Export basket widening - the scale base under it is not
Originally published in Sunday Observer on 2026-08-09.
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Sri Lanka's first half export figures landed on July 22, and one line inside them deserved more attention than the headline. Total exports reached US$9.01 billion, up 8 percent year-on-year. Further down the table, exports of electrical and electronic components rose 123.48 percent to US$450.2 million. In June alone the category grew more than fourfold, led by insulated wires and cables, then pumps, engines and industrial equipment, from a base close to zero. The column is careful about that base. A number starting near zero produces spectacular percentages. But the direction is real and not isolated: apparel fell 6.07 percent over the half, tea 5.69 percent, and India passed the United Kingdom to become Sri Lanka's second largest market, up 36.16 percent to US$688.5 million. Regional supply chains are being redrawn around India and Southeast Asia, and component work moves to whoever supplies it reliably. Sri Lanka has been handed a small share of that work. The argument is that a wider export basket is not yet a deeper scale base. Component manufacturing at scale requires an upstream supplier base, testing and certification capacity, uninterrupted power for time-sensitive production, and a technical pipeline producing mid-level engineers in volume. Sri Lanka has fragments of each and a system of none. The trade deficit widened over the same six months because imports grew faster than exports, which is what an economy looks like when it captures assembly work without owning the layers above or below it. The predictable responses are promotional campaigns, duty concessions and calls for value addition. Each supports firms already exporting. A testing laboratory is not an incentive. A polytechnic pipeline is not a tax holiday. Singapore built Jurong and its polytechnics before attracting electronics multinationals. Sri Lanka has taken the order first; the foundation is still optional.
What I'd Revise Now
I led with electronics. I would now lead with India. A category growing 123 percent off a near-zero base is a genuine signal but a fragile one, and some of it is re-export and one-off contracts. A 36 percent increase into a market twenty times our size, sustained enough to displace the United Kingdom in the rankings, is the more durable structural fact. The electronics number was the more interesting line. The India number was the more important one, and I gave it a paragraph. The engineering talent constraint I named here as one requirement among four turned out to be the binding one. The labour depth data that emerged weeks later measured exactly this: firms in priority export sectors running at half the workforce they need, with attrition near 80 percent in specialised technical roles. I treated the pipeline as infrastructure to be built alongside the others. It is the gate. Certification remains the most underbuilt layer and the cheapest to address. Testing and calibration capacity requires no industrial zone, no decade and no multinational anchor, which makes it the item on this list least dependent on State sequencing.
Key Takeaways
- Electronics buyers purchase compliance first and price second; certification is the entry ticket, not a later upgrade
- Secure the credit facility before signing volume, because component contracts consume cash long before they pay
- Build one deep customer before three shallow ones; scale in components comes from being difficult to replace
- Budget technical training with the discipline applied to machinery; a mid-level engineer takes longer to build than a production line
- Design deliberately for India, where proximity is an advantage only when service levels match