For nearly two years before the November 2025 reforms, Sri Lanka's gem import pipeline contracted sharply. Industry reporting attributed the collapse to value-based VAT and SSCL on imported rough, which made clearance costs unpredictable and disputes at customs routine.
When rough stops entering, consequences cascade. Cutting houses lose feedstock. Re-export volumes fall. Foreign buyers who once flew through Colombo begin routing to Bangkok. Miners still produce locally, but foreign rough that supplemented colour variety and size in workshops disappears.
The damage extended beyond tax revenue. Buyer confidence in Sri Lanka as a reliable processing hub eroded because lead times became unreliable. Some traders did not realize policy had changed until parcels stalled at the airport.
The weight-based deemed value system introduced in late 2025 targets the core failure mode: valuation fights at the border. Early 2026 import recovery data will show whether international wholesalers believe the fix is durable.