Dr. Syed Mehboob

Senior Economic and Political Analyst

Pakistan and Sri Lanka are very close friends and their friendship is based on mutual trust both countries faced similar challenges like fighting against terrorism, striving for the economic well-being of their people, and waging war against poverty, illiteracy, and extremism. Both countries are promoting tolerance, interfaith dialogue, women empowerment, resource and skills sharing, and human development. Pakistan and Sri Lanka have similarities in views on important regional and international issues and enjoy a rich tradition of close collaboration in multilateral fora. Following the diplomatic relations in 1948, the enduring bilateral friendship between the two countries fostered by mutually rewarding cooperation has grown in strength and subsistence through the decades in diverse areas, particularly in the political, economic, social, security and defense, and cultural fields for the mutual benefits of the people of both countries.

Sri Lanka and Pakistan have a formidable relationship based on mutual trust and confidence. This closeness is reflected at many levels such as bilateral trade, joint diplomatic initiatives, friendly competitive sports, and citizen-to-citizen camaraderie. The relations between the people of Pakistan and Sri Lanka date back to the pre-Islamic era. Taxila is a reminder of that period. Pali, the language in which the cannon of Theravada Buddhist was presented in Sri Lanka was spoken in the areas now Pakistan. The Gandhara civilization with which Sri Lanka has strong religious relations existed in what is now Northern Pakistan. The relations further expanded in 1948 and in 2011 when Pakistan presented Buddhist relics to Sri Lanka.

Bilateral trade is still far below even though both countries signed FTA on 1st August 2002 about twenty years before but it is below US$ 500 million.

Pakistan Sri Lanka Trade Statistics

Year Export $ million Import $ million Total Trade $ million Balance of Trade $ million Total Export of Pakistan $ billion % share in Pakistani Export Total Imports of Pakistan $ billion $ share in Pakistani imports
2017 269.3 103.5 372.8 165.8 21.91 1.2 57.52 0.2
2018 356.8 105.4 462.1 251.4 23.78 1.5 60.39 0.2
2019 323.9 64.9 388.8 258.9 23.82 1.4 50.51 0.1
2020 253.8 71.3 325.2 182.5 22.45 1.1 45.84 0.2
2021 349.5 74 423.5 275.5 28.88 1.2 73.11 0.1
2022 368.7 74.4 443.0 294.3 31.17 1.2 71.10 0.1
2023 302.9 48.6 351.5 254.4 28.49 11.1 50.53 0.1


Sri Lanka was the first country with which Pakistan signed a free trade agreement. Pakistan Sri Lanka Free Trade Agreement (FTA) was signed in August 2002 and came into effect on June 12, 2005, granting favorable concessions to top exports of Pakistan including cement and cotton. As a result, trade volume doubled from US$ 212 million in 2005 to around $ 400 million in 2017. Pakistan and Sri Lanka can further enhance their bilateral trade up to $ 2 billion if serious efforts are made to implement the Free Trade Agreement. Before Covid 19, Pakistan organized a “Single Country Exhibition” in January 2018 in Sri Lanka. Both countries agreed to achieve zero tariffs on a range of products in the long run. In this regard, Pakistan offered 100% concessions on 206 products while Sri Lanka offered immediate concessions on 102 products.


Summary of Pakistan Sri Lanka Free Trade Agreement ( FTA)

Tariff Reduction Pakistan Sri Lanka
100% immediate concession 206 items 102 items
Tariff phasing out period 3 years 5 years
Sensitive list 540 607 ( amended in 2013)
Rule of origin Direct Value Addition (DVA) is 35% of FOB value. If parts of an input originate from

a contracting country, the minimum aggregate content must be 35% with a minimum

domestic input content being 25%.


Both countries fought terrorism and faced harsh economic conditions therefore both countries need to enhance efforts to increase bilateral trade. The single-country exhibition, Sri Lanka Pakistan Joint Chamber of Commerce, and exchangeof trade delegations might be the better solution in this regard.

The Pakistani tourism industry can get a major boost if a comprehensive tourist-focused strategy is put in motion and one, prime sector is the Buddhist tourist sector. Buddhists from all over the world, including millions of Sri Lankan Buddhists, visit or desire to visit Pakistan to see and pray at Buddhist relics and sites such as Textla, Gandhara, and Harappa. Pakistan can learn a lot from Sri Lankan tourism development. Also, there is a suggestion that a Ceylon Tea Centre be established in Karachi to promote Sri Lankan tea.

Remittances and tourism are the two largest sources of foreign exchange earnings for the Sri Lankan economy after exports. Sri Lanka is restructuring its economic policies, introducing transparency in government dealings, and endeavoring to bring peace and tranquility to the country.  By taking the bull by its horns, the government is focused on good governance and a determined sense of direction for the well-being and prosperity of the citizens.

Sri Lanka Economy

Population                              : 22.16 million

GDP Nominal US$                 : 84.4 billion ( 2023)

GDP PPP US$                        : 321.98 billion ( 2023)


GDP Growth

year % growth
2020-21 -3.5
2021-22 3.3
2022-23 -8.7


GDP per Capita US$             : 3,130 Nominal ( 2023)

                                                : 14,230 PPP (2023)

GDP by sector

Sector % of GDP
Agriculture 7.9
Industry 25.3
Services 60.6


Exports: US$ 14.94 billion (2023)

Export goods: Textile and  Apparel, Tea and spices, It services, rubber

Export Partners

Country % of Exports
USA 25.29
UK 9.18
India 6.09
Germany 5.75

Imports: US$ 16.8 billion (2023)

Import Partners

Country % Total imports
China 22.96
India 19.30
UAE 5.57
Singapore 3.96



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