Economics

What Are The Biggest Industries In Sri Lanka?

Rubber, tea, and coconut processing industries flourish in Sri Lanka.

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Sri Lanka is a South Asian island state that is situated in the Indian Ocean. The island state is separated from the Indian sub-continent by the Palk Strait and Mannar Gulf. Sri Lanka is the second largest island in the Indian Ocean occupying an area of about 25,330sq miles and has a population of over 21,670,000 people. The island state became a plantation economy known for the production and exportation of Ceylon tea, rubber, and cinnamon during the nineteenth and twentieth centuries. Sri Lanka’s economy experienced a growth of roughly 6.4% from 2003 to 2012. The country attained its MDG (Millennium Development Goal) of reducing the poverty level by 50%. Most of the primary industries in Sri Lanka rely on the country's natural resources and include agriculture, textile, apparel, tea export, and tourism.

Tourism

Tourism is one of Sri Lanka’s primary sectors which have been growing rapidly. The island has been a popular attraction for foreign visitors for centuries. Marco Polo identified the country as the world’s best island for its size. Fa-Hien, a Chinese traveler, visited the island during the fourth century. The government’s initiative to develop the tourism sector dates back to 1937 when they established the Ceylon Tourism Bureau (Sri Lanka was previously known as Ceylon). The Bureau was closed in 1939 because of the Second World War and then reopened after Sri Lanka gained their independence. Currently, the main tourist attractions in the country include its beautiful beaches, resorts, and ancient heritage sites. The precious stones like sapphires and rubies that are mined in Ratnapura have also served as a significant tourist attraction in Sri Lanka.

The civil war and the 2004-tsunami might have affected the tourism industry, but the number of visitors started growing again in 2008. After the civil war ended the number of tourist arrivals grew from 448,000 (2009) to 1,798,380 (2015). A huge number of the short term visitors to Sri Lanka in 2018 came from India (424,887), China (265,965), and the United Kingdom (254,176). Domestic tourism has also grown with over 6 million locals touring the country. The main reasons for the growth in domestic tourism include sightseeing, study works, family holiday, and pilgrimage.

Tea Industry

Tea production accounted for 2% of the country’s GDP in 2013 after contributing about $1.5 billion. Tea is one of Sri Lanka’s primary source of foreign exchange. The tea industry employs, indirectly or directly, over a million people with over 215,338 individuals working in the tea estates and plantations. Small scale tea production in the country has employed thousands of people while providing a livelihood for tens of thousands of families. Sri Lanka became the leading tea exporter in 1995 with a 23% market share. Today is the world's fourth largest exporter of tea with 349,699 tonnes.

Tea was introduced in the island in 1867 by a British planter known as James Taylor. Taylor smuggled the tea plant from China and planted it in the Peradeniya. The cool temperature, humidity, and rainfall in the central highlands provide a unique climate for high-quality tea production. Tea farming in the low-elevation areas like Ratnapura, Galle, and Matara districts that have a warm temperature and high rainfall have high astringent levels. Sri Lanka is one of the states which export fair trade tea to the United Kingdom and other countries.

Mining Industry

The gemstone industry in Sri Lanka has a colorful and long history with Marco Polo claiming that the region had the best amethysts, topazes, and sapphires on earth. Over 25% of the country’s area is potentially gem-bearing with some residual deposits found in the flood plains of the island’s streams and rivers. Sri Lanka is famous for producing various gemstones including tourmaline, spinel, ruby, corundum, and chrysoberyl among others. Sri Lanka is the world’s top producer of Ceylon blue-sapphire. The best gemstone mining places in the country include Ratnapura, Okkampitiya, Moneragala, Kamburupitiya, Elahera, and Balangoda. Sri Lanka also produces various industrial minerals like dolomite, quartz, phosphate rock, limonite, graphite, feldspar, kaolin, ball clay, mica, limestone, and zircon among others. The most crucial non-ferrous mineral reserve in the country is the Pulmoddal beach sand deposit. The Pulmoddal beach sand is the richest sand deposit on earth with about 60% heavy metal concentrations and other minerals like titanium.

Coconut Industry

One of Sri Lanka’s main plantation crops is coconut. Coconut accounts for over 12% of the country’s total agricultural production. Sri Lanka produces over 2,500 million coconuts annually with over 1,525 sq miles of its land area being used for coconut farming. Sri Lanka is quite famous in the global market for brown fiber, desiccated coconut, and copra. The country uses the drum system to extract pure fiber from coconuts. Sri Lanka is the leading exporters of brown fiber. The coconut industry earned Sri Lanka $598.19 million in 2017.

Natural Rubber Industry

The history of the rubber industry in Sri Lanka dates back to 1876 when 1,919 rubber seedlings were planted in the Henerathgoda Botanical Gardens. The natural rubber industry has flourished since then to become the third biggest export earner in the country. The rubber industry provides direct employment to over 300,000 Sri Lankans. The traditional rubber growing districts in Sri Lanka include Kegalle, Ratnapura, Matara, Kandy, Kalutara, and Colombo among others. All rubber trees have an economic life of approximately 30 years and harvesting starts at roughly 7 years. Sri Lanka was ranked sixth among all the global rubber producers in 2014, with the state exporting all kinds of natural rubber including scrap crepe and ribbed-smoked sheet rubber among others.

Other Industries

The apparel industry exports mainly to Europe and the United States. There are over 900 apparel and textile factories in Sri Lanka serving various international companies including Tommy Hilfiger, Liz Claiborne, and Victoria’s Secret. The textile and apparel industry’s export accounted for over 44% of the country’s merchandise exported in 2017.

The agricultural sector in Sri Lanka produces grain coconut and rice for both domestic consumption and export purposes. Over 31.8% of the Sri Lankans are engaged in numerous agricultural activities. The agricultural sector together with fisheries and forestry accounted for 18% of Sri Lanka’s GDP in 2014. Rice is the most crucial plant in the state which occupies 37% of the cultivated land. Sri Lanka produces 2.7 million tons of rice per year which satisfies 95% of domestic consumption.

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