Growing middle class consumer base
Sri Lanka has an established and growing middle class. Much of the middle class has a direct link with the UK through work, study or though family members in the UK. UK products are therefore familiar and recognised as high quality.
Highly skilled workforce
The UK is the leader for higher education and professional training in Sri Lanka. This contributes to availability of a highly skilled workforce. The cost-effective delivery capability of high calibre tech, R&D, manufacturing, and analytical work is a crucial reason that UK companies set up strategic operations in Sri Lanka.
Logistical hub
Sri Lanka is a logistical hub for South Asia, with Colombo port being the busiest in the region. It is the main transhipment hub for the Indian subcontinent taking advantage of free trade agreements (FTAs), trade preference schemes, and its connectivity to emerging markets.
Top five UK goods exported to Sri Lanka , in the four quarters to the end of Q4 2024
| Goods | Value (£ million ) |
|---|---|
| Scientific instruments (capital) | |
| Textile fabrics | |
| Other miscellaneous manufactures (intermediate) | |
| Other manufactures (intermediate) | |
| Miscellaneous foods |
Source:
ONS Trade in goods: country-by-commodity exports
Last updated: February 2025
Download the latest trade and investment factsheet for Sri Lanka.
Total import value (into the UK from Sri Lanka) and export value (from the UK into Sri Lanka) over time
| Year | Imports (£ billion ) | Exports (£ billion ) | Total trade (£ billion ) |
|---|---|---|---|
| 2016 | 1.5 | 0.3 | 1.8 |
| 2017 | 1.1 | 0.3 | 1.4 |
| 2018 | 1.1 | 0.5 | 1.6 |
| 2019 | 1.0 | 0.4 | 1.5 |
| 2020 | 0.9 | 0.3 | 1.3 |
| 2021 | 0.8 | 0.4 | 1.2 |
| 2022 | 1.1 | 0.4 | 1.5 |
| 2023 | 1.0 | 0.4 | 1.4 |
Source:
ONS UK total trade: all countries, seasonally adjusted
Last updated: January 2025
Total trade is the sum of all exports and imports over the same time period.
Download the latest trade and investment factsheet for Sri Lanka.
Sri Lanka: at a glance
Economic growth
-7.3%
Actual figure (IMF, 2022)
The UK is 4.3% (IMF, 2022, actual figure)
GDP per capita
$3,846
Actual figure (IMF, 2020)
The UK is $40,231 (IMF, 2020, actual figure)
Currency
Sri Lankan Rupee
Business languages
English (occasionally Sinhala or Tamil)
Time zone
GMT +5.30
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Opportunities for exporters
The UK is strong in sectors where Sri Lanka requires specialist products and expertise. It is home to big UK companies including HSBC, Standard Chartered, London Stock Exchange Group, De La Rue Currency, and Unilever. It is also a popular sourcing destination for retail brands including M&S, Tesco, and Next.
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The Sri Lankan government aims to create more knowledge-based jobs in Sri Lanka and to develop Sri Lanka as a regional hub for education. Additionally, with an overarching policy to evolve towards a digital economy, there is a growing need to developing digital transformation and technology development capability in the country.
Higher and further education
Sri Lanka is the second largest host nation and fastest-growing market for UK transnational education. Over 40 UK universities currently deliver programmes with local providers on franchise arrangements, continuing to grow their course offering. Demand now exists from local investors for the creation of international branch campus partnerships.
Educational tools and services
There are opportunities to establish educational publishing and printing, edtech development, and online educational services and support offices.
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The potential opportunities cut across the export potential of both goods, from machinery, technology, and equipment, to construction services like consulting, project management, and design. Most will be advertised and delivered as donor- funded projects including from the World Bank, ADB, and bilateral funds.
Tourism demand
With the increasing number of tourism arrivals, there could be opportunities arising to upgrade existing tourism infrastructure, including design services for high-end luxury hotel and resort projects.
Water treatment and distribution
The Sri Lankan government is keen to improve water distribution and wastewater management. There are opportunities for UK companies in project design and management, including to work as part of consortiums.
Transport projects
Areas of focus in Sri Lanka's transport infrastructure sector include roads and bridges and port and airport development. The UK has a successful track-record especially in project design and management of bridge, port, and expressway projects.
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With the growing need for energy security, Sri Lanka needs to expand renewable energy generation. Based on build-own-operate or build-operate-transfer models, these require investment which could include consortiums. Besides securing funding and technologies for capacity addition, Sri Lanka needs to transform and modernise the power grid to integrate variable renewable energy sources effectively.
Hydropower
Currently Sri Lanka generates around 35% of its electricity through hydropower. Opportunities could look at expanding existing facilities to creating new opportunities including pumped storage hydropower. Opportunities here could be from geological and hydrological studies, to design, construction and project management.
Solar and onshore wind
The share of energy generated through solar and onshore wind has grown in recent years, with projects regularly tendered. Energy storage technology is crucial for managing the intermittent nature of solar and wind power. Opportunities here could be from technology partnerships, to design, construction, and project management.
Offshore wind
Offshore wind is at a nascent stage, with high potential locations identified across different parts of the country’s coast. The policy landscape is being developed. The World Bank has published an Offshore Wind Road Map, with pre-feasibility studies ongoing. Opportunities may arise linked to these feasibility studies and policy development.
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Sri Lanka’s retail sector is undergoing transformation, reflecting broader shifts in the economy and consumer behaviour. Driven by evolving consumer trends and the surge in the tourism sector, there is growing interest in international food and drink brands.
Consumer demand for international brands
The Sri Lankan middle-class has a strong recognition and desire to purchase UK brands. This interest in purchasing international food brands is supported by consumer exposure to social media, overseas travel, and family links. Most of this demand is currently met through grey market imports.
Hospitality industry
Sri Lanka’s dining culture is expanding significantly. This creates opportunities for exports to institutional segments like hotels, resorts, and restaurants catering to discerning Sri Lankan diners and international travellers. With UK tourists remaining within the top 3 source markets, this is a further market segment who welcome access to familiar brands.
Regional market access
Sri Lanka’s geographic location provides opportunity for being a regional hub. Supported by strong logistical elements including freeports and warehousing. Opportunities range from using Sri Lanka as a regional warehousing destination to break up bulk shipments, setting up manufacturing facilities for re-packaging or value addition for regional export.
Check for trade barriers
Trade barriers, such as tariffs or taxes, can raise costs, cause delays, or even stop you from exporting. Check for any issues that may impact your business when exporting.
Check duties and customs
Find information on how to export goods from the UK. View the duties, rules, restrictions, and the documents you need for your products.
Doing business in Sri Lanka
Preparing to export
Standards and technical regulations
Food, cosmetics, and pharmaceutical items must be labelled in English, Sinhala and Tamil to meet regulatory requirements - local distributors can advise.
Registration for pharmaceuticals and cosmetics imports is required from the regulator. Local distributors can guide on the process.
The Sri Lanka Standards Institution (SLSI) is the national standards body of Sri Lanka.
VAT
The VAT rate is 18%.
You can find more information on VAT from the Sri Lankan Inland Revenue Department.
Corporate and income tax
You can find details of corporate taxation from Sri Lanka’s Inland Revenue Department
Employee related taxes which are an employer’s responsibility to collect include:
- Pay As You Earn (PAYE)
- Employees Provident Fund (EPF)
- Employees’ Trust Fund (ETF)
Operating in Sri Lanka
Read the overseas business risk report for Sri Lanka for information on security and political risks which UK businesses may face when operating in this market.
Routes to market
Routes to market include:
- setting up a company, branch or franchise
- establishing a partnership
- appointment of agents or distributors
Business culture
Building relationships is seen as an important part of business negotiations, this includes over meals or drinks.
Establishing connections and small talk could include asking about your background in an effort to find common ground that could lead to a deeper relationship, and is seen as a foundation for trust.
Punctuality is flexible, and it’s common for people to arrive late to meetings or events. There’s a saying about being on “Sri Lankan time,” which means arriving later than scheduled.
Occasionally women or men may prefer not to shake hands with the opposite sex. You should wait and see if a hand is offered.
Communication style
Sri Lankans often avoid direct statements, especially with those they are not close to. They may also avoid saying "no" directly, opting instead to say, 'I will try'. Be prepared to further probe indirect responses and ask clarifying questions.
Intellectual property
Sri Lanka IP law recognises the following forms of intellectual property:
- industrial design
- patents
- trade marks
- copyright
- layout designs of integrated circuits
You should register IP with the National Intellectual Property Office to protect against infringement.
Commercial and legal advice
Firms engaging in commercial projects and entering into contracts in Sri Lanka should conduct independent risk assessments and due diligence, drawing on legal advice as required.
The UK government and local business chambers can offer general advice on commercial opportunities, and any relevant risks of operating in Sri Lanka.
Bribery and corruption
We encourage all UK companies preparing to do business in Sri Lanka to consider their strategy for dealing with bribery and corruption. You should consider:
- taking advice from a range of sources including the British High Commission and local business chambers
- carrying out due diligence checks on all potential partners
- ensure you have defined anti-corruption corporate policies
Next steps
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