India-UK agreement major economic setback for Sri Lanka

Colombo, May 16 (Daily Mirror) - The recently signed free trade agreement between India and the United Kingdom on May 6 has raised fresh economic concerns for Sri Lanka, particularly at a time when the country is already grappling with hefty US-imposed tariffs, says Ratata Hetak Social Service Programme organiser Sarath Kalugamage.

Speaking to the media, Kalugamage pointed out that the UK is currently Sri Lanka’s second-largest export destination, with export earnings amounting to USD 903.72 million in 2024. He warned that if Sri Lanka fails to follow India’s lead and negotiate its own free trade agreement with the UK, the country could face a serious economic setback in the near future.

He also emphasised the importance of an international trade strategy, noting that among Sri Lanka’s top five export destinations - the US, UK, India, Germany and Italy - only India represents the Asian region, while three are in Europe and one in North America. 

“The conduct of our international trade should be based on a well-planned, organised roadmap rather than ad-hoc decisions. Without such direction, the economic cliff we risk falling into will be dangerously steep,” Kalugamage cautioned.

Highlighting the UK's significant economic footprint in Sri Lanka, he noted that more than 100 UK-related companies currently operate in the country. Major global firms such as HSBC, Standard Chartered, the London Stock Exchange Group, De La Rue Currency, Unilever, M&S, Tesco and Next have established a presence in Sri Lanka. 

Additionally, the United Kingdom ranks among the top 10 sources of foreign investment into the island nation.

Kalugamage further said that the India–UK agreement’s provisions could open doors for Indian skilled professionals to access the UK job market more easily, potentially putting Sri Lankan labour exports and economic competitiveness at risk. He said that there is an urgent need for the government to proactively engage with the UK and develop a strategic trade framework to safeguard Sri Lanka’s economic interests in a shifting global landscape.