A key component of Sri Lanka ‘s efforts to encourage an export-oriented growth strategy was to create a climate conducive to attracting foreign direct investment (FDI). Institutional reforms in this regard have included the establishment of the Board of Investment of Sri Lanka (BOI) to administer an attractive incentive package for foreign investors, including access to Export Processing Zones (EPZs). FDI was seen as a key element in promoting export growth, supplementing scarce domestic capital, technology, and managerial skills, as well as a means of penetrating foreign export markets. Given increasing evidence of intra-industry and services investment linkages between Sri Lanka and its South Asian economic partners – most obviously that of India – this thematic area of study aims to analyse issues related to the investment climate for FDI. The areas of study include examining the linkages between trade and investment at the national level as well as assessing the potential for increasing intra-South Asian trade and investment flows, focusing in particular on important sectors such as textile and clothing (T&C) and automobile industries.