Sri Lanka’s Trade Relations with Pakistan
Trade and economic relations between Pakistan and Sri Lanka are solid and longstanding. Pakistan is the second largest trading partner of Sri Lanka in the SAARC region. Sri Lanka was the first country to sign a Free Trade Agreement with Pakistan. A substantial growth is seen in bilateral trade, particularly after implementation of the Pakistan–Sri Lanka Free Trade Agreement (PSFTA) in 2005.
- Sri Lanka’s Exports, Imports, Total Trade & Balance of Trade with Pakistan
Sri Lanka’s total exports to Pakistan have fluctuated over the past five years, peaking at US$ 91.9 million in 2021. Imports from Pakistan have also shown variability, with the trade balance consistently remaining in Pakistan’s favor during this period.
| Sri Lanka – Pakistan Trade Relations | |||||
| Description | 2020 | 2021 | 2022 | 2023 | 2024 |
| Exports | 74,522,156 | 91,883,759 | 79,509,680 | 74,690,891 | 76,307,524 |
| Imports | 324,913,545 | 394,110,842 | 361,553,951 | 323,154,547 | 456,511,962 |
| Balance of Trade | -250,391,389 | -302,227,083 | -282,044,271 | -248,463,656 | -380,204,438 |
| Total Trade | 399,435,701 | 485,994,601 | 441,063,631 | 397,845,438 | 532,819,486 |
2.Sri Lanka’s Exports to Pakistan
Pakistan was the 31st largest export market for Sri Lanka with a share of 0.6% in 2024. In 1977, Pakistan was Sri Lanka’s largest export market with a share of 8.67%. Sri Lanka’s major export items to Pakistan for the period 2020 to 2025 (up to February) are provided in the annexure.
3.Sri Lanka’s Imports from Pakistan
Pakistan was the 10th largest Import partner of Sri Lanka with a share of 2.4% in 2024. Sri Lanka’s major import items from Pakistan for the period 2020 to 2025 (up to February) are provided in the annexure.
4.Preferential Trade
The Pakistan–Sri Lanka Free Trade Agreement (PSFTA) was signed on 1st August 2002 and came into force on 12th June 2005, making it Sri Lanka’s second bilateral Free Trade Agreement. The PSFTA has made a moderate contribution to enhancing bilateral trade between the two countries.
In addition to the PSFTA, both Sri Lanka and Pakistan are also members of the South Asian Free Trade Area (SAFTA) and the SAARC Preferential Trading Arrangement (SAPTA).
5.Scope for further expansion of Sri Lanka’s Exports to Pakistan
Considering the growing demand in Pakistan and Sri Lanka’s supply capabilities, the following products have strong potential for further expansion in the Pakistani market.
-Black tea -Copra
-Vegetable products -Artificial staples
-Cinnamon, not crushed nor ground -Fresh coconuts
-Desiccated coconuts -Surgical gloves of vulcanized rubber
-Pepper, not crushed nor ground -Boards for electric control
-Nuts -Gloves with plastics/rubber, knitted or crocheted
-Solid/Cushion rubber tires -Food preparations
-Brassieres -Coconut fiber
-Mechanically made lace -Coconut oil
-Animal feed -Cloves
Further, Pakistan’s industries—particularly in steel, pharmaceuticals, plastics, sugar, and poultry—possess significant expertise and production capacity. These sectors present valuable opportunities for collaboration with Sri Lankan industries. By partnering with their Sri Lankan counterparts, Pakistani manufacturers can benefit from knowledge and technology exchange while also leveraging Sri Lanka’s market access preferences to expand exports to other regions, including South Asia, Southeast Asia, and the European Union.
Such collaboration would enable Pakistani businesses to tap into preferential trade arrangements available to Sri Lanka and enter new markets more effectively. Sri Lankan industrialists are encouraged to explore these synergies and pursue strategic partnerships with Pakistani industries for mutual growth.
—A TRQ of 10,000 MT for tea was granted to Sri Lanka, but utilization remains minimal. The challenge lies in meeting Rules of Origin (ROO). To address this, a draft Product Specific Rule (PSR), jointly developed by the Department of Commerce and Sri Lanka Tea Board, has been submitted to Pakistan for consideration.
—For Basmati rice, Pakistan offers a 6,000 MT annual quota, allocated by the Department (with Ministry oversight) to state and private entities. A rising interest among private importers has been observed in 2023 and 2024, indicating growing engagement with the PSFTA provisions.
The complete text of Pakistan Sri Lanka Free Trade the Agreement (PSFTA)
Download PSFTA
Annex ‘A’ – No-Concession List (Negative List) of Pakistan
Download List
Annex ‘B’ – No-Concession List (Negative List) of Sri Lanka
Download List
Annex ‘C’
Annex C deals with the rules of origin, which have to be complied with by the exporters of the two countries in order to qualify their products for preferential duty benefits. Based on the origin, the Rules of Origin categorize the products exported under the PSFTA into the following two main segments.
Products wholly produced or obtained in the territory of the exporting country such as agricultural, fishery and mineral products.
Products, not wholly produced or obtained in the territory of the exporting country (manufactured products).
All manufactured products falling under the category (b) above should contain a minimum of 35% of Domestic Value Addition of their FOB value in order to qualify for preferential treatments. Further, it is also necessary that all non-originating materials, used by the exporters change their HS codes at six-digit level against that of the final product as a result of the manufacturing process undertaken in the exporting country.
Cumulative Rules of Origin:
The Cumulative Rules of Origin encourages exporters to source their inputs from the other contracting country. However, the Domestic Value Addition in the territory of the exporting country shall not be less than 25% of the FOB value of the final product, while the aggregate value addition in both contracting parties should be minimum of 35% of the FOB value. In addition, the respective products should also conform to the Change of HS code requirement (at six digit level) as in the case of the manufactured goods, referred to under category (b) above.
Provision for Change of HS Codes at six-digit level, has made the Rules of Origin of the PSFTA more flexible, compared to most of the other Free Trade Agreements, which stipulate that Change of HS Code should take place at four digit level.
6.Pakistan’s Investment in Sri Lanka
●There is a Bilateral Investment Treaty between the two countries signed on 20th December 1997 which came into force on 1st May 2000.
●Double Taxation Avoidance Agreement between the two countries was signed on 05th October 1981.
●In addition, both Sri Lanka and Pakistan are covered by the SARRC Multilateral Treaty signed on 13th October 2005 which came into effect from 2011/2012 onwards.
●Sri Lanka has received around US$ 10 million cumulative FDI from Pakistan during 2005-2023 period.
Pakistan’s Investment in Sri Lanka (2005 – 2021)- Values in US$ Mn
Year Investment Change (%)
2005 0.15 –
2006 1.12 648.67
2007 0.53 -52.8
2008 1.29 143.96
2009 0.47 -63.73
2010 0.45 -3.41
2011 3.08 579.47
2012 0.32 -89.77
2013 0.33 5.71
2014 1.52 355.26
2015 – -100
2016 0.65 100
2017 0.05 -92.62
2018 – -100
2019 – –
2020 0.048 –
2021 0.119 147.92
2022 – –
2023 – –
2005 – 2023 10.13
Source: Board of Investment, Sri Lanka
Tourism
Number of tourist arrivals to Sri Lanka from Pakistan has gradually increased till 2017 except a
slight decline in 2016 and showed a declining trend after the year 2017.
Tourist Arrivals from Pakistan (2012 – 2022)
Year Tourists Arrivals Change (%)
2012 16,056 –
2013 25,336 57.80
2014 25,424 0.35
2015 32,300 27.05
2016 29,965 -7.23
2017 31,815 6.17
2018 19,116 -39.92
2019 14,655 -23.34
2020 3,065 -79.1
2021 7,520 145.35
2022 6,260 -16.76
2023 10,744 71.62
2024 13,451 25.19
Source: Sri Lanka Tourism Development Authority
Annex I – Sri Lanka’s Major Export Items to Pakistan (2020 –2025 (up to February) -Values
in US$ Mn.
Code Description 2020 2021 2022 2023 2024 2025 (Jan -Feb)
S.1002 Textile 13,205,865 14,150,151 6,883,557 10,733,029 14,124,129 2,290,829
S.0701 Betel Leaves 15,447,306 15,118,934 14,854,534 14,351,424 9,254,194 479,314
S.0301 Coconut Kernel Products 8,180,861 8,885,337 10,246,405 8,281,700 8,760,443 656,231
S.1899 Other Products of Base Metal 1,055,138 1,145,634 197,184 232,543 7,623,274 1,286,588
S.1901 Electrical & Electronic Products 2,703,469 6,425,653 8,604,645 8,260,040 7,293,902 787,410
S.1702 Articles of Stones 1,121,240 5,726,350 5,597,892 3,754,759 5,133,058 1,152,542
S.0201 Natural Rubber 9,812,836 8,757,958 9,452,775 7,129,698 4,863,031 1,467,758
S.0303 Coconut Shell Products 1,824,340 3,425,269 5,396,153 5,029,657 4,167,647 887,219
S.1601 Chemical Products 3,153,521 6,732,520 3,081,033 2,997,883 3,159,440 466,598
S.0203 Rubber Finished Products 3,707,187 4,375,680 3,195,316 2,064,731 1,657,004 141,580
S.0404 Nutmeg & Mace 364,321 309,617 489,888 753,397 1,471,426 187,101
S.1602 Plastic Products 528,395 1,096,796 657,329 791,469 1,129,879 165,483
S.0302 Coconut Fiber Products 1,320,199 1,669,538 1,410,735 892,294 997,753 142,914
S.0104 Instant Tea 249,378 407,165 748,882 593,116 903,283
S.2101 Petroleum Oils 980,630 4,524,675 2,429,677 3,333,851 757,343 576,640
S.1803 Nails, Screws, Bolts & Nuts of
Metal
20,832 278,775 1,113,812 1,349,158 656,187 53,272
S.1104 Rice, Cereals, Oil Seed and its
Products
435,601 518,446 423,454 387,001 634,239 106,845
S.1107 Animal Feed 941,471 732,614 288,047 590,872 546,103 60,628
S.1502 Stationery 459,819 349,889 456,867 537,985 538,509 116,488
S.1704 Other Mineral Products 217,430 415,212 363,204 139,816 342,915 69,337
S.1503 Other Paper & Paper Products 647,850 287,856 154,643 187,717 304,674 71,460
S.2299 Other Manufactures nes 40,915 171,460 179,726 233,635 276,552 86,517
5
S.1405 MDF & Fibre Boards 3,456,124 2,507,384 623,270 396,707 248,813
S.1001 Apparel 874,887 728,350 1,029,675 303,293 230,576 6,230
S.1103 Processed Food 76,875 8,478 285,107 195,688 146,845 5,427
S.2201 Toys, Games & Sport Requisites 28,083 88,100 134,727 134,384 139,196 20,342
S.1902 Transport Equipment & Parts 18,906 196,239 5,802 26,927 127,597
S.0703 Plants and Parts of Plants 64,720 112,685 177,021 179,476 111,779 22,732
S.0101 Tea Packets 57,006 99,406 125,782 70,843 108,096
Sub total 70,995,205 89,246,171 78,607,142 73,933,093 75,707,887 11,307,485
Total 3,526,951 2,637,588 902,538 757,798 599,637 59,587
Other 74,522,156 91,883,759 79,509,680 74,690,891 76,307,524 11,367,072
Source: Sri Lanka Export Development Board
Annex II – Sri Lanka’s Major Import Items from Pakistan (2020 –2025 (up to February) –
Values in US$ Mn.
Code Description 2020 2021 2022 2023 2024
2025 (Jan –
Feb)
S.1002 Textile 98,095,001 144,538,862 157,745,981 121,054,491 138,208,119 20,636,578
S.0503 Vegetables 50,207,977 53,809,688 41,519,341 41,849,582 93,719,339 11,529,459
S.1704 Other Mineral Products 100,220,132 108,558,866 62,262,487 46,534,837 71,510,227 10,970,998
S.1104 Rice, Cereals, Oil Seed and its
Products
8,565,925 9,789,150 21,332,045 45,388,229 58,599,006 3,816,873
S.1601 Chemical Products 30,945,314 37,584,549 36,844,306 40,029,154 45,512,567 6,145,038
S.1001 Apparel 6,165,624 7,126,677 8,455,952 6,787,194 10,808,973 3,109,883
S.1102 Sugars, Sugar Confectionery
& Bakery Products
154,251 301,458 195,014 3,050,861 7,432,648 7,133,861
S.1602 Plastic Products 7,798,184 10,826,182 9,126,396 3,842,253 6,367,847 864,409
S.1899 Other Products of Base Metal 8,418,460 7,112,091 3,228,083 3,684,182 5,843,227 807,308
S.0501 Fruits 2,311,738 3,899,721 2,636,842 2,249,574 5,520,513 3,480,173
S.1103 Processed Food 761,525 1,174,112 910,418 1,778,245 3,198,666 610,218
S.1503 Other Paper & Paper Products 1,607,259 742,358 1,794,073 619,104 1,395,942 178,293
S.1901 Electrical & Electronic
Products
669,025 1,213,432 756,477 406,398 1,282,283 188,506
S.1107 Animal Feed 658,488 656,508 9,157,196 865,175 1,271,401 345,641
S.0801 Edible Fish Products 2,643,554 378,260 123,215 322,830 1,126,232 337,712
S.1301 Raw Hides & Skins 1,704,405 1,431,309 2,337,013 1,056,254 777,548 330,752
S.2299 Other Manufactures nes 187,875 193,087 182,315 343,623 562,371 66,922
S.1101 Processed Vegetables, Fruits
& Juices
224,748 413,490 309,599 303,539 542,281 3
S.0703 Plants and Parts of Plants 590,704 790,294 334,741 446,345 531,667 57,405
S.0412 Condiments 946,534 747,792 341,058 394,560 530,172 73,551
S.2201 Toys, Games & Sport
Requisites
162,185 332,759 167,591 534,786 450,769 140,660
S.1304 Gloves, Mitts & Mittens of
Leather
5,451 8,102 14,306 117,020 408,643 139,473
S.0499 Other Spices and Spice
Mixtures
507,585 1,018,655 150,742 952,750 277,103
S.1805 Tools, Implements, Cutlery &
Parts
232,260 262,089 246,958 143,825 135,298 2,534
S.2204 Buttons, Studs, Fasteners &
Similar Products
64,490 205,013 410,475 27,874 118,588 8,216
Sub total 323,848,694 393,114,504 360,582,624 322,782,685 456,131,430 70,974,466
6
Balance 1,064,851 996,338 971,327 371,862 380,532 61,207
Total 324,913,545 394,110,842 361,553,951 323,154,547 456,511,962 71,035,673
Tariff Phasing out Schedule
The PDF of list is attached below
List of Potential Importable & Exportable products from Sri Lanka on Duty Free Basis
- List of importable products
- List of Exportable products
Exportable & Importable Products List
For more details on trade opportunities in Sri Lanka and the assistance on Pakistan-Sri Lanka Free Trade Agreement, please contact Consulate General of DSR of Sri Lanka’s Commercial Division: slcgkhi@yahoo.com, 021-35854024
Some of the PDFs related to Pakistan-SriLanka trade are attached below:
No Concession List of Pakistan