Green and Digital Industrial Policy Advisory for Sri Lanka

Tulip provided expert advisory support to the International Trade Centre (ITC) to assist Sri Lankan government officials in developing a modernised industrial policy framework that integrates both green and digital dimensions. The engagement addressed a critical challenge for Sri Lanka as it seeks to strengthen its economy while positioning itself to benefit from the twin transitions reshaping global production and trade.

Industrial policy has returned to prominence across the global economy, with governments in both advanced and emerging economies deploying a range of instruments — including subsidies, tax incentives, trade preferences, public procurement rules, and regulatory standards — to shape the structure of their economies in ways that support climate goals and digital transformation. For a middle-income developing country like Sri Lanka, navigating this new landscape requires a clear-eyed assessment of where domestic comparative advantages lie, how global value chains are evolving, and how trade policy can support rather than constrain industrial development.

Tulip’s presentation covered several interconnected dimensions of a modernised industrial policy agenda for Sri Lanka. On the green dimension, the session examined how Sri Lanka can develop export sectors that are aligned with evolving international sustainability standards, including the EU’s Ecodesign for Sustainable Products Regulation (ESPR), carbon border measures, and supply chain due diligence requirements. It highlighted opportunities for Sri Lanka in sectors such as sustainable textiles, renewable energy components, and agri-food, and assessed how trade policy instruments — including preferential trade agreements, rules of origin, and mutual recognition arrangements — can support green industrial development.

On the digital dimension, the session examined how Sri Lanka can leverage digital technologies to improve the productivity and competitiveness of traditional sectors, develop a domestic digital services industry, and participate more effectively in global digital value chains. It addressed the interface between digital industrial policy and trade commitments, providing guidance on how Sri Lanka can develop a coherent digital economy strategy while managing the risks associated with premature regulatory liberalisation.

The engagement contributed to a broader ITC-supported dialogue on Sri Lanka’s economic reform agenda, helping to build policymakers’ capacity to develop and implement a more integrated and forward-looking approach to industrial and trade policy in the context of the green and digital transitions.