Previously, Sri Lanka pursued a policy of import substitution which relied upon stringent licensing Procedures as part of widespread Government Regulation of the economy. Since 1977 there has been a change in political direction and economic policy. A programme of liberalization was instituted which centred on the deregulation of trade in order to encourage development of an exchange economy. Import controls were overhauled and the number of items subject to restrictions was first reduced to 360 in 1977. Thereafter, items have been subject to licensing or un licensing from time to time. There are now 209 items subject to licensing.

Import regulations derive their authority from the Imports and Exports (Control) Act, No. 1 of 1969 and are issued by the Ministry of Trade and Shipping. The primary regulation is usually referred to as “Special Import Licence (SIL) No. 1 of 1977”.

Import Approval
Import regulations are administered by the Department of Import and Export Control and approval for items requiring licences rests ultimately with the Department’s Controller.
To obtain a licence, importers should apply for an indent form in triplicate and three copies of the pro-forma invoice.

Generally, it is required that imports be negotiated against a Letter of Credit (L/C) for shipment within six months. Imports into an Export Processing Zone (EPZ) are exempt from this L/C requirement. Export-oriented projects may use Documents against Acceptance (D/A) terms under which the supplier usually gives three months credit, subject to prior approval from the Exchange Control Department.

Those allowed to import in commercial quantities are restricted to the following four categories: sole traders who are Sri Lanka citizens; firms or on piece goods. Special regulations apply to dairy products.

Those allowed to import in Commercial quantities are restricted to the following four categories: sole traders who are Sri Lanka citizens; firms or partnerships wholly owned locally; public companies incorporated in Sri Lanka with local majority ownership and control: and registered importers and industrialists.

Eight product items were brought under mandatory quality inspection on 1 June 1986 by a measure that applies to both locally manufactured and imported products of the kinds stipulated. To enforce the directions for imports and local trade, the Sri Lanka Standards Institution has initiated a scheme of sampling and inspection at the wharf, jointly with Customs officials.

Licensing, Quotas and prohibitions
A number of imported items still require licenses. The items come under four main groupings: firearms, explosives an chemicals having health and security implications; agricultural goods such as rice, wheat, potatoes, bombay onions, masoor dhal and dried chillies handled by government agencies; manufacture goods produced by protected industries and luxury commodity goods such as Jewellery, cameras and motor vehicles.


An important part of the Government’s trade liberalization policy has been ration rationalization of the tariff structure.

When the Presidential Tariff Commission (PTC) was established in 1980, existing levels of protection were reviewed and changed for over 2,000 tariffs. Duties had previously ranges from zero for some foodstuffs to 500 per cent on luxury items. This range of duties was replaced by a series of tariff bands which lowered many duties and raised others, so as to minimize the economic cost of protecting established domestic industries, while maintaining important sources of government revenue.

Customs Duties
Goods are subject to specific duties on a weight basis. Dutiable weight is calculated by gross or net weight and deducting a tare allowance for the container.

Taxes And Surcharges
When imports have a customs duty of 50 per cent or more they are then liable for a surcharge of 10 per cent. This is known as the “EDB Cess” which funds the activities of the Export Development Board.