidential committee tasked with evaluating the full implications of the tariff decision and formulating urgent countermeasures.

The government’s decision to send a separate high-powered team solely for this purpose has raised questions about coordination and resource management. A senior Sri Lankan delegation, which includes officials from the Ministry of Finance, the Central Bank, and the Ministry of Foreign Affairs, is already scheduled to be in Washington from April 21 for the IMF Spring Meetings. Observers argue that this group is well-positioned to handle the tariff discussions as part of broader economic diplomacy efforts.

Critics suggest that dispatching two different delegations signals poor inter-ministerial communication and unnecessary duplication of efforts. It reflects weak coordination at a time when Sri Lanka should be projecting a united and efficient front to international partners. Moreover, the additional expenditure involved in sending a second team has been deemed avoidable and counterproductive.

The special committee appointed by President Anura Kumara Dissanayake includes a mix of senior government officials and private sector leaders. Among its members are Senior Economic Adviser to the President Duminda Hulugamuwa, Central Bank Governor Dr. Nandalal Weerasinghe, Finance Secretary Mahinda Siriwardana, Trade Secretary A. Wimalaneththiraja, and Senior Director General of the Ministry of Foreign Affairs Dharshana Perera. Also included are EDB Chairman Wijesinghe, Brandix CEO Ashroff Omar, MAS Co-Founder Sharad Amalean, Lanka Garments MD Saif Jafferjee, Michelin Lanka’s Head of Legal and Public Affairs Nilanthi Weliwe, Labour Minister Dr. Anil Jayanta Fernando, and Deputy Finance Minister Dr. Harshana Suriyapperuma.

Wijesinghe indicated that the discussions thus far have explored both the economic rationale behind the U.S. tariffs and their wider implications for developing economies. The delegation is expected to seek continued relief beyond the current 90-day tariff reduction to 10 percent and pursue long-term trade cooperation mechanisms, regulatory alignment, and enhanced engagement with the U.S. market.

As Sri Lanka attempts to navigate this crisis, experts are urging the government to develop a more cohesive and proactive trade diplomacy strategy. Calls are growing for stronger inter-agency collaboration and a clearly defined national approach to counter future economic shocks.

Without a consolidated response and clear leadership, analysts warn that Sri Lanka risks losing further ground in global trade negotiations—particularly in times of rising protectionism and shifting geopolitical priorities.

By: Staff Writer

April 17, Colombo (LNW): Hayleys Plantations has celebrated a key milestone with the inauguration of its state-of-the-art Kiruwanaganga Tea Factory, a Rs. 780 million investment that underlines the group’s dedication to innovation, sustainability, and excellence in Sri Lanka’s tea industry.

Operated by Talawakelle Tea Estates PLC and located in Kirillapone, Matara, the new factory replaces an older facility impacted by environmental and economic challenges. Despite obstacles such as the pandemic, landslides, and financial pressures, Hayleys Plantations ensured continuous tea production during the transition—reflecting its resilience and commitment to stakeholders.

The factory features cutting-edge technology, including modern rollers, dryers, colour sorters, and dedicated elevators for tea transport. An in-house tea tasting area enhances quality control, while upgraded fire protection and safety measures boost workplace security. With a daily production capacity of 14,000 kilograms, it has already earned the No. 1 low-grown tea factory ranking from the Colombo Tea Traders Association (CTTA).

Designed in accordance with international environmental benchmarks and the Green Building Concept, the Kiruwanaganga facility is a symbol of Hayleys’ broader sustainability strategy. It holds multiple prestigious certifications, including Rainforest Alliance, ISO 22000:2018, ISO 14064-1:2018, and the Ecolabel. It also meets ethical and environmental standards, with acknowledgments such as the UN Climate Neutral Now pledge and the Mother & Child Friendly Seal. Green Building certification is also underway.

Beyond technological advancements, the factory fosters local economic growth by integrating smallholder farmers into the formal tea supply chain, further strengthening community ties and regional development.

The launch event was graced by key figures including Hayleys Chairman and CEO Mohan Pandithage, Hayleys Plantations MD Dr. Roshan Rajadurai, and Talawakelle Tea Estates CEO Senaka Alawattegama. Proceedings included the national flag hoisting, traditional oil lamp lighting, religious blessings, a commemorative plaque unveiling, and the planting of a Na tree—a symbol of environmental stewardship.

“This is not just a factory; it is a statement of our values,” said Pandithage. “It reflects our dedication to quality, innovation, and sustainable growth. Wherever Hayleys goes, opportunities follow.”

Dr. Rajadurai echoed this sentiment, calling the facility a product of perseverance and vision. Regional GM Gimhan Jayatilake highlighted its legacy, the employment prospects it creates, and its future potential for the community.

 The celebration concluded with cultural performances and a heartfelt exchange of appreciation, blending tradition with forward-looking progress.

By: Staff Writer

April 17, Colombo (LNW): In a move that has sent shockwaves through Sri Lanka’s export sector, the United States has significantly increased tariffs on imports from several countries, including Sri Lanka.

The sharp hike—reportedly up to 44% on key products—threatens the island’s crucial garment industry, a pillar of its economy and a lifeline for over 350,000 workers, an eminent economist disclosed.

The United States is Sri Lanka’s largest single export destination, accounting for $2.9 billion in goods in 2024—nearly a quarter of the nation’s total exports. Of that, apparel made up $1.7 billion, underscoring the sector’s strategic importance

The imbalance in bilateral trade—Sri Lanka enjoys a $2.5 billion surplus—has prompted criticism from the US administration, which has labelled the trade relationship as one-sided

Currently, US tariffs on Sri Lankan goods stand at 11–12.5%, while Sri Lanka imposes a steep 88% average tariff on US imports.

This discrepancy has fueled tensions, with Washington citing the imbalance as a rationale for its recent tax policy shifts, which appear aimed at countries with which the US runs deficits. an economist and a former member of the Sri Lanka Council for Agricultural Research Policy and former director of the Merchant Bank of Sri Lanka and Finance PLC, Chitral Jayawarna said.

Industry on the Brink

The impact on Sri Lanka’s apparel industry has been immediate. The US market alone accounts for nearly 38% of all Sri Lankan apparel exports. Industry leaders warn that the sharp increase in tariffs is already triggering order cancellations and threatens to force production cuts. If unaddressed, this could result in widespread job losses and social disruption.

Several major manufacturers have begun shifting operations to more cost-effective countries like Bangladesh, raising fears of a long-term exodus. With little meaningful government intervention thus far, stakeholders are calling for urgent measures to safeguard the sector.

Calls for Action

Industry experts have proposed a series of emergency responses, including initiating diplomatic negotiations with the US to reconsider tariff rates, offering financial relief packages to exporters, exploring new trade deals to diversify markets, and investing in technology and innovation to boost competitiveness.

Critics argue that the Sri Lankan government and its diplomatic missions failed to act preemptively despite early warnings about the impending US policy shift. Some have called the official response weak and ill-prepared.

A Trade Policy Reckoning

At the heart of the dispute lies the principle of reciprocity. Former US President Donald Trump’s administration championed the idea of taxing countries in proportion to what the US perceives as unfair trade practices. Under this approach, nations like Vietnam, China, India, and even Sri Lanka have seen higher proposed tariff rates based on their trade surpluses with the US.

In response, Sri Lanka could consider lowering its own tariffs on American goods from 88% to 40% as a goodwill gesture to reset trade relations. In return, Colombo may seek a reduction in US tariffs on Sri Lankan exports to no more than 10%.

Global Implications

These protectionist policies are not just bilateral concerns—they carry global consequences. As production costs rise and trade flows slow, developing nations like Sri Lanka face increased vulnerability. Inflation, unemployment, and reduced investor confidence are just a few of the potential ripple effects.

Amidst these challenges, Sri Lanka’s tax system also comes under scrutiny. The existing structure is complex, inconsistent, and lacks transparency. Reforming it with a simplified and fairer framework could strengthen investor confidence and economic resilience.

Ultimately, while the US tariffs are an external shock, Sri Lanka’s response must be proactive, strategic, and inclusive—protecting both its economy and its people from deeper crisis.

By: Isuru Parakrama

April 17, Colombo (LNW): The escalation of trade tensions led by higher United States tariffs is expected to have a ripple effect across the Asia-Pacific region, potentially undermining the credit stability of several nations, according to recent analysis by Fitch Ratings.

The global ratings agency has warned that Sri Lanka could be amongst the countries adversely affected, particularly when country-specific tariff measures come into effect.

Fitch has observed that heightened trade barriers, coupled with growing economic uncertainty, are likely to dampen export performance and curb export-driven investment across Asia.

Such developments are projected to have a cooling effect on regional economic growth, with both emerging and advanced economies feeling the strain.

For countries like Sri Lanka, which are navigating fragile post-crisis recoveries and ongoing fiscal challenges, the impact could be more pronounced. The island nation remains particularly vulnerable due to its limited foreign exchange buffers and high dependency on external earnings.

A sustained downturn in export revenues, prompted by reduced global demand or higher tariffs, could place added pressure on the country’s external financing and debt servicing capacities.

Fitch also flagged the risk of central banks being forced to step in to stabilise local currencies in the face of volatile capital flows and investor sentiment. Interventions of this nature, whilst necessary in the short term, could lead to a depletion of foreign exchange reserves—posing further challenges for nations with already stretched balance sheets.

The credit agency underscored that the trajectory of regional sovereign ratings will largely depend on how governments respond to the evolving global trade environment.

Strategic policy decisions, including measures to diversify exports, strengthen local industries, and shore up reserve positions, will play a crucial role in determining the resilience of each economy.

Countries such as Bangladesh, Sri Lanka, and Vietnam were singled out as being especially exposed due to a combination of modest reserve levels and significant reliance on export income.

Without timely policy adjustments and prudent fiscal management, these nations could face increased pressure on their creditworthiness in the months ahead.

By: Isuru Parakrama

April 17, Colombo (LNW): The Inland Revenue Department has confirmed significant changes to the country’s Value Added Tax (VAT) framework, following the recent enactment of an amendment to the legislation.

The changes include new exemptions for key sectors and the expansion of tax obligations targeting the digital economy and international trade.

According to a public communication issued by the department, locally produced liquid milk and yoghurt are no longer subject to VAT as of 11 April. This exemption came into effect immediately after the amendment received formal approval from the Speaker, following its passage in Parliament two days earlier.

The tax relief applies only to products where at least half of the content consists of fresh milk, ensuring that genuinely local dairy producers benefit from the policy.

In a parallel move aimed at easing operational costs in the energy sector, the government has also lifted VAT on naphtha supplied by the Ceylon Petroleum Corporation to the Ceylon Electricity Board for electricity generation.

This exemption is expected to support cost efficiencies at a time when the country continues to manage energy affordability and supply challenges.

Beyond the domestic adjustments, the amendment introduces new measures to bring Sri Lanka’s tax system in line with international norms regarding digital commerce. Starting from October 01, non-resident companies providing digital services to Sri Lankan consumers via online platforms will be required to pay VAT on their transactions.

This marks a significant step in capturing tax revenue from global tech firms and service providers operating in the local market without a physical presence.

The tax authority also outlined that all parties involved in the commercial import or export of goods must now register under the revised VAT system. This requirement applies to both individuals and organisations, reinforcing regulatory oversight in cross-border trade and expanding the country’s tax net.

Officials say these measures are designed to improve fiscal discipline, encourage fair competition, and support domestic production, whilst also positioning Sri Lanka to participate more effectively in the evolving global digital economy.

By: Isuru Parakrama

April 17, Colombo (LNW): The Colombo Stock Exchange (CSE) resumed operations on Wednesday (16) following the Sinhala and Tamil New Year holidays, recording modest yet encouraging gains in its key performance indices.

The market opened to a notably quiet trading day but still managed to reflect investor optimism through positive price movements.

The All Share Price Index (ASPI), which tracks the broader market, climbed nearly 100 points to end the session at 15,625.88. Similarly, the S&P SL20 Index — a key gauge of blue-chip stocks — advanced by close to 30 points, reaching 4,644.49 by market close.

Despite the uptick in indices, trading volumes remained subdued. The day’s turnover amounted to Rs. 792 million, signalling a marked drop when compared to the more robust volumes recorded during recent sessions.

Analysts attributed the muted activity to the transitional period following the New Year break, where many investors have yet to return fully to the market.

Local retail and institutional participants accounted for the bulk of the day’s trades. Domestic buying outpaced selling slightly, with Rs. 781 million in purchases and Rs. 730 million in sales — suggesting a cautious but steady return of local interest.

Meanwhile, foreign investor engagement remained notably marginal. Overseas buyers contributed a modest Rs. 11 million in inflows, while foreign outflows amounted to Rs. 61 million, reflecting a continued hesitancy among international participants to re-enter the Sri Lankan market in any significant capacity.

Market observers noted that whilst the post-holiday session lacked vibrancy in terms of volume, the upward trend in indices offered a positive signal of investor sentiment.