Category: Daily Financial Times

Sri Lanka yesterday signalled a major reset in its economic engagement with India saying a review of the existing Free Trade Agreements (FTA) by the Government is nearing completion, while policymakers and business leaders called for a shift from traditional trade towards deeper integration in investment, technology, logistics and digital commerce.

The announcement was made at a forum marking 25 years of the India Sri Lanka FTA (ISLFTA), where the launch of a dedicated India Trade Desk was positioned as a catalyst to help Sri Lankan businesses tap opportunities in what is now one of the world’s fastest-growing major economies.

Trade and Commerce Minister Wasantha Samarasinghe disclosed that a Cabinet-appointed high-level committee reviewing Sri Lanka’s FTAs is expected to submit its recommendations next month.

‘We agree that as our economies evolve, so must the framework that supports our bilateral engagement. In this context, a comprehensive review of Sri Lanka’s existing Free Trade Agreements by a Cabinet Appointed High-Level Committee is currently underway. The findings and recommendations are expected to be submitted to the Cabinet ministers in the month of July for policy consideration,’ he said.

The announcement comes as bilateral trade has reached nearly $ 5.8 billion, with Sri Lankan exports to India surpassing the $ 1 billion mark in 2025 for the first time. However, imports from India climbed to $ 4.3 billion, underscoring a trade imbalance that has long fuelled debate over the benefits and limitations of the 25-year-old agreement.

‘We agree that as our economies evolve, so must the framework that supports our bilateral engagement,’ Samarasinghe said, signalling support for expanding cooperation beyond goods trade into services, logistics, technology and digital commerce.

Industry and Entrepreneurship Development Minister Sunil Handunneththi described India as one of Sri Lanka’s most important economic partners, noting that cumulative Indian investments have exceeded $ 2.5 billion across sectors ranging from energy and manufacturing to telecommunications, banking, tourism and infrastructure.

He said the newly launched India Trade Desk would strengthen business linkages, facilitate investment and trade, and create greater opportunities for SMEs to access international markets and technical partnerships.

The strongest message from the forum, however, was that Sri Lankan businesses are failing to fully capitalise on opportunities emerging across India’s rapidly transforming economy.

Speaking on behalf of the High Commission of India, Economic and Commercial Counsellor Devika Lal said India had evolved far beyond being a large neighbouring market and should instead be viewed as a platform for innovation, manufacturing, technology and investment.

She highlighted India’s sweeping digital transformation, infrastructure modernisation and expanding middle class as factors creating significant opportunities for Sri Lankan firms across sectors including manufacturing, tourism, pharmaceuticals, engineering, electronics and services.

Global Investment and Trade Advisers (GITA) Managing Partner Priya Rawat in her detailed presentation pointed out that many Sri Lankan businesses continue to misunderstand the scale and complexity of the Indian market.

‘India is not a single market,’ she said, noting that each state possesses distinct industrial strengths, policy frameworks and consumer characteristics. She pointed to growing opportunities in apparel, ICT, food processing, tourism, logistics, pharmaceuticals and value-added agriculture.

Rawat said the launch of the India Trade Desk was intended to address one of the biggest barriers facing Sri Lankan companies, navigating India’s vast and fragmented business landscape.

The new desk, established by the Indo Lanka Chamber of Commerce and Industry in collaboration with the High Commission of India and operated by GITA, will provide market intelligence, partner identification, investment guidance and business facilitation services for companies seeking to enter India.

ILCCI President M. Raguraman said that while ISFTA had transformed bilateral trade and investment flows over the past quarter century, economic engagement between the two countries remained well below its potential.

Sri Lanka’s small and medium enterprise (SME) sector took a significant step forward with the launch of the ‘National SME Strategy Framework – SME NEXUS’ in Colombo recently.

Bringing together Government officials, development partners and industry stakeholders, the initiative aims to provide a unified roadmap to strengthen the SME sector, improve competitiveness and create new opportunities for sustainable economic growth across the country.

Chrysalis was recognised by the Industry and Entrepreneurship Development Ministry at the launch event for its longstanding contribution to SME development and efforts to strengthen Sri Lanka’s entrepreneurial ecosystem. The award was accepted by Chrysalis CEO Ashika Gunasena on behalf of the organisation.

Chrysalis is a Sri Lankan non-profit organisation and social enterprise that focuses on empowering women and youth, driving inclusive growth, and transforming communities. Formerly known as CARE Sri Lanka, it became an independent affiliate of CARE International in 2016.

During the event, Chrysalis was specifically acknowledged for its technical and collaborative contributions to national SME development efforts, including supporting the simplification of the Business Name Registration process and assisting the Ministry in strengthening the National Industry Database, among other initiatives aimed at improving efficiency and access within the SME ecosystem.

The recognition highlights Chrysalis’ continued work in supporting women-owned and women- and youth-led enterprises, livelihoods, entrepreneurship, and inclusive economic growth across Sri Lanka.

The SME NEXUS initiative introduces a strengthened national approach to SME development through a 5-pronged strategic outlook, 3 implementation approaches, and an 11-pillar strategy framework. Developed by the Ministry of Industry and Entrepreneurship Development with input from the SME Advisory Committee and key ecosystem stakeholders, the framework serves as a national platform for engagement.

It is designed to encourage broader stakeholder participation, strengthen partnerships, and align efforts across the SME ecosystem to improve coordination and effective implementation.

This recognition comes as Chrysalis marks its 10th anniversary on 10 May, celebrating a decade of community-driven development and social impact.

‘The organisation’ works across gender equality, youth leadership, social inclusion, climate resilience, peace building, and economic empowerment.

Commenting on the recognition, Ashika Gunasena said: ‘This recognition reflects the collective efforts of the communities, entrepreneurs, partners, and stakeholders we have worked with over the past decade. We believe inclusive entrepreneurship and sustainable livelihoods are key to building resilient communities and a stronger economy’.

Chrysalis welcomed the launch of ‘SME NEXUS’ as an important step toward supporting innovation, digital transformation, and sustainable growth opportunities for SMEs across Sri Lanka.

The organisation reaffirmed its commitment to advancing inclusive entrepreneurship and supporting resilient enterprises that contribute to Sri Lanka’s long-term economic transformation.

The Turkish Airlines Golf Tournament concluded in style with an exciting finish, as Samitha Perera emerged as the Overall Winner after producing an outstanding Stableford score of 45 points. His consistent and composed performance throughout the competition earned him the tournament’s top prize.

The competition attracted a strong field of golfers. In the Best Gross Score category, Kumar Dhanushan demonstrated remarkable consistency and shot-making ability to return an impressive gross score of 35, earning top honours in the gross division.

Special awards were also presented for accuracy. Dilini Hennayake won the Ladies Nearest Pin competition with a superb shot, while Priyath Bandu Wickrama captured the Men’s Nearest Pin title.

The successful tournament once again showcased the growing popularity of golf in Sri Lanka, with Turkish Airlines providing golfers with a unique opportunity to compete for an international golfing experience while celebrating excellence on the fairways.

SANASA Life Insurance Company PLC has announced its intention to issue up to 5 million unrated, unlisted, unsecured, Tier II, redeemable, cumulative, subordinated debentures to raise up to Rs. 500 million via a private placement to identified investors subject to a lock-in clause.

In a disclosure to the Colombo Stock Exchange yesterday, the Company confirmed that the Proposed Issue will not have any adverse or material impact on the rights, interests, security or repayment capacity relating to the existing listed debentures currently in issue.

It also confirmed that the Trustee of the existing listed debentures was duly notified on 24 February 2026 of the proposed issue, prior to its opening. The Trustee granted its concurrence on 26 March 2026.

Approval was obtained from 75% of the holders of its existing listed debentures in respect of the proposed issue.

SANASA Life said the latest notification was submitted in compliance with the conditions stipulated in the Securities and Exchange Commission’s approval letter dated 6 April 2026 for the proposed issue.

Sri Lanka captain Chamari Athapaththu overcame her team’s disappointing loss to the West Indies, when she piloted her team to a thumping nine-wicket win against Ireland in an ICC Women’s T20 World Cup match played at Bristol yesterday.

After the defeat against West Indies Athapaththu said that she had failed as captain, but yesterday she played the captain’s knock to lead her side to victory smashing 17 fours and 2 sixes in a display of ruthless hitting as she raced to 106* off 61 balls to see her team reach their target of 131 with 27 balls to spare.

It was Athapaththu’s second World Cup century on this ground following her 178* against Australia ten years ago in a Women’s World Cup 50-over match and her fourth hundred in T20Is.

Ireland batting first were restricted to a total of 130-5 and Sri Lanka needing 131 to win made it look so easy with Athapaththu on song.

Scores:

Ireland Women 130-5 (20) (Gaby Lewis 59, Leah Paul 20, Alice Tector 28*, Nilakshika Silva 1/12, Mithali Ayodhya 1/18)

Sri Lanka Women 134-1 (15.3) (Chamari Athapaththu 106*, Imesha Dulani 20)

Delegates at the 35th Rotary Sri Lanka and Maldives Conference at ITC Rathnadipa, Colombo, were called to treat empathy not as a soft virtue but as a measurable competency for sustainable humanitarian action by the global expert Mimi Nicklin.

Founder of ‘ Empathy Everywhere’ the keynote framed empathy as ‘perspective-taking’ – the disciplined practice of understanding a beneficiary’s reality before designing interventions in supporting SME’s , disease prevention, education, or disaster response.

‘Compassion is the desire to alleviate suffering. Empathy comes first,’ the address stated. ‘It is data-gathering. It asks ‘help me understand’ before we build wells or classrooms. Without it, service risks becoming work to communities, not with them.’

The speech linked low empathy to social fragmentation, noting Nicklin’s finding that when organisational empathy drops, ‘isms’ rise – casteism, ageism, urban-rural bias. In humanitarian terms, this erodes inclusion and local ownership.

Backed by global data, the address quantified the ’empathy deficit’: 52% of people report chronic loneliness, a health risk the US Surgeon General equates to smoking 15 cigarettes daily. Only 24% of the global workforce is engaged, creating an $ 8.8 t productivity loss. Conversely, Gallup data showed 79% of workers would work longer hours for an empathetic leader, and teams with high engagement are 21% more profitable.

For Rotary’s 75 clubs, three practical steps were proposed:

1. Active listening as due diligence – pausing to ask beneficiaries ‘what does dignity look like to you?’ before project design.

2. Curiosity as ‘Do No Harm’ – using questions like ‘help me understand why this failed last time?’ to prevent top-down programming.

3. Formal measurement – adding community feedback loops to project M and E and embedding empathy training in RYLA, PETS, and club inductions.

Connecting the theme to local context, the address noted that Sri Lanka’s post-crisis recovery and Maldives’ climate vulnerability both demand solutions rooted in community perspective. ‘Technical capacity is abundant in 2026. What is scarce is human understanding,’ it concluded.

Several Rotarians said the framework resonated with field experience. District Governor Delvin Pereira noted, ‘We build assets, but lasting impact comes when people feel heard. This gives us language for that.’

The session closed by recalling Paul Harris founding Rotary through dialogue among four men who chose to understand each other’s realities – an early act of empathy. Delegates indicated interest in piloting empathy metrics in upcoming projects.

The Public Image Chair Dr. Rohantha Athukorala said ‘We have done over 1500 projects across the country by the 75 Rotary Clubs valued at Rs. 2 billion plus. Now we must reflect back and see how we can do better next year. Hence the Rotary Conference is staged annually. The speaker gave us something to take home and change our behaviour.’

Aggregate earnings of 271 listed companies declined 11.4% year-on-year (YoY) in the March 2026 quarter, marking a third consecutive quarter of earnings contraction, according to First Capital Research.

The investment research firm said reported earnings were heavily influenced by large one-off gains and losses, particularly within the Food, Beverage and Tobacco sector, masking stronger underlying profitability trends across several sectors.

After adjusting for major exceptional items recorded by Bukit Darah PLC, Carson Cumberbatch PLC, Browns Investments PLC and Brown and Company PLC in both the March 2026 and March 2025 quarters, First Capital estimated underlying earnings growth at 30.1% YoY.

‘The aggregate corporate earnings delivered underlying earnings growth of 30.1%YoY, a more representative reflection of core profitability trends,’ the report said.

The Food, Beverage and Tobacco sector was the largest contributor to the decline in aggregate earnings, with profits falling 73.8% YoY and 55.0% quarter-on-quarter (QoQ).

According to First Capital, the decline largely reflected a high base effect stemming from a Rs. 35 billion one-off gain recognised by Browns Investments in the March 2025 quarter. Additional pressure came from Carson Cumberbatch and Bukit Darah, whose Indonesian subsidiary, Goodhope Asia Holdings Ltd., was subjected to a one-off administrative fine estimated at approximately Rs. 24 billion to Rs. 25 billion, equivalent to around $ 108.4 million.

Browns Investments also swung to a loss as a higher cost base weighed on profitability.

Despite the sector’s earnings decline, First Capital noted that 31 of the 45 companies within the Food, Beverage and Tobacco sector remained profitable, with the majority recording year-on-year earnings improvements supported by volume-driven revenue growth amid improving economic conditions during the first quarter.

The Diversified Financials sector reported a 5.0% YoY decline in earnings despite a 12.8% QoQ increase.

The decline was largely driven by First Capital Holdings (CFVF), which recorded mark-to-market losses on its financial assets as market yields moved higher amid heightened geopolitical tensions following the onset of the US-Iran conflict. CFVF reported a loss of Rs. 1.2 billion during the quarter, while GUAR and CINV also weighed on overall sector profitability.

In contrast, First Capital said several major financial companies recorded stronger earnings supported by net interest income expansion and loan book growth underpinned by higher vehicle imports and registrations.

The Retailing sector emerged as the strongest performer during the quarter, posting earnings growth of 404.6% YoY and 62.5% QoQ.

According to the report, a significant rise in vehicle imports during January-March 2026 supported higher vehicle sales, helping United Motors Lanka PLC increase earnings by 750.4% YoY to Rs. 2.1 billion from Rs. 248.8 million a year earlier.

Richard Pieris and Company PLC recorded earnings growth of 246.8% YoY to Rs. 2.6 billion, supported by the performance of its subsidiaries United Motors Lanka PLC and Plantation and Petroleum Resources Development Ltd., (PAP), alongside revenue growth exceeding 300% YoY.

Singer Sri Lanka PLC also contributed positively, recording earnings growth of 77.5% YoY alongside revenue growth of 47.4% YoY, driven by stronger demand for electronic appliances.

The Telecommunications sector also delivered a strong performance, with earnings rising 99.8% YoY and 26.9% QoQ.

Dialog Axiata PLC was the largest contributor, with earnings increasing 122.4% YoY and 50.5% QoQ alongside revenue growth of 9.0% YoY. First Capital attributed the improvement to subscriber growth, higher average revenue per user (ARPU) and cost efficiencies following the scaling down of its low-margin international wholesale business.

Sri Lanka Telecom PLC also recorded a strong quarter, with revenue increasing 10.6% YoY and earnings rising 53.3% YoY, supported by EBIT margin expansion.

First Capital noted that the Retailing, Telecommunications and Real Estate sectors each recorded underlying earnings growth exceeding 100% YoY.

The research firm said the divergence between reported and underlying earnings reflected the impact of several large one-off gains and losses recorded during the quarter. After adjusting for these items, corporate earnings growth remained positive across several sectors, particularly retailing, telecommunications and real estate.

Sri Lanka is soon to be shocked by another wave of rupee depreciation after mid-August this year unless the Government and monetary authorities do something proactively to avoid it. The necessary conditions have already been set for the crisis. The previous time (in May, 2026) the domestic conditions for rupee depreciation were set, perhaps unknowingly, by the Government and the Central Bank. This time, the necessary conditions have already been set by the Government and the Central Bank under the pressure of the IMF. Let me explain.

The Government issued an extraordinary Gazette notification on 15 May imposing a 50% surcharge on import duty on vehicles. The objective was to curb non-essential imports. On 18 May

the Gazette was amended for practical application reasons, but the broader objective remained the same. Just two days later, on 20 May

the Government issued a letter to the IMF stating that the imposition of the 50% surcharge was temporary, lasting only three months. The market, especially buyers of vehicles and importers, reacted quickly by postponing their intended purchase for another three months. This means that by the end of August, there would be unrealised accumulated demand for three months. Keep that in mind.

Why did the Government issue the said letter signed by the Minister of Finance, Anura Kumara Dissanayake and the Central Bank Governor Dr. Nandalal Weerasinghe. First, have a look at the letter shown below. This letter could be found in the last section of the IMF Country Report 26/111, May 2026.

The IMF Agreement contains a continuous performance criterion prohibiting the imposition or intensification of import restrictions. The Government violated it by imposing a 50% surcharge on vehicle imports through a Gazette notification dated 15 May 2026. This clearly constitutes an intensification of import restrictions. The IMF viewed this as a violation of the continuous performance criterion and immediately asked the Government to revoke the restrictions on vehicle imports. The Government agreed to do so after three months and requested a three-month waiver for non-observance of that particular continuous performance criterion.

This clearly indicates that the 50% surcharge imposed will be removed by mid-August. Given that there is an unrealised accumulated demand of three months as mentioned above, importers might be rushed into importing vehicles, and buyers’ demand might increase as vehicle prices have come down due to the removal of the surcharge. The resultant effect is that private credit growth might go up, negatively affecting the national current account and foreign exchange reserves. Then begins the rupee depreciation. The Central Bank might be willing to allow the rupee depreciation, thinking that a depreciated exchange value for the rupee would reduce car imports and stabilise the currency based on demand and supply.

Those who argue for a strict floating exchange rate believe that a floating exchange rate acts as an automatic stabiliser of the external sector, and that the value of a country’s currency is determined mainly by market demand and supply and is beneficial. This might be the theory that the Central Bank might adhere to when the next wave of currency depreciation occurs, possibly towards the end of August. The IMF will be jubilant for the observance of a continuous performance criterion on not imposing import restrictions.

The theory is good. But this will not work if the country’s private sector credit growth is excessive. Private credit growth was excessive in the last year, and in the first quarter of 2026. Private credit growth was above 20%. Under such circumstances, what could happen is that we will see significant exchange rate volatility, which can cause uncertainty for exporters, importers, investors, borrowers in foreign currency, and for the general public.

The solution is to set the necessary conditions for a floating exchange rate regime by containing rapid private credit growth. Rapid private credit growth was triggered by vehicle imports. The central bank increased interest rates, but the market did not respond. Increasing interest rates can slow private credit growth, but it is not always an effective brake if borrowers’ appetite for loans and liquidity in the banking system is high.

The IMF report itself suggests that private credit growth must be below 10% for the years 2025, 2026 and 2027. These are stabilisation benchmarks. Therefore, the prudent action for both the Government of Sri Lanka and the IMF is to extend the non-performance waiver on not imposing import restrictions until such time that Sri Lankan monetary authorities take control of private credit growth. If the country fails once again, the IMF fails too. But we, the people of Sri Lanka, cannot afford to fail again.

FORMER State Intelligence Service (SIS) Director detained for more than 100 days under the Prevention of Terrorism Act due to his alleged involvement with the devastating 2019 Easter Sunday terror attack. As Sallay’s health deteriorated after his refusal of food and water Three months into his detention, he was transferred to the ICU of the Colombo National Hospital.

The detention of the former Intelligence Chief has sparked intense and emotional sentiments, especially among nationalistic political forces. Politicians who appeal to nationalistic opinions have tried their best to galvanise public opinion against the treatment meted out to Sallay. Sympathisers of the beleaguered retired intelligence officer have accused the NPP Government of unfairly harassing Sallay to appease the leaders of the Catholic Church and achieve political mileage, while the Government has maintained that they are trying to deliver justice to the victims of the catastrophic tragedy.

Since the dreadful incident which took 270 precious human lives, numerous narratives have been disseminated as to who masterminded the brutal offensive against Christian Churches. Pro-Rajapaksa camps claim that had it not been for the breakdown of the intelligence and security apparatus as well as lapses and omissions by the defence establishment under the Yahapalana dispensation, the unfortunate incident could have been avoided. On the contrary, the anti-Rajapaksa camp opine that certain influential sections of the State Intelligence collaborated with the attackers to propel Gotabaya Rajapaksa’s presidency.

The detention of the former SIS Chief is directly tied to the testimony and evidence provided by witness Azad Maulana, a former insider and aide to ex-chief Minister of Eastern Province Sivanesathurai Chandrakanthan alias Pillayan. Maulana had told CID investigators that he helped arrange a meeting in 2018 between members of the extremist group linked to Zahran Hashim – the chief perpetrator of the Easter Sunday Attack – and Sallay. Also, in an interview with the British media network, he had alleged that Sallay had conveyed to him and the attackers that Rajapaksas needed a national security disaster to come into power. Did Gotabaya really need such a crisis-type situation to secure the presidency in 2019?

Well before 2019, the Yahapalana fiasco of Maithripala Sirisena had become highly unpopular due to lack of cohesion and disagreements between the then President and Prime Minister. No meaningful policy reforms could be realised under the Sirisena-Wickremesinghe combination due to the internal conflicts. On the other hand, in the run up to the 2019 Presidential Election, the former president who resigned in 2022 was perceived as a go-getter who got the job done, and he was making headway among voters through his well-organised Viyathmaga platform. It must also be recalled that the 2018 Local Government Election was won quite convincingly by the SLPP, about 14 months before the contentious terror incident. At the unprecedented local council election, the SLPP obtained 40% of the votes while the UPFA, which extended support to Gotabaya during the 2019 presidential poll, received 12%.Moreover, Gotabaya had a very low following among the Muslim community, and he was recognised as a Sinhalese Buddhist hardliner. Muslims were naturally suspicious of him because of his closeness to anti-Muslim Bodu Bala Sena movement. Hence, a radicalised Islamic extremist like Zahran and his followers undertaking a suicide terror attack to make a Sinhalese Buddhist hardliner president is a claim that appears politically and socially implausible. Meanwhile, Maulana’s credibility too is under a cloud as his second wife after the explosive Channel 4 documentary had lodged a complaint at Saindamardu Police that the former married her under a false name.

Ultimately, determining whether Sallay is culpable or a scapegoat depends on the strength and credibility of evidence presented in a court of law. Investigations of this magnitude must remain insulated from political pressures and guided solely by facts. For the families of the victims, justice must not be reduced to competing political narratives. It must be rooted in truth, accountability, and due process.

The Cabinet on Monday approved the establishment of a special committee to address illegal land acquisitions, unauthorised coastal developments and longstanding land administration issues in the Eastern Province, Cabinet Spokesperson and Minister Dr. Nalinda Jayatissa said yesterday.

The decision follows concerns over what the Government described as a series of political, economic and administrative problems in the province arising from the misuse of state power, political patronage, illegal land grabbing and unauthorised construction activities along the eastern coastline.

Announcing Cabinet decisions, Dr. Jayatissa said the proposal had been submitted by President Anura Kumara Dissanayake with the objective of finding permanent solutions to land-related disputes, strengthening institutional coordination and enabling legal action against unlawful activities.

Accordingly, Cabinet approved the appointment of a committee titled ‘Protecting Eastern Province Lands’ under the chairmanship of former Southern Province Land Commissioner and current Southern Province Local Government Commissioner Senaka Palliyaguruge, with representatives from relevant state institutions.

The Government said illegal land acquisitions and unauthorised coastal developments have contributed to environmental degradation and accelerated soil erosion along large sections of the eastern coastline.

Cabinet also approved the establishment of a special unit headed by a Deputy Inspector General of Police and the granting of full powers to the security forces to prevent unauthorised land acquisitions and land reclamation activities allegedly carried out using political influence.

As part of the initiative, the Government will also take back lands allocated by the Sri Lanka Mahaweli Authority more than five years ago where no development projects have been implemented.

Those lands will subsequently be handed over to Divisional Secretaries under a formal program to support local development activities.

The Cabinet paper further noted that, despite 16 years having passed since the end of the civil war, the absence of a comprehensive resettlement program for displaced persons and inconsistencies in administrative structures have continued to affect development activities in the province and have implications for national security.

Among the other measures approved was the preparation of a formal plan to promote tourism along the eastern coastline while safeguarding coastal ecosystems.

Cabinet also approved the formulation of a mechanism to ensure that Government officials enforce laws impartially and transparently in relation to hotel operations and tourism-related developments along the eastern coast.

The Government said the measures are intended to address longstanding governance and land management issues in the Eastern Province while supporting sustainable development and environmental protection.