Dr Asanka Wijesinghe and Dr. Diana Barrowclough discuss the opportunities and challenges in Sri Lanka’s Potential in EV Battery and sustainable fabric manufacturing to harness trade competitiveness with green transition in production

December 12, 2024

Speaking about the role of industrial policy in positioning Sri Lanka in the EV and EV battery value chain, IPS Research Fellow Dr Wijesinghe pointed out that the country has a strong case for getting involved in the global manufacturing process of electric vehicle batteries. He emphasised given the existing technological know-how, natural resource availability, and growing global demand EV assembly and component production are ideal candidates to be targeted in an industrial policy. Such an industrial policy enables Sri Lanka to diversify into high-tech manufacturing.

“Countries which produce high-tech products have better economic growth and right now Sri Lanka exports many low-tech products,” he added.
Leveraging on the country’s high-purity graphite availability is promising, although the scale of the production will be a challenge to attract investors. Producing EV battery components like anodes for niche markets through sustainable mining and low-carbon intensive manufacturing is an option for the country.

As the industry experts pointed in the workshop, the battery cell production in the country is not realistic as Sri Lanka cannot match the leader’s cost. Under the scale disadvantage, lack of cost-competitiveness, and fierce global competition Sri Lanka may need to find a competitive business model in EV manufacturing value chain. Dr. Wijesinghe suggested that incentivizing EV assembly as the initial step is a viable approach. A dialogue between the industry and the government is necessary to choose the policy option in this regard. For example, the industry experts view that a VAT removal for the domestically assembled EVs will help the growth of the industry in the country.

Moving on to industrial policy and financing tools for sustainable fabric production in Sri Lanka, Dr. Diana Barrowclough, senior economist, UNCTAD said the European Union (EU), one of Sri Lanka’s key trading partners, was concerned about how microplastics could affect the future of trade with the country, as apparels were one of the EU’s main imports from Sri Lanka. She emphasised the need for a coordinated effort between industrial policy and innovative financial solutions to promote sustainable fabric production switching RMG manufacturing to a more sustainable process.

They made these remarks at the Workshop on Mobilising Resources for a Green New Deal: Opportunities for Sri Lanka in Green Manufacturing in the EV and Textile sectors. The workshop, hosted by IPS and UNCTAD, was held at its premises. It comprised two panel discussions: “Positioning Sri Lanka in EV Battery Value Chain: The Role of Industrial Policy” and “Sustainable Fabric Production in Sri Lanka: Leveraging Financing Tools and Industrial Policy for Green Growth.”

Mr Sasiranga de Silva from ThermalR Industries of Sri Lanka, Mr Hiroki Oi, Resident representative of Japan External Trade Organisation (JETRO), Dr Diana Barrowclough of the United Nations Trade and Development (UNCTAD), and Mr Sumith Siriwardena from the Joint Apparel Association Forum (Sustainability Initiative) took part in the panel discussions.