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Economy

Court of Appeal Restores Order in Tuk-Tuk Licence Dispute

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Sri Lanka prides itself on being governed by law, not by press conferences. That principle was reaffirmed on 19th February 2026, when the Court of Appeal intervened in the escalating controversy over whether foreign tourists may lawfully drive tuk-tuks in Sri Lanka using International Driving Permits together with covering permits issued under Sri Lankan law.

In C.A. (Writ) 1154/25, Hon. Justice Dhammika Ganepola and Hon. Justice Adithya Patabendige granted Interim Orders preserving the existing legal framework and restoring the position that prevailed before media reports on or about 20th November 2025 suggested that foreign visitors could no longer drive tuk-tuks on the strength of International Driving Permits.

Sri Lanka is a Contracting State to the 1949 Geneva Convention on Road Traffic. The Convention is founded on reciprocity: member states recognise each other’s International Driving Permits to ensure uniform and predictable cross-border mobility. To give domestic effect to these obligations, Sri Lanka enacted regulations through Gazette No. 11,603 of 1958 under the Motor Car (Convention) Ordinance – regulations that remain valid and in force.

Under that statutory framework, a foreign visitor holding a valid International Driving Permit may lawfully drive in Sri Lanka upon obtaining a local covering permit issued either by the Department of Motor Traffic or by the Automobile Association of Ceylon, which is expressly designated by law for that purpose.

This is not an administrative concession. It is the governing legal scheme.

For decades, tourists have driven tuk-tuks under this regime without controversy. Businesses, such as the Petitioner in this case, have structured operations around it. Hundreds of Sri Lankan families depend on it for livelihood. The framework reflects not only domestic regulation but Sri Lanka’s commitment to international comity –  the mutual respect of rights arising under treaty obligations.

When the matter came before Court, the Bench held that a serious question of public law arises as to whether the impugned decision was made within statutory authority or contrary to the governing legal framework. The Court further held that permitting the directive to operate pending final determination would adversely affect existing permits and business operations, whereas interim relief would merely preserve the status quo ante.

Accordingly, Interim Orders were granted.

The legality of the purported directive will now be tested in Court. Until that determination is made, the law as it stands continues to govern.

Mr. Avindra Rodrigo, President’s Counsel, with Ashiq Hassim and Nishika Fonseka appeared for the Petitioner. Mr. Sanjay Rajaratnam, President’s Counsel, with Edward Jayasinghe appeared for the Automobile Association of Ceylon. Ms. Avanthi Weerakoon, State Counsel, appeared on behalf of the State Respondents, including the Commissioner General of Motor Traffic and the Inspector General of Police.

Economy

Vehicle imports generate Rs. 512.5 billion in tax revenue

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Sri Lanka imported 316,000 vehicles during the first six months of 2026, generating Rs. 512.547 billion in tax revenue, according to officials from Sri Lanka Customs.

The figures were revealed during a review of the operations and revenue performance of Sri Lanka Customs by the Parliamentary Committee on Ways and Means.

Of the total tax revenue generated through vehicle imports, motor vehicles imports accounted for the largest share, contributing Rs. 386.726 billion.

Petrol-powered cars with engine capacities below 1,000cc emerged as the highest revenue-generating category, contributing Rs. 137.4 billion in Customs revenue. This represented 9.96% of total Customs revenue.

Meanwhile, Sri Lanka Customs recorded total revenue of Rs. 1.379 trillion by June 30, 2026, against an expected revenue of Rs. 1.061 trillion for the period, representing 130% of the targeted revenue.

Officials informed the committee that customs revenue had exceeded monthly targets throughout the year and had recorded higher revenue compared with the corresponding months of 2025.

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Economy

Rs. 5.8bn World Bank-backed project to rehabilitate 296 irrigation tanks

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Sri Lanka has begun rehabilitating 296 minor irrigation tanks under a World Bank-funded programme aimed at strengthening irrigation infrastructure and improving climate resilience.

More than Rs. 5.8 billion has been allocated for the work under the Integrated Rurban Development and Climate Resilience Project (IRDCRP), which is planned to continue until 2029.

Of the 296 tanks, 290 are located across 18 districts and were damaged by Cyclone Ditwah. About Rs. 5.58 billion has been allocated for their rehabilitation under the project’s Contingent Emergency Response Component.

The largest number of affected tanks is in Badulla, where 97 are being rehabilitated, followed by Ratnapura with 29, Mannar with 24 and Kurunegala with 19. Fifteen tanks each are being rehabilitated in Kandy and Vavuniya.

A further six minor irrigation tanks in Polonnaruwa, Hambantota and Jaffna are also being rehabilitated at a cost of about Rs. 256.2 million.

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Economy

Sri Lanka exports to India grow 7.2% to USD 669mn in first seven months

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Sri Lanka’s merchandise exports to India increased by 7.22% year-on-year during the first seven months of 2026, reaching US$669.36 million, according to data from the Export Development Board (EDB).

Exports to India during the January-July period rose from US$624.31 million recorded during the corresponding period of 2025.

In July alone, exports to India increased by 9.12% year-on-year to US$129.51 million, compared with US$118.69 million in July 2025.

The EDB said the cumulative growth in exports to India was mainly supported by increased shipments of boilers, piston engines, pumps and vacuum pumps, petroleum oils, animal feed and base metal products.

The growth also came amid a broader expansion in Sri Lanka’s exports to the South Asian region.

Exports to South Asian markets increased by 11.98% year-on-year to US$916.55 million during the January-July 2026 period.

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