By Dhananath Fernando
Originally appeared on The Morning
Sri Lanka has recorded an impressive export performance in September 2026. According to the Export Development Board (EDB), our total exports increased by 17.23% compared to September 2025, reaching $ 1.69 billion. Merchandise exports increased by 21.66%, while services exports grew by 0.67%.
These are encouraging numbers, and we should appreciate the entrepreneurs and businesses behind this performance. However, when we look beyond September, the picture is somewhat different.
During the first nine months of 2026, our total exports increased by only 5.04% compared to the same period last year. This raises an important question. Is September an exceptionally good month, or are we seeing a genuine improvement in our export competitiveness?
There is another question we need to answer. How much of this growth came from exporting larger quantities, and how much came from higher prices? Export earnings can increase even without producing or selling more. The available headline data does not provide sufficient information to separate these effects across all sectors.
These distinctions matter because our challenge is not recording one exceptional month. Our challenge is sustaining export growth for several years.
The Government has set a target of $ 36 billion in annual exports by 2030. In 2025, Sri Lanka earned approximately $ 17.25 billion from merchandise and services exports. To achieve the 2030 target, exports need to grow by approximately 16% annually over five years.
If we continue at the current nine-month growth rate of approximately 5% annually, we will reach the $ 36 billion target only around 2041. That is about 11 years later than planned.
The difference between 5% and 16% growth may appear small when written as percentages. But economically, it requires a completely different approach.
Where is the growth coming from?
The composition of our exports provides some interesting insights.
During the first nine months of 2026, apparel and textile exports declined by 5.68%, representing a reduction of approximately $ 228 million compared to the previous year. Tea exports declined by 6.83%, a reduction of approximately $ 79 million.
These are two of Sri Lanka’s traditional export industries that have contributed significantly to employment and foreign exchange earnings for decades.
Interestingly, some other sectors have performed exceptionally well.
Electrical and electronic components recorded growth of 61.05%, generating approximately $ 193 million in additional export earnings. Spices, essential oils, and related products grew by 30.53%, adding approximately $ 101 million.
Within electronics, insulated wires and cables recorded particularly strong growth. Processed food and beverages also performed well, recording growth of 20.90%.
What can we learn from these numbers? First, our traditional export industries are facing challenges, although they remain extremely important. Second, opportunities are emerging in sectors that have not necessarily received the same level of attention in our industrial policy discussions.
This is an important lesson for policymakers. Entrepreneurs continuously identify opportunities in global markets. Some products become competitive while others face challenges. Global demand changes, technology changes, and production moves between countries.
The Government’s responsibility is not necessarily to predict which industry will become the next success story and provide special privileges to that industry. Its primary responsibility should be to remove the barriers that prevent entrepreneurs from responding to these opportunities.
Land and capital: Two connected problems
One of the biggest challenges faced by businesses looking to expand is access to land.
Sri Lanka has significant restrictions on land ownership, transfer, and utilisation. Entrepreneurs sometimes struggle to obtain suitable land for industrial expansion. Where land is available through Government arrangements, businesses may face lengthy approval processes and restrictions on how it can be used.
This creates another problem: access to capital. A business with secure, transferable land rights can potentially use that property as collateral to raise financing. When ownership and transfer rights are restricted, the ability to unlock capital is also restricted.
Accelerating land titling, improving the land registry, and allowing more land to enter productive use can help address both problems.
Industrial zones have a role, but they need not always be developed and operated by the Government. Private investors should also be allowed to develop industrial parks under clear rules.
The objective should be to make land available through transparent, market-based mechanisms rather than depending on discretionary approvals.
Exports cannot grow without imports
Another fundamental reform is Customs modernisation. Sri Lanka still operates under a Customs Ordinance originating in 1869, although it has been amended many times.
We cannot expect an export sector to grow rapidly while maintaining unnecessary delays, complicated procedures, and uncertainty in clearing goods.
An important point often overlooked in public discussions is that exporters are also importers. An apparel exporter needs imported fabric and accessories. An electronics manufacturer needs components. Even agricultural exporters depend on imported machinery, packaging, and technology.
Making imports expensive or complicated ultimately makes our exports less competitive. Customs reforms should focus on simplified procedures, digital systems, risk-based inspections, and predictable clearance times. We also need stronger accountability for unnecessary delays.
The Government’s National Tariff Policy and the proposed removal of para-tariffs, including cess and the Ports and Airports Development Levy, are steps in the right direction.
However, these reforms must be implemented consistently. Protecting selected industries through import restrictions often comes at the expense of other businesses, including exporters.
Our neighbours are important markets
There is another interesting development in the export numbers.
During the first nine months of 2026, our merchandise exports to the United States increased by only 0.05%, although September recorded growth of approximately 18%. Meanwhile, exports to India increased by 12.3% during the first nine months. India has now become our second-largest single-country export destination.
This should encourage us to think more seriously about regional economic integration. Sri Lanka is located close to some of the world’s largest and fastest-growing markets. Yet we have been slow to take full advantage of this geographical position.
We should accelerate negotiations on the Economic and Technology Cooperation Agreement (ETCA) with India and pursue opportunities for deeper integration with Asian markets, including through the Regional Comprehensive Economic Partnership (RCEP).
Trade agreements alone will not increase exports. Businesses must also be able to access land, finance, technology, skilled workers, and efficient logistics.
However, without greater market access, even our most competitive entrepreneurs will face unnecessary limitations.
The real celebration
Sri Lanka’s September export performance deserves recognition. But we should not confuse a successful month with a successful export strategy.
Achieving $ 36 billion in exports requires much more than organising trade exhibitions, announcing targets, or identifying industries that deserve Government support. It requires difficult economic reforms.
We need better land markets, modern Customs, lower trade barriers, stronger competition, efficient infrastructure, and closer integration with global supply chains.
These reforms are not always politically attractive. Their benefits may also take time to become visible. But they are essential if we want entrepreneurs to invest, expand production, and compete internationally.
Our exporters have demonstrated that they can identify opportunities even under difficult conditions. The question is whether our economic policies will allow them to take advantage of those opportunities.
Celebrating 17% export growth in one month is easy. Creating an economy capable of sustaining that growth is the real challenge.
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