The impacts of South Asian trade liberalisation on poverty and income inequality in the Sri Lankan economy are examined using a multi-country computable general equilibrium (CGE) model. A non-parametric extended representative household-agent approach is used to estimate the income inequality and poverty effects using micro household survey data. Two trade liberalisation policy simulations are investigated (i) the formation of the South Asian Free Trade Agreement (SAFTA) and (ii) unilateral trade liberalisation in South Asia. Poverty in Sri Lanka is predominantly rural and the findings suggest that poverty and income inequality is reduced in the urban, rural and estates sectors in Sri Lanka under both trade liberalisation policies.