2.0 The Economy

2.6 Honourable Speaker, we have offered many incentives to encourage imports competing industries such as cement, steel, tyres/rubber based products, agricultural/ tea industry machinery, equipment/ spare parts, power generation/transmission machinery and equipment, building material, furniture and boat/ship building. Similar encouragements have been extended to increase new investments in food processing, sugar and vegetable oil manufacturing, dairy and pharmaceutical products and to increase the production of renewable energy and coal power. Many of these activities have a potential to graduate to export markets in the medium term. The Customs tariffs that will come into force tonight will facilitate the expansion of such value creating and import competing industries. Quality standards will be enforced on imports and exports.

14.0 Lead Export Industries

14.1 Sri Lanka’s high value tea, apparel and handlooms and rubber products dominate country’s exports, employment and value chain activities. Our Government’s vision is to raise export earnings of these three industries to US$ 10 billion by 2016. In the case of apparel exports, our vision is to position Sri Lanka among the top ten high quality apparel manufacturing countries in the world by 2020. Therefore, in support of further innovation in this industry, triple deductions will be provided for research and innovation carried out within businesses, while recognizing the cost of purchasing international intellectual property rights and the cost of operations relating to such rights, for tax deduction. Royalty income will be made tax free for a period of 7 years. Higher value added tea exporters securing a price in excess of US$ 3 per kg over the average FOB price, who have established internationally reputed local brand names in packed form while using over 75 percent home grown tea, will be permitted to import any specialty tea free from restrictions to facilitate blending to meet market needs. High value tea and rubber product exports will be encouraged through increased cultivation of these crops and by maintaining a high level of CESS on primary commodity exports. Market access to Japan, India and China will be explored for these commodities through Bilateral Trade Arrangements, in view of the high trade deficit Sri Lanka runs with the three countries.