Trade Relationship Reaches $1.1 Billion

Strong Bilateral Non-Oil Trade

Recent reports indicate that the bilateral non-oil trade between the UAE and Sri Lanka has surged to an impressive $1.1 billion in 2025, marking a growth of 5.2% from the previous year. This statistic has been highlighted by Thani Al Zeyoudi, the UAE’s Minister of State for Foreign Trade, who emphasized that the UAE ranks among Sri Lanka’s top four trading partners. The UAE alone accounts for approximately 5.2% of Sri Lanka’s total foreign trade, underscoring its significance in the island nation’s economy.

Despite acknowledging that 2026 may present its share of challenges, Al Zeyoudi optimistically noted that there remains “considerable scope for rebooting our cross-border exchange.” The UAE’s well-established market already offers a broad range of opportunities for Sri Lankan exports, particularly in the sectors of garments and agricultural products. Furthermore, the UAE’s robust logistics network facilitates Sri Lankan exporters in accessing international markets.

Expanding Opportunities in Food Security

Food security has emerged as another promising area for collaboration between Sri Lanka and the UAE. Sri Lanka is actively seeking investments from UAE companies focused on agricultural production, allowing them to cultivate food in Sri Lanka and export the produce back to the Emirates. Alexi Gunasekera, Consul General of Sri Lanka to Dubai and the Northern Emirates, revealed that discussions with potential investors regarding this model had already begun.

In a recent meeting, investors expressed keen interest in leveraging Sri Lanka’s agricultural capabilities to bolster UAE food security. “They are willing to grow and cultivate in Sri Lanka, agricultural production, and export back to the UAE,” Gunasekera stated, highlighting a strategic partnership that not only supports UAE’s food needs but also creates significant economic opportunities for Sri Lanka.

This proposal is aligned with Sri Lanka’s broader objective of diversifying its trade offerings beyond traditional products, which largely include apparel and tea. Gunasekera emphasized, “We want to diversify our exports,” reflecting a shift towards a more varied economic strategy.

Focus on Technology and Pharmaceuticals

In addition to agriculture, the Sri Lankan government is aiming to attract UAE investment in technology and pharmaceuticals. Gunasekera articulated the potential for technology firms to establish operations in Sri Lanka while maintaining a dual presence in the UAE. This approach provides access to both markets and enables Sri Lankan businesses to engage more comprehensively in global value chains.

Pharmaceutical manufacturing is another sector ripe for investment, particularly given that Sri Lanka currently imports about 85% of its pharmaceuticals. Gunasekera noted the pressing need for local production capacities, suggesting that investments in this sector could significantly reduce dependency on foreign supplies. “Pharmaceuticals, we are looking at investment to Sri Lanka,” he remarked, showcasing the urgency for a more self-reliant approach.

Moreover, opportunities in technology transfer and participation in global automotive and pharmaceutical value chains were identified as key avenues that could yield dual benefits for both nations.

Investment Safeguards to Encourage Confidence

To create a conducive environment for foreign investment, both nations’ officials are keen on establishing stronger frameworks. Al Zeyoudi referred to Sri Lanka’s 2024 Investment Promotion Act and the recently signed bilateral investment treaty of February 2025. According to him, these measures lay the groundwork for expanding investment pathways and ensuring the protection of foreign investments.

Gunasekera underscored that potential investors frequently inquire about the security of their investments, specifically regarding profit repatriation and the overall stability of the economic and political climate. “The main thing is they ask, if I invest in Sri Lanka, whether I can repatriate my profit back to the UAE without any problem,” he shared, underlining the importance of building confidence among investors. Factors like investment protection agreements, government stability, and a commitment to anti-corruption were highlighted as crucial considerations.

Boosting Tourism from the UAE

Beyond trade and investment, tourism is another promising sector where Sri Lanka sees potential for expansion, especially among Emirati travelers. Gunasekera noted that the current number of Emirati visitors is around 5,000, and the goals are set higher to increase this figure substantially. The focus will largely be on attracting niche markets, including business events and destination weddings.

Notably, some recent weddings in Sri Lanka hosted large parties, with guest counts reaching up to 600 and extravagant budgets of $1 million to $2 million. “These high-value events present a significant opportunity for tourism,” he pointed out, hinting at the potential for attracting wealthy visitors.

Promoting Sri Lanka within the UAE context opens doors not only to Emiratis but also to the diverse range of nationalities residing in the Emirates, thus broadening the tourism base.

Prospects for Increased Trade

Looking ahead, Gunasekera is optimistic about the potential for deeper economic agreements between Sri Lanka and the UAE. He expressed confidence that measures such as the existing investment protection and promotion agreement, coupled with ongoing discussions about a broader economic partnership, will pave the way for enhanced bilateral trade.

“Everything is in place. Trade will increase by two, three folds,” he asserted, emphasizing the importance of increased official and business delegations traveling between both countries. Additionally, he pointed to the significant people-to-people connections, with around 250,000 Sri Lankans currently residing and working in the UAE, strengthening ties between the two nations.

In summary, the burgeoning trade relationship between the UAE and Sri Lanka signals a positive trajectory, bolstered by mutual interests in agriculture, technology, and tourism, along with concerted efforts to establish a robust investment framework.