Local industries demand for overhaul of e-commerce rules

Courier Express Parcel Association of Sri Lanka Vice President Sanjay Samarasinghe / Sri Lanka Apparel Brands Association Immediate Past President Yasotharan Paramanantham 

-Pix by Ruwan Walpola

• CEPAC Vice President Sanjay Samarasinghe praises Sri Lanka Customs for standardising process but wants fair and modern rules
• Reveals fake duty structure prevailed allowed 20,000 parcels bypass proper checks daily
• Notes medical equipment such as MRI scanners imported disguised as B2C without safety checks
• Highlights lack of proper cross-border e-commerce policy or de minimus threshold in place; suggests UK-style simpler clearances 
• Sri Lanka Apparel Brands Association Immediate Past President Yasodaran Paramanantham claims 
• Rs. 700 b local apparel sector hit by low-quality imports
• Says 60% of daily small parcels via e-commerce are apparel, but many disguised B2B shipments
• Estimates Rs. 35-50 m in lost tax revenue to Govt. coffers
• Says Sri Lanka’s apparel tariff is 17%, below global average, exposing local industry

By Charumini de Silva

Local industries yesterday called for a comprehensive overhaul of the country’s cross-border e-commerce framework, warning that gaps in Customs processes and policy loopholes are enabling tax evasion, distorting the local market, and threatening legitimate businesses. 

Addressing the media in response to a large-scale campaign led by groups with vested interests to shield cross-border e-commerce platforms, Courier Express Parcel Association of Sri Lanka (CEPAC) Vice President Sanjay Samarasinghe commended the Sri Lanka Customs leadership for taking bold steps to standardise the process in a first step to create a level playing field. 

“We must commend the leadership and senior officials of the Sri Lanka Customs for taking a stand against corruption and standardise this process by introducing the Harmonised System (HS) codes,” he said, adding that it was after many years that the industry stakeholders saw Customs officials taking some bold steps to prevent State revenue leakage.



However, he insisted that without a fair, transparent, and modern system aligned with international best practices, the country risks losing critical revenue and undermining its local industries.

“The meaning of an economy is the exchange of goods and money within its ecosystem. It is not about protectionism. It is about a level playing field,” he said. 

He revealed that a group of officials within the Sri Lanka Customs and a few courier companies and e-commerce platforms got together and created a process to clear goods based on kilograms. “There were no Customs declarations, invoices, or the collected money as per their fake duty structure,” he alleged, pointing to a system where Customs duties were evaded through informal channels, where 20,000 parcels were cleared daily.

“Is it fair that a business generating jobs in Sri Lanka, paying taxes here, and following proper import regulations has to meet all legal requirements, while someone else who is not registered, does not employ people here, and illegally imports goods gets to bypass the rules? —That is simply not fair,” he said. 

Samarasinghe disclosed that some have even facilitated imports of high-value medical equipment, such as MRI scanners, as well as injections, without proper approvals or safety certification via relevant authorities by disguising them as business-to-consumer (B2C) shipments, while in reality operating as business-to-business (B2B) importers. “This is why Sri Lanka needs to standardise e-commerce policies and processes,” he said.

Noting that Sri Lanka lacks a proper policy framework in place to monitor e-commerce or a functioning ‘de minimus’ threshold, Samarasinghe said they need a proper structure and not ad-hoc fixes.

Explaining that with clearance processes unproductive and cumbersome, he said most businesses opt to pay duties and taxes instead of navigating the bureaucracy. “The ‘de minimus’ process is often accompanied by warehouse fees, retention charges per day, and sometimes they exceed the duty itself,” he noted.

He proposed that Sri Lanka should follow international models, such as the UK’s system, which allows customers to get immediate Customs clearance at courier centres. “Simplify the process—otherwise people avoid the system entirely,” he added.

Sri Lanka Apparel Brands Association Immediate Past President Yasodaran Paramanantham also argued that lax border controls during the recent e-commerce surge had flooded the country with low-quality imported garments from cross-border e-commerce platforms, hampering the Rs. 700 billion or $ 2.2 billion local apparel market.

“Of the 20,000 daily parcels, around 60% are apparel-related products, with only 30% of these genuine B2C shipments, while the rest were B2B operations masquerading as personal imports to dodge taxes,” he said. 

He estimated this practice could have cost the Treasury around Rs. 35-50 million lost in revenue. 

During the recent foreign exchange crisis, Paramanantham pointed out that import restrictions gave domestic apparel producers an opportunity to showcase their capabilities, encouraging entrepreneurship and local manufacturing.

“However, in the past couple of months, the B2B cross-border e-commerce mafia has managed to smuggle low-quality apparel products back into the market,” he charged.

Paramanantham warned that unless the Government enforced a comprehensive trading policy, including a fair Customs regime, its hard-won manufacturing capacity could collapse. 

When asked if protectionism is what they require, he noted that Sri Lanka’s average apparel import tariff is at around 17%, well below the global average of 37%—leaving local manufacturers vulnerable to unfairly priced imports.