This study reviews the industrial policies Sri Lanka has pursued since its colonial period to-date, especially with regard to the prospect for rapid industrial development. Apart from this, the industrial potential in the country is also examined. The objective of private investors is maximization of profit, but they may not invest in industries if a satisfactory level of profit is not ensured. Policy, therefore, plays a crucial role in attracting investments required for economic activities. The creation of economic activities depends on the ability to exploit the potentials of various sectors of the economy. The objective of the study is to provide literature on current and topical themes relating to the economy of Sri Lanka, to a broad audience that is interested in economic issues, but have little background in theoretical economics.