When the iron is hot, hit it: Ex-Envoy Kananathan

The United States has dealt a heavy blow to South Asian trade by slapping 50% tariffs on most imports from India, a move expected to hit New Delhi’s $86 billion annual exports to the U.S. hard. President Donald Trump said the decision is aimed at cutting India’s access to the U.S. market while pressuring it over continued purchases of Russian oil.

Former ambassador to Kenya Kana Kananathan said Sri Lanka can see  Both Peril and Promise After U.S. Slaps 50% Tariffs on Indian Imports 

With Indian goods such as garments, jewelry, seafood, and carpets suddenly becoming far more expensive for American buyers, experts believe the ripple effects will be felt across the region.

For Sri Lanka, the situation is a mixed blessing, according to Ambassador Kananathan, who stressed that Colombo faces both unprecedented opportunities and serious risks.

A Window Opens for Sri Lanka

“As Indian products get priced out, buyers in the U.S. will inevitably look to other suppliers,” Kananathan said. “This creates an opening for Sri Lankan industries – from apparel and seafood to gems and handicrafts – to step in and capture part of that market share.

He added that if positioned smartly, Sri Lanka could also attract fresh foreign investments  into its export industries, with U.S. firms in particular seeking new supply chain partners in the region.

The Big Challenge: Can Sri Lanka Scale Up?

But the opportunity comes with a warning. Sri Lanka is still recovering from a severe economic crisis, leaving industries hampered by limited capacity, high production costs, and reliance on imported materials.

“This isn’t just about demand – it’s about whether we can meet it at scale,” Kananathan cautioned. “Without urgent reforms and investment, Sri Lanka risks letting others – like Vietnam or Bangladesh – take the lead.”

The tariffs could also rewire alliances. With Washington tightening the screws, India may drift closer to Russia and China. For Sri Lanka – already balancing delicate relations with all three powers – the diplomatic chessboard is about to get even more complicated.

Kananathan emphasized that the government must act now if the country is to seize the moment

“This is the right time to roll out targeted incentives for both local and foreign investors,” he said. “Tax breaks, simplified export procedures, and fast-tracked approvals for new factories could make Sri Lanka far more attractive as an alternative sourcing hub.”

Ambassador Kananathan said that such measures would not only help boost exports quickly, but also create long-term competitiveness in industries where Sri Lanka already has global recognition – apparel, seafood, gems, tea, and IT services. Government should  Simplify exports with fast-track approvals and tax incentives, while boosting local industries through loans, subsidies, and export-ready zones. Launch a global promotion drive to attract U.S. buyers and investors, positioning Sri Lanka as India’s alternative supply hub. Strengthen trade diplomacy with Washington to secure market access and long-term partnerships.

“The door has opened – but it won’t stay open forever,” when iron is hot HIT it Kananathan warned. “If Sri Lanka can mobilize investment and scale up production, we can turn this into a game-changing moment. If not, others will step in and we loose.