A recent meeting took place between the Sri Lanka Export Development Board (EDB) and European Commission consultants Paul Baker and Talal Rafi, focusing on the implications of the EU–India Free Trade Agreement (FTA) for Sri Lanka’s export industries.
Baker and Rafi were commissioned by the European Commission to evaluate how this significant trade agreement will affect Sri Lanka. Yohan Lawrence, Secretary General of the Joint Apparel Association Forum (JAAF), participated in the meeting, raising concerns about potential challenges facing Sri Lanka’s apparel sector once the FTA is implemented.
The negotiations for the EU–India FTA were finalized on January 27, 2026, and the agreement is anticipated to take effect after the necessary legal reviews, signatures, and ratification processes are complete.
Submit Your Press Release
Get your company news, announcements, launches, appointments and events in front of a wider audience.
This FTA is projected to enhance the competitiveness of Indian exports in the European market. Several key export sectors, such as apparel, marine products, leather and footwear, chemicals, plastics and rubber, sports equipment, toys, and gems and jewellery, are expected to benefit from significant tariff reductions, with numerous products gaining duty-free access upon the agreement’s activation.
Mangala Wijesinghe, Chairman of the EDB, highlighted the critical role of the European Union in Sri Lanka’s export economy, noting that the EU is the country’s second-largest export market after the United States, accounting for roughly 24% of Sri Lanka’s merchandise exports. He provided a comprehensive overview of how the EU–India FTA could affect Sri Lanka’s export landscape, identifying both challenges and opportunities for domestic exporters.
In 2025, Sri Lanka’s exports to EU countries saw robust growth, with notable increases in major markets such as Germany, Italy, the Netherlands, France, and Belgium compared to the previous year.
Wijesinghe emphasized the necessity of maintaining Sri Lanka’s preferential access to the EU market through the GSP+ scheme, especially as Indian products are expected to become more competitively priced following the FTA’s implementation. He underscored the importance of Sri Lanka adhering to the EU’s updated GSP framework to secure preferential access under the new agreement.
“We aim to establish Sri Lanka as a dependable, sustainable, and high-quality supplier in the global market while encouraging local businesses to focus on higher-value, differentiated products and enhance compliance with EU standards,” Wijesinghe stated, outlining some strategies the EDB plans to adopt to alleviate potential negative impacts from the FTA.
Paul Baker, the European Commission consultant and international trade economist, noted that economic forecasts and long-term models suggest that the EU–India FTA could significantly boost India’s exports to the EU while also increasing foreign direct investment in India.
He mentioned that although Indian products are likely to gain price competitiveness in the EU following tariff liberalization, the European Union’s growing focus on sustainability, environmental practices, traceability, and regulatory compliance will continue to create opportunities for exporters who can meet these criteria.
Baker encouraged Sri Lankan exporters to reevaluate their product and market strategies, enhance value addition, and strengthen compliance with the evolving EU sustainability and regulatory standards to maintain their competitive edge.
Yohan Lawrence and other apparel industry representatives expressed concerns regarding the FTA’s potential effects on Sri Lanka’s apparel exports to the EU. They specifically pointed out the importance of rules of origin and regional cumulation arrangements relating to fabrics and other materials sourced from India and subsequently utilized in garments produced in Sri Lanka for EU export under GSP+.
Industry representatives warned that any limitations on Sri Lankan apparel manufacturers’ access to cumulation arrangements involving Indian inputs could further diminish the local garment sector’s competitiveness at a time when Indian apparel exports are gaining better tariff access to the European market.
The EDB assured that the Government of Sri Lanka would engage with the European Union to establish suitable cumulation arrangements with India to protect Sri Lanka’s export competitiveness and promote greater regional supply chain integration.
At the meeting’s conclusion, the European Commission consultants expressed gratitude to the EDB and apparel industry representatives for their valuable insights. They indicated that the concerns raised during the discussions would be considered in the preparation of the final report to be submitted to the European Commission.
