The Sri Lankan Ministry of Industries will launch a countrywide SME incubator system campaign with an extensive focus on the commercialization of research and development. Under the budgetary backup of 1 billion, the program is set to be implemented in a public-private partnership model.

The chairman of the National Enterprise Development Authority Lakshman Abeysekera while addressing a post-budget forum organized by the Institute of Certified Management Accounts (CMA) stated, “Our aim is to support the commercialisation of innovation. We will be collaborating with universities and private companies to launch this programme. This will be one of our foundations for the year”

The Sri Lankan Government has also increased funding for research and development (R&D) and established a public-private partnership to leverage resources and expertise from both local and international investors. One such landmark initiative is the launch of the National Initiative for R&D Commercialization. This aims to commercialize near-complete or completed research projects.  

The Ministry is attempting to revive the development of SMEs with the support of the Asian Development Bank. SMEs in Sri Lanka contribute approximately 52% to the country’s GDP and employ about 45% of the population. The Asian Development Bank had earlier in 2024 approved a $100 Million loan to support MSMEs in Sri Lanka. Through participating in financial institutions, it had opened a $50 million line of credit for underserviced SMEs. It will also establish a $500,000 special facility to cover guarantee subsidies for women-led SMEs.

The ministry is also planning to establish an SME development bank. Earlier it initiated the National Credit Guarantee Institution (NCGI), the institution along with the Asian Development Bank will provide credit guarantees on loans to SMEs via participating financial institutions, it will also provide services such as such as underwriting guarantees, managing risks through risk-based pricing to ensure guaranteed recovery operations.

“We are currently working on the modalities of establishing this fund,” an official from the ministry explained. Parallelly, the ministry is trying to set up an SME loan facility with a consortium of banks. The official added that the Bank of Ceylon has already agreed to a Rs.5 billion loan facility in this regard. “We are in discussion with the Regional Development Bank for a similar facility,” he said. Similarly, the ministry will discuss with other government banks such as the Peoples Bank, the National Savings Bank etc. This will be for seed funding without collateral for SMEs.