Sri Lanka to Establish Industrial Transformation and Innovation Authority to Boost Economic Growth

April 23, 2026 g0hra

📌 Introduction

Sri Lanka is moving forward with a major institutional reform aimed at transforming its industrial sector, as the government plans to establish a new Industrial Transformation and Innovation Authority (ITIA).

This initiative is expected to streamline industrial development efforts, improve coordination, and strengthen support for small and medium enterprises (SMEs) across the country.

🏛️ Cabinet Approval and Legal Framework

The Cabinet of Ministers has approved steps to draft legislation for the creation of the new authority. The government has instructed the Legal Draftsman to prepare a Bill to formally establish the ITIA.

Policy approval for the initiative had already been granted in December 2025, and a legal framework was later developed with stakeholder input and technical support from the Asian Development Bank.

🔄 Merging Key Institutions

A central feature of the reform is the consolidation of three major institutions into a single entity:

Industrial Development Board (IDB)
National Enterprise Development Authority (NEDA)
Small Enterprise Development Division

This merger aims to eliminate duplication, improve efficiency, and create a more coordinated industrial support system.

📊 Why This Matters

Sri Lanka’s industrial ecosystem has long been criticised for fragmentation and lack of coordination.

By creating a unified authority, the government aims to:

Enhance policy coherence
Reduce bureaucratic overlap
Provide better support for businesses and entrepreneurs
Strengthen innovation and industrial transformation

The new body is expected to function as a central hub for industrial development and innovation, helping businesses navigate support systems more effectively.

🚀 Driving SME Growth and Exports

The ITIA is also expected to play a key role in strengthening Sri Lanka’s SME sector, which is critical to the country’s economy.

The broader reform strategy includes improving:

Access to finance
Business registration processes
Regulatory clarity
Innovation and productivity

The government has set ambitious targets, including boosting exports to $36 billion by 2030, with SMEs playing a central role in achieving this goal.

🌍 A Shift Toward Innovation-Led Growth

The establishment of the ITIA reflects a broader shift in Sri Lanka’s economic strategy — moving from traditional industrial development toward innovation-driven growth.

Rather than focusing only on expanding industries, the new approach emphasizes:

Technological advancement
Productivity improvements
Global competitiveness

This marks a significant transition in how the country approaches long-term economic development.

💡 Final Thoughts

The proposed Industrial Transformation and Innovation Authority represents one of the most important structural reforms in Sri Lanka’s industrial policy in recent years.

If successfully implemented, it has the potential to reshape the country’s industrial landscape, improve business support systems, and position Sri Lanka as a more competitive player in the global economy.