Guidance

Doing business in Sri Lanka: Sri Lanka trade and export guide

Updated 19 November 2024

This guidance was withdrawn on 15 April 2025

See current information to:

•  explore opportunities for exporting to Sri Lanka in our country guide on great.gov.uk
•  find out how UK organisations can manage risk when doing business in Sri Lanka

Managing risk

Find out how UK companies can control risks when doing business in Sri Lanka.

Export opportunities and advice

Find more export advice and explore opportunities overseas on great.gov.uk.

1. Sri Lanka export overview

Sri Lanka is a trading and a trans-shipment hub for South Asia.

Sri Lanka is a market of 21 million people. With its geographical location in South Asia it can reach a market of over 1.6 billion. It 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.

Sri Lanka is already home to some of the big UK companies. They include HSBC, De La Rue Currency, Standard Chartered Bank and London Stock Exchange Group. It is an important sourcing destination for companies like M&S, Tesco, and Next. There are over 100 companies in Sri Lanka with UK affiliation across a wide range of sectors.

Benefits for UK businesses exporting to Sri Lanka include:

• English widely spoken

• strong historical and trading links with the UK

• commercial law based on English law 

• gateway country to Indian market via a free trade agreement

Strengths of the Sri Lankan market include:

• highly skilled and educated workforce

• logistical hub for South Asian region

Contact UK Export Finance (UKEF) about trade finance and insurance cover for UK companies. You can also check the current UKEF cover position for Sri Lanka.

2. Challenges

Bureaucracy, nepotism and a lack of transparency are all prominent in the Sri Lankan business environment.

Sri Lanka was ranked 115th in Transparency International’s 2023 Corruption Perceptions Index.

Read the Foreign, Commonwealth and Development Office’s (FCDO) overseas business risk guide for Sri Lanka.

You should ensure you take the necessary steps to comply with the requirements of the UK Bribery Act.

3. Growth potential

3.1 Economic Growth

After defaulting on its sovereign debt in May 2022, Sri Lanka experienced its worst economic crisis since independence. Debt default led to negotiations with the International Monetary Fund (IMF) for a support programme. The current IMF programme began in March 2023 and is worth USD 3 billion over a 4-year period. Financing is disbursed in a series of tranches following completion of 6-monthly reviews, which assess progress on policy reform agreed with the IMF and debt restructuring negotiations.

Sri Lanka’s economy has stabilised, but challenges remain. The economy grew by 5.3% year-on-year in Q1 of 2024 (the fastest growth since Q2 of 2021), inflation is low and stable, tourist arrivals have returned to pre-pandemic levels. The exchange rate has strengthened, and tax revenue and foreign exchange reserves are steadily climbing.

3.2 Free trade agreements

Sri Lanka has free trade agreements (FTA) with India, Thailand and Pakistan which can reduce import tariffs into those countries. It does not apply to all goods and services.

Sri Lanka is also expected to finalise a FTA with China.

4. UK and Sri Lanka trade

Links between both countries have always been strong and Britain is a top 10 investor in Sri Lanka.

Go to DBT’s trade and investment factsheet for Sri Lanka for up-to-date information.

The UK’s top potential exports are:

• education
• infrastructure services
• information and communications technology (ICT)
• banking, financial, and insurance services
• consulting, business and technical services
• renewable energy
• electrical and mechanical machinery
• miscellaneous raw materials including metals and paper
• pharmaceuticals and medicinal products

The UK is:

• the leading business partner for higher education and professional training

• the preferred option for latest technology partnerships

• strong in sectors where Sri Lanka requires expertise and specialist equipment

5. Opportunities for UK businesses in Sri Lanka 

The Department for Business and Trade (DBT) provides free international export sales leads from its worldwide network. Search for export opportunities.

5.1 Education and training

Government policy aims to create more knowledge based jobs by:

• attracting foreign universities to set up branch campuses

• attracting foreign students to the country

British qualifications are the most desired. There are already 40 UK universities present in the market, working with local providers on undergraduate and postgraduate qualifications.

There are opportunities in vocational and further education, including skills training for the tourism sector. UK colleges are currently exploring the market.

Sri Lanka has the largest membership outside the UK of the:

• Chartered Institute of Management Accountants (CIMA)

• Chartered Institute of Marketing (CIM)

There are opportunities to:

• supply study materials, tools and classroom aides

• set up educational publishing, printing, software development offices

Contact the export support team for more information on opportunities in the education and training sector.

5.2 Infrastructure

Much of Sri Lanka’s infrastructure needs to be modernised to enable further economic growth.

Opportunities include:

• roads and bridges

• water distribution and wastewater management

• port and airport development

• tourism infrastructure, including hotel expansion

Contact the export support team for more information on opportunities in the infrastructure sector.

5.3 Energy

The Sri Lankan government aims to develop renewable energy sources including offshore wind.

Sri Lanka has little experience in renewable energy. This creates opportunities related to the maintenance and running of renewable energy plants. These include:

• consultancy

• analytical services

Contact the export support team for more information on opportunities in the energy sector.

5.4 Other sectors with opportunities

There is also potential for UK companies in:

• food and drink where there is interest and demand for British products, but hardly any available in the market

• information and communications technology (ICT)

• manufacturing

• knowledge and business process outsourcing (KPO/BPO)

• commercial services

British companies have found Sri Lanka to be a useful base for their new development operations by:

• buying into well performing Sri Lankan ICT companies

• setting up branch offices

The government is keen to establish Sri Lanka as a centre for the provision of:

• commercial services

• international banking

• international investment

This objective and the expected growth in port services and tourism provides opportunities for UK businesses in these sectors.

Contact the Trade Team in Colombo for more information on opportunities in these sectors.

6. Start up considerations

Routes to market include:

• setting up a company, branch or franchise

• establishing a partnership

• appointment of agents or distributors

The Department of the Registrar of Companies is responsible for incorporating companies.

Tax and legal obligations differ depending on which business structure you choose. DBT Sri Lanka can provide lists of lawyers and accountants on request.

The Board of Investment of Sri Lanka (BOI) can assist in establishing a company. Depending on the level of investment the BOI is able to offer tax incentives and holidays.

There are no special laws governing the contractual appointments of Sri Lankan agents by foreign principals.

7. Legal considerations

The laws and the court system in Sri Lanka are based on English Law.

Roman Dutch Law or local laws such as Kandyan Law or Thesavalamai Law can apply for property and inheritance.

Contact the DBT team in Sri Lanka to help find tax and legal advisers before entering into agreements.

7.1 Standards and technical regulations

The Sri Lanka Standards Institution (SLSI) is the national standards body of Sri Lanka. It is a member of the International Organization for Standardisation (ISO)

Consumer goods exported to Sri Lanka must indicate the Maximum Retail Price (MRP).

Food, cosmetics, and pharmaceutical items must be labelled in English, Sinhala and Tamil in line with regulatory requirements that local distributors can advice on.

Prior approval for imports of pharmaceuticals and cosmetics is required from relevant regulatory bodies. Local distributors can guide and advice on the procedures.

7.2 Intellectual property (IP)

Sri Lanka IP law recognises the following forms of intellectual property:

• industrial design

• patents

• trade marks

• copyright

• layout designs of integrated circuits

It is recommended that companies register IP with the National Intellectual Property Office to protect against infringement.

8. Tax and customs considerations

Sri Lanka’s tax structure for businesses can be complex so accountancy advice is essential.

Once you’ve completed a company registration contact the Department of Inland Revenue for:

• a Value Added Tax (VAT) number

• a Tax Identification Number (TIN)

• information on other taxes and rates

The BOI can grant exemptions from laws such as inland revenue, exchange control and customs if a project meets certain investment thresholds.

8.1 Value Added Tax (VAT)

The VAT rate is 18%.

You can find more information on VAT from the Sri Lankan Inland Revenue Department.

8.2 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).

8.3 Customs

The Sri Lanka Customs authority provides details of customs regulations and procedures.

You can find more from their Import Tariff’s page.

9. Business behaviour

Sri Lankan business people generally speak English.

Occasionally women or men may prefer not to shake hands with the opposite sex. You should wait and see if a hand is offered.

10. Entry requirements

All visitors must have a valid passport and visa.

You can apply for a visa online.

10.1 Travel advice

If you’re travelling to Sri Lanka for business, check the FCDO travel advice beforehand.

11. Contacts

Contact the DBT team in Sri Lanka for more information and advice on opportunities for doing business in Sri Lanka.