India’s foreign exchange reserves have reached a record US$785.7 billion. For Sri Lanka, however, the bigger question is not simply how much money India has in its reserves.
It is how much more Sri Lankan businesses can sell into the Indian market.
The Reserve Bank of India’s reserves rose by nearly US$45 billion in the week ending September 4, marking the 10th consecutive weekly increase. Reserves have risen by almost US$120 billion over the past 10 weeks, helped by strong capital inflows.
The latest increase was mainly driven by a US$47.4 billion rise in foreign currency assets, while the value of India’s gold reserves fell by about US$2.6 billion. The RBI said it had received US$136.3 billion through measures introduced since June to attract dollar inflows, including about US$127 billion from non-resident Indian deposits.
For Sri Lanka, the reserves are useful as a sign of India’s strong external financial position. But the real opportunity lies in the size of the Indian economy, its demand for imported goods and the market access already available to Sri Lankan exporters.
Speaking at an event at ITC Colombo marking 25 years of the India-Sri Lanka Free Trade Agreement, MP Dr. Harsha de Silva said “Sri Lanka should aspire to achieve economic growth rates similar to those recorded by Indian states such as Tamil Nadu, which he said have consistently maintained annual growth of 10% to 11%”.
Sri Lanka already has a foothold
Sri Lanka’s exports to India reached about US$1.04 billion in 2025, up 17.21% from the previous year, according to the Export Development Board.
India was Sri Lanka’s second-largest export market during the year.
But imports from India were much larger.
Sri Lanka imported about US$4.33 billion worth of goods from India in 2025. That left a merchandise trade gap of about US$3.3 billion in India’s favour.
That gap points to the bigger business question.
Can Sri Lanka increase exports to India instead of allowing the relationship to remain heavily weighted towards imports?
The trade agreement is already there
Sri Lankan companies do not have to start from zero.
The Indo-Sri Lanka Free Trade Agreement has been in operation for more than two decades. In 2025, Sri Lanka exported US$1.04 billion to India, with US$634.34 million, or about 61%, exported under the agreement.
That means market access already exists for a substantial part of the trade.
The problem is that having tariff concessions does not automatically create sales.
A company still needs a product that Indian buyers want, competitive pricing, the required standards and certifications, reliable supply and a way to reach customers across a market that is far larger than Sri Lanka.
What is Sri Lanka already selling?
The existing export data gives some clues.
Under the free trade agreement, Sri Lanka’s largest export to India in 2025 was prawn feed, worth about US$126.4 million. Nuts were worth US$70.6 million, while vegetable fats and oils reached US$50.3 million.
Other important exports included beverage and food cans, non-alcoholic beverages, processed fruit and nuts, waste and scrap, and apparel products.
This is important because it shows that the opportunity is not limited to traditional Sri Lankan products such as tea, spices or coconut.
Sri Lankan companies are already supplying industrial inputs, food products, packaging and manufactured goods to Indian buyers.
The next step is to identify where that success can be expanded.
Where could the next growth come from?
For exporters, the more useful question is not whether India is a big market.
Everyone already knows that.
The question is which products can Sri Lanka supply competitively and at scale.
That could mean expanding products already selling well in India. It could also mean moving into higher-value processed foods, industrial products, packaging, apparel and other manufactured goods where Sri Lankan companies already have production experience.
The Department of Commerce data also shows that the value of exports under the FTA has not followed a straight upward path. It was US$525.9 million in 2021, rose to US$560.1 million in 2022, fell to US$490.2 million in 2024 and then climbed to US$634.3 million in 2025.
That suggests there is room to grow, but also that access to India alone is not enough.
The bigger opportunity is beyond goods
The next stage of the relationship could also involve services, investment and business partnerships.
Sri Lankan companies looking at India do not have to think only about putting another container of goods on a ship.
Services, technology, tourism-related businesses, logistics, professional services and partnerships with Indian companies could all create additional links between the two economies.
This becomes particularly important as Sri Lanka looks for ways to increase foreign exchange earnings without relying only on traditional merchandise exports.
What would more exports mean for Sri Lanka?
The first benefit is straightforward: more export revenue.
A Sri Lankan company that sells more to Indian customers earns foreign exchange and expands its market beyond the relatively small domestic economy.
At the national level, stronger exports could also help reduce the trade imbalance with India.
But there is a wider benefit.
If companies see enough demand in India to invest in additional production capacity, the export opportunity can create more activity across manufacturing, agriculture, packaging, transport and logistics.
That is where a larger Indian market could matter to the wider economy.
India’s reserves are not the whole story
There is also an important distinction to make.
India’s US$785.7 billion reserve position does not mean Sri Lankan exports will automatically increase.
The latest rise in reserves was driven largely by capital inflows, including non-resident deposits and foreign currency assets. The RBI has also been intervening in the foreign exchange market to manage the rupee.
Last modified: September 13, 2026
