Asking consumers to stomach rising prices. The Minister of Science and Technology, Chrishantha Abeysena, recently urged the government and consumers to prioritise locally manufactured goods over cheaper imports. The proposal is neither new nor unique to Sri Lanka, and it is particularly popular among nationalists and socialists. But it reopens familiar questions about costs, competitiveness, and the political economy of subsidising domestic production in a weak fiscal environment.
“While it is possible to import goods similar to those produced locally at a cheaper cost, our focus should not be purely on financial gain,” the minister said during a discussion with local industrialists. His statement outlined several proposed interventions. “We must prioritise the purchase of locally made products whenever possible and ensure the survival and growth of those industries. This includes providing technical guidance to reduce production costs, introducing modern manufacturing technologies, supporting the creation of high-quality and attractively finished value-added products that can compete globally, and facilitating access to modern equipment,” Abeysena said.
The intentions may be commendable, but the economic logic remains uncertain. The minister did not address who would bear the burden of the higher prices that often accompany domestic preference policies. Consumers will likely absorb the cost through elevated retail prices. Taxpayers may also pay more if the government decides to subsidise local industry or introduce preferential procurement policies. These omissions are not trivial. Without a clear explanation of who pays, how much, and for how long, such plans risk being more rhetorical than practical.
The appeal to support local industry has deep political roots. Protectionist sentiment often rises during periods of economic strain. In Sri Lanka’s case, the desire to reduce dependence on imports is understandable. The country has faced foreign currency shortages, high inflation, and a sovereign default in recent years. Calls to produce locally rather than import can resonate widely in such a context. Yet, policy based on economic nationalism often underestimates the complexity of market dynamics and overestimates the state’s ability to guide industrial development.
Sri Lanka has tried this before. Past governments have introduced tariffs, import bans, and subsidies in an attempt to support local industries. The stated aim was usually to give domestic firms time to scale up, adopt new technologies, and eventually become globally competitive. In theory, such protection is temporary. In practice, it is often difficult to reverse. Firms that benefit from these policies quickly grow dependent on them.
Politicians, in turn, find it easier to maintain the support than to remove it. Protectionist policies become entrenched, and the cost of maintaining them accumulates over time. The result is a system where inefficient industries persist, and consumers pay more for products of lower quality. Rather than encouraging innovation or efficiency, long-term protectionism creates complacency. It rewards political connections and lobbying power rather than performance or productivity. Meanwhile, other parts of the economy suffer from resources flowing to underperforming sectors.
The effect on supply chains is also significant. In sectors where local substitutes are unavailable or inferior, a domestic preference policy can act as a hidden tax. Companies that purchase local inputs at higher costs often face reduced margins or must raise their prices: this affects everything from food to construction. The price of building materials, for example, remains high partly because of limited domestic competition and constrained import options. If constructing a toilet becomes disproportionately expensive, it signals deeper inefficiencies in the broader economy.
There is also a broader strategic question to consider. Not all sectors are equally important or equally capable of becoming competitive. A more targeted industrial strategy would prioritise sectors with export potential, existing skill bases, or clear strategic value. Blanket policies that apply across all industries are more likely to protect legacy firms than to support innovation or create new employment. Without prioritisation, state support risks becoming scattered and ineffective.
The minister’s statement also reflects a broader global trend. In many countries, there is renewed interest in self-sufficiency, reshoring, and reducing import dependency. Rising geopolitical tensions, disruptions in global supply chains, and domestic political pressures have all contributed to this shift in the market. However, successful industrial strategies are typically those that engage selectively with international markets rather than attempt to wall them off. Competitive economies do not isolate themselves.
They specialise, invest in skills and technology, and export their products well. Sri Lanka, emerging from a deep economic crisis, cannot afford policies driven by nostalgia or populism. The country’s immediate needs are fiscal stability, debt restructuring, and growth based on real productivity gains. A local-first policy that imposes higher costs on consumers and businesses without delivering competitive advantages could do more harm than good.
It would weaken purchasing power, limit choice, and strain public finances. If the government does intend to support local industry, it should proceed with clarity and discipline. Interventions should be time-bound, transparent, and accompanied by measurable performance criteria. Sunset clauses, cost-benefit analysis, and regular review mechanisms should be part of the process. The policy should favour firms that demonstrate progress in innovation, quality, or export readiness rather than those that merely benefit from regulatory shelter.
Industrial policy can work under the right conditions. But those conditions include competitive pressure, disciplined execution, and honest accounting of trade-offs. Protectionism without these guardrails quickly turns into patronage. Suppose Sri Lanka is to chart a more sustainable path for its manufacturing sector. In that case, it must avoid the trap of permanent protection and commit instead to a policy grounded in evidence, not sentiment. The minister’s comments offer a direction, but whether that leads to industrial renewal or deeper inefficiency will depend on what comes next.