Economic Ties

Sri Lanka and India maintain strong economic ties, with India as a top trading partner, investor, and source of tourism for Sri Lanka. 

The trade relationship reflects both strong export and import flows and a diverse mix of commodities. Sri Lanka’s major export items include areca nuts, animal feeds, pepper, vegetable fats and their fractions, byproducts of petroleum oil, apparel, rubber products, coconut products, non-alcoholic beverages, bicycles and ceramic products. Imports from India are dominated by petroleum oils, woven and knitted fabrics, pharmaceuticals, motor vehicles, cement, onion, lentils and other food items, paper and paper boards, and sugar along with sugar confectionery and bakery products. This composition illustrates the complementary nature of bilateral trade, with Sri Lanka exporting niche agricultural and industrial products while relying on India for essential energy, textile inputs, and consumer goods.

In 2025, India was both the second-largest export destination and second-largest source of imports for Sri Lanka. Sri Lanka’s exports to India amounted to USD 1,035.72 million and imports from India stood at USD 4,330.01 million.

Bilateral trade under the Indo-Sri Lanka Free Trade Agreement is duty free with specific exceptions. India’s negative list includes 429 items and Tariff Rate Quotas on specific products, while Sri Lanka’s negative list excludes 1,180 products from Indian duty free access.

Between 2005 and the second quarter of 2025 India’s foreign direct investment in Sri Lanka amounted to USD 2.3 billion. During this period, 197 Indian companies commenced operations in Sri Lanka. An additional 29 projects remain in the pipeline, signaling continued investor interest. These investments have generated employment opportunities for 16,335 individuals as at 2024 across various sectors.

Of the total of 2,362, 521 tourist arrivals to Sri Lanka in 2025, India accounted for 22.5 per cent or 531,511, becoming the highest source of arrivals to the country that year. This is a 27% increase from the previous year, with 416,974 Indian tourists accounting for 20 per cent of the total tourist arrival number of 2,053,465. Travel has been facilitated with SriLankan Airlines operating 89 weekly flights from Colombo to nine key destinations in India.

Beyond its appeal as a year-round holiday spot, Sri Lanka has emerged as a premier destination for Indian weddings, film productions, and MICE tourism.