Increasing military tensions between India and Pakistan are creating ripple effects across South Asia, with Sri Lanka’s aviation and maritime sectors feeling the strain, according to a report by Asha Securities Research, cited by Daily Mirror.
The report highlights that SriLankan Airlines is expected to face mounting operational expenses, particularly due to longer flight routes to Europe caused by the closure of Pakistani airspace. The added fuel costs come when the national carrier is already grappling with financial and logistical challenges.
Tourism, a key pillar of Sri Lanka’s economic recovery, is also at risk. With Indian nationals making up around 20% of tourist arrivals, fears related to safety or disrupted travel could weaken the sector’s rebound in 2025. Asha Securities cautioned that these developments might delay the pace of recovery in an already fragile tourism landscape.
Adding to the pressure, India has reportedly advised major transshipment ports such as Colombo, Dubai, and Singapore to refrain from facilitating the re-export of Indian goods to Pakistan. While Colombo Port remains operational and lies outside the immediate conflict zone, its strategic role as a regional shipping hub could be jeopardized if such restrictions tighten.
As Daily Mirror noted, Sri Lanka’s significant trade relationship with India, which totaled approximately US$ $782 million in exports and US$ $3.5 billion in imports in 2024, exposes it to further economic risks in the event of prolonged regional instability.
Although immediate disruptions to trade flows appear unlikely, Asha Securities warned that ongoing hostilities could intensify strain on both tourism and logistics.
“Colombo’s role as a transshipment hub hinges on geopolitical stability”, the report emphasized, underscoring the fragile position Sri Lanka finds itself in amid growing regional tensions.
