Sri Lanka is preparing to introduce a landmark national tariff policy by mid-2026, marking what officials describe as the most sweeping overhaul of the country’s trade and import tax system in decades. The Trade, Commerce and Food Security Ministry says the reform will replace a long-criticised structure of ad-hoc, sector-driven protection that has undermined competitiveness, discouraged innovation, and locked the economy out of global value chains.
Speaking at the Sri Lanka Economic Summit hosted by the Ceylon Chamber of Commerce, Ministry Secretary K.A. Vimalenthirarajah said the new policy will shift the country away from a revenue-driven, protectionist approach toward a predictable, rules-based framework aligned with international trade standards.
He noted that global institutions such as the World Bank have repeatedly flagged Sri Lanka’s tariff regime as one of the most complex worldwide, creating uncertainty, raising production costs, and limiting the ability of local firms to scale regionally.
According to Vimalenthirarajah, the new framework is anchored on four pillars: ensuring predictability, simplifying the tariff maze, replacing long-term protection with targeted and time-bound support for infant industries, and lowering input costs to enhance participation in global and regional supply chains. He argued that decades of using tariffs as a catch-all tool of economic management have weakened entrepreneurship by shielding firms from competition instead of encouraging productivity and innovation.
The reform, he said, will be particularly critical for transforming inward-looking SMEs into outward-oriented exporters and supporting diversification goals outlined by the Export Development Board. Cabinet has already approved the establishment of a National Tariff Committee and a Ministerial Tariff Committee to finalise the structure ahead of rollout next year.
Vimalenthirarajah stressed that tariff reform is inseparable from Sri Lanka’s broader trade agenda, including ongoing negotiations and reassessments of Free Trade Agreements (FTAs). A Cabinet-appointed committee is currently reviewing existing FTAs to craft a national strategy focused on diversification into Asian, African and Middle Eastern markets.
He also confirmed that Sri Lanka has been invited to join the ASEAN Free Trade Area (AFTA)—an opportunity now under technical evaluation to determine long-term strategic benefits.
The Secretary underscored that FTAs require phased tariff reductions, sometimes over two decades, and demand strict compliance with rules of origin, SPS and TBT standards—areas in which Sri Lanka has historically underperformed, leaving many preferential market access schemes under-utilised.
Non-tariff barriers, now more influential than tariffs globally, remain a growing concern. Sri Lanka, he said, is intensifying engagement with the US and other partners to dismantle such obstacles.
As part of wider reforms, the Government plans to fully implement the remaining 14 WTO-aligned intellectual property agreements within three years, while accelerating the National Single Window and other trade-facilitation measures aimed at reducing Customs delays and strengthening regulatory predictability.“Sri Lanka cannot afford isolation,” Vimalenthirarajah said, emphasising that deeper regional integration, modern FTAs and a transparent tariff regime are essential to restoring investor confidence and unlocking export-led growth
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