Sri Lanka could face fresh economic headwinds following the free trade agreement signed between India and the United Kingdom on May 6, warns Sarath Kalugamage, organizer of the Rata Hetak Samaja Seva program.
Speaking at a media briefing, Kalugamage noted that the UK is currently Sri Lanka’s second-largest export market, with export revenue in 2024 estimated at USD 903.72 million. He cautioned that unless Sri Lanka takes proactive steps to negotiate its own trade pact with the UK similar to what India has done the island nation could face serious economic decline in the near future.
He emphasized the urgent need for a comprehensive international trade strategy, pointing out that of Sri Lanka’s top five export destinations the US, UK, India, Germany, and Italy only India lies within the Asian region. According to Kalugamage, this geographic imbalance in trade relations highlights the need for more calculated, regionally integrated economic planning.
“Our international trade conduct must be based on a well-planned, organized roadmap rather than ad hoc decisions,” he said. “Without such guidance, the economic cliff we are headed down will be dangerously steep.”
Underscoring the UK’s significance, Kalugamage highlighted that over 100 UK-linked companies currently operate in Sri Lanka, including international giants such as HSBC, Standard Chartered, London Stock Exchange Group, De La Rue Finance, Unilever, M&S, Tesco, and Next. The UK also ranks among the top 10 foreign investors in Sri Lanka.
He further warned that the India-UK agreement’s provisions could facilitate easier entry of Indian professionals into the UK job market, potentially reducing opportunities for Sri Lankan labor exports and diminishing the island’s competitiveness in the global services sector.
Kalugamage called on the Sri Lankan government to urgently engage the UK in trade discussions and formulate a robust strategic trade framework to protect the country’s economic interests amid shifting global alliances and trade dynamics.
