By The Realty Times | International Business &
Real Estate
Colombo,
Sri Lanka: Sri
Lanka’s capital, Colombo, is emerging as a specialised business destination for
Indian companies looking to expand their regional operations, diversify
business risks and strengthen operational resilience. The city’s growing appeal
is being driven by its strategic location, competitive operating costs and the
development of the Colombo Port City Special Economic Zone (SEZ).
As India’s
business ecosystem continues to expand, companies are increasingly exploring
locations outside the country for specialised functions, research and
development, technology operations and business continuity. Colombo is
positioning itself as a complementary destination for these activities rather
than a replacement for India’s established business centres.
The Colombo
Port City project is at the centre of Sri Lanka’s efforts to attract
international businesses. The multi-services special economic zone is seeking
to attract technology companies, multinational corporations and Indian firms
interested in establishing specialised regional operations.
According to
a report published by The Economic Times on September 11, 2026, Port City
Colombo is actively engaging with large technology companies that are exploring
the location as part of their risk-diversification and business-continuity
strategies.
The zone is
being promoted as an alternative to established business destinations such as
Singapore and Dubai. Its developers have highlighted the potential for lower
operating costs and a business environment designed to support international
operations.
One of the
emerging opportunities is the development of smaller Global Capability Centres
(GCCs), sometimes referred to as Nano GCCs. Unlike traditional GCCs that employ
thousands of professionals, these specialised units can operate with relatively
small teams focused on areas such as artificial intelligence, product
engineering, cybersecurity, data analytics, treasury management and research.
Colombo’s
geographical proximity to India and its connectivity with markets in the Gulf
and Europe could make it suitable for such operations.
The
objective is to complement India's established technology and business centres,
including Bengaluru, Hyderabad and Gurugram, by providing an additional
location for selected functions. This approach could help companies diversify
their operational footprint while maintaining close links with their Indian
operations.
Operating
costs are another factor supporting Colombo’s pitch to international
businesses. Port City Colombo’s management has estimated that the cost of doing
business in the zone could be around one-fourth of the cost in Singapore and
Dubai. This is an estimate provided by the project’s management and may vary
depending on the nature of the business and its operating requirements.
The zone
also has a designated currency framework under which the US dollar is the
primary transaction currency, while the Indian rupee is also permitted for
transactions.
These
features could be relevant for Indian companies seeking to manage cross-border
transactions and establish regional business operations. However, the actual
benefits will depend on applicable regulations, business costs and the
requirements of individual companies.
The growing
business relationship between India and Sri Lanka provides an additional
foundation for Colombo’s ambitions.
According to
Sri Lanka’s Ministry of Foreign Affairs, Indian foreign direct investment in
Sri Lanka amounted to approximately $2.3 billion between 2005 and the second
quarter of 2025. During that period, 197 Indian companies commenced operations
in the country, with additional projects in the pipeline.
The two
countries also have a Free Trade Agreement, while discussions around trade,
investment and financial connectivity continue to support bilateral economic
engagement.
For Indian
companies, Sri Lanka’s location offers access to a neighbouring market and a
potential base for selected regional activities.
Colombo’s
emergence as a specialised business hub reflects a broader trend in which
companies are spreading selected operations across multiple locations to
improve resilience.
India is
expected to remain central to large-scale technology operations and GCC
expansion, given the scale of its workforce and established business
infrastructure. Colombo’s opportunity lies in attracting smaller, specialised
teams and functions that can benefit from its location and operating
environment.
The success
of this strategy will depend on the zone’s ability to attract sustained
investment, provide a predictable regulatory environment and develop the
skilled workforce required by international businesses.
Colombo’s
growing appeal to Indian companies signals a new phase in India-Sri Lanka
business relations. With Port City Colombo seeking to attract technology firms
and specialised service operations, Sri Lanka is positioning its capital as a
regional base for companies looking to diversify their operations.
For the
commercial real estate sector, this could create opportunities in office space,
business services and supporting infrastructure. While the scale of future
demand remains to be seen, Colombo’s development as a complementary business
hub could strengthen cross-border investment and expand the region’s business
landscape.
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