Sri Lanka is an excellent shopping destination for clothes, household items, tea and spices. If you have foreign currency, you should be able to buy a whole cartload of goods at 'dirt cheap' rates. The conversion rate between the rupee and most foreign currencies will ensure that you are able to buy good quality items at a much lower rate than in many other countries.
However, be careful when buying items, specially clothes, with designer labels as the country has a booming market for fake 'designer goods'. Fake labelled goods such as Armani, Gucci, CK Jeans and Tommi Hilfiger are sold on pavement stalls at prices which are a fraction of the real price. Invariably, these low quality goods are produced by unlicensed manufacturers and are not the authentic original product.
Other goods that are worth buying are tea, spices, hand-loom products, masks, carvings and gems such as moonstones. However, be aware about buying good quality gems and jewellery before you proceed with such purchases.
When travelling outside Colombo, opt for items which may be unique to each area. Certain areas of the country are traditionally well known for producing specific goods and such items may offer better quality and possibly lower prices when being bought from their traditional home bases. For example, Galle is famous for traditional hand-made lace. You will find elderly women selling their marvelous creations outside the New Oriental Hotel and on the ramparts. Likewise, Veveldeniya on the Kandy Road is famous for handwoven reed ware such as reed baskets. Ambalangoda is the centre of traditional Sri Lankan mask-carving and although masks could be bought from anywhere in the island, this southern coastal town is where you will find the best available at more reasonable prices.
Note that the export of antiques (defined as anything over 50 years old) and animal or marine products is illegal unless you can produce the relevant export licences. Contact the Sri Lanka Tourist Board for details.