{"id":369429,"date":"2026-01-14T14:03:08","date_gmt":"2026-01-14T14:03:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/369429\/"},"modified":"2026-01-14T14:03:08","modified_gmt":"2026-01-14T14:03:08","slug":"sri-lankas-apparel-sector-celebrates-duty-free-access-to-uk-market","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/369429\/","title":{"rendered":"Sri Lanka’s Apparel Sector Celebrates Duty-Free Access to UK Market"},"content":{"rendered":"

\n\tIn what could be viewed as a gift to usher in the new year, the wider tariff-free access announced last year by the United Kingdom<\/a> under its Developing Countries Trading Scheme <\/a>(DCTS) came into effect earlier than expected on Jan. 1. <\/p>\n

\n\t\u201cIt\u2019s been a very positive advantage for exporters in Sri Lanka<\/a>,\u201d a manufacturer in Colombo told Sourcing Journal with obvious exhilaration, pleased that Sri Lanka<\/a> will now at least be on par with countries such as Bangladesh and Cambodia, which already enjoy comprehensive export benefits.<\/p>\n

\n\tBeing hailed as a game changer for the industry in terms of exports to the U.K.\u2014which accounts for approximately 15 percent of Sri Lanka\u2019s total apparel exports\u2014the scheme allows manufacturers to source 100 percent of inputs globally while retaining duty-free access to the market. This means garment manufacturers can now source fabric internationally, complete production locally, and still qualify for the scheme.<\/p>\n

\n\tThe new rules remove the requirement for two substantial manufacturing processes to be carried out in Sri Lanka. This allows the value chain to become more flexible and export-oriented, with industry analysts estimating additional sales of between $150 million and $180 million for the current year.<\/p>\n

\n\tThe DCTS is the U.K.\u2019s post-Brexit preferential trade arrangement for developing countries. It replaces the former EU Generalised System of Preferences (GSP) and offers tariff reductions or eliminations along with more flexible rules of origin for eligible exporters.<\/p>\n

\n\tWhile the scheme itself came into effect on June 19, 2023, covering 65 developing countries across three preference tiers\u2014comprehensive, enhanced and standard\u2014the liberalized rules of origin with more flexible sourcing for apparel took effect on the first day of 2026.<\/p>\n

\n\tWith these changes, Sri Lanka now enjoys benefits similar to Bangladesh <\/a>and Cambodia<\/a>, which already have comprehensive preferences. India signed a free trade agreement with the U.K. in 2025, while Vietnam already has a free trade agreement with the U.K.\u00a0<\/p>\n

\n\tYohan Lawrence, Secretary General of the Joint Apparel Association Forum (JAAF), explained that the reforms to the DCTS removed previous restrictions that had limited Sri Lanka\u2019s competitiveness.<\/p>\n

\n\t\u201cSri Lankan manufacturers can now compete equally by accessing global supply chains. The garment sector accounts for over 60 percent of Sri Lanka\u2019s exports to the U.K. and supports 1 million livelihoods across the country. This is a significant boost to our export potential in an important market, and we are excited to work with buyers and manufacturers to create meaningful growth from this opportunity,\u201d he said.<\/p>\n

\n\tThe U.K. High Commission referred to the changes as an \u201cunprecedented gain\u201d for Sri Lanka\u2019s export sector.<\/p>\n

\n\tBritish High Commissioner to Sri Lanka, H.E. Andrew Patrick, said the reforms demonstrate the U.K.\u2019s commitment to creating shared prosperity through trade partnerships. \u201cBy simplifying rules of origin, we are supporting Sri Lanka\u2019s economic growth by improving market access to the U.K. and helping to further diversify exports. We recognize the Sri Lankan government\u2019s ambition for export growth and will continue to advocate for improved utilization of the scheme,\u201d he said.<\/p>\n

\n\tAnalysts in Sri Lanka have cautioned that this advantage will only materialize if it is seized and implemented speedily, noting that manufacturers who move fast and strategically will capture volume and improve margins.<\/p>\n

\n\tThey also warned that delays in negotiations and in strengthening buyer relationships could blunt the momentum. Given the current geopolitical environment\u2014including election-related uncertainty in Bangladesh and Myanmar, and tensions between Bangladesh and India\u2014Sri Lanka has a strong opportunity to boost the sector.<\/p>\n

\n\t\u201cWith better ESG credentials and now being cost-competitive, Sri Lanka can become a value leader, while Bangladesh, with its large-scale factories and lower costs, can remain a price leader. Sri Lanka also offers shorter shipping times to the U.K., greater agility in sampling and development, and a strong communication and planning culture,\u201d a U.K.-based buyer told Sourcing Journal.<\/p>\n

\n\tSri Lanka has also seen a growth in the industry with investors from Bangladesh and India<\/a> exploring the possibility of setting up manufacturing plants in Sri Lanka.<\/p>\n

\n\tThe industry has already recorded growth in 2025, with a 5.42 percent increase in apparel exports during the 11-month period from January to November, reaching $4.57 billion compared to the $4.33 billion seen during the same period in 2024.<\/p>\n

\n\tThe reduction in processing requirements is being seen as a major positive for the export sector, giving manufacturers additional incentives by removing the previous rule that required two significant manufacturing processes to take place in Sri Lanka.<\/p>\n

\n\tThe changes respond to requests from many businesses and countries, including the Sri Lankan government and the Joint Apparel Association Forum. The U.K. is Sri Lanka\u2019s second-largest garment export market, valued at approximately $675 million, with exports expected to increase significantly under the new arrangements.<\/p>\n

\n\tFelix Fernando, chief executive officer and managing director of Omega Line Ltd and deputy chairman of JAAF, said the outlook for 2026 is now far more optimistic and beneficial for manufacturers regardless of size. \u201cWe may not save costs directly, but we expect to attract more orders because it will be cheaper for customers in the U.K.,\u201d he said.<\/p>\n

\n\tJoe Jayawardena, country manager of Dewhirst Ltd, observed that the strategic opportunities created by the DCTS would \u201cdeliver meaningful benefits to British consumers and contribute positively to the Sri Lankan economy.\u201d Dewhirst, a British apparel manufacturer with more than 146 years of industry experience, has been sourcing from Sri Lanka for over two decades. \u201cAs an organization, we remain committed to deepening our engagement and strengthening our presence in Sri Lanka,\u201d he said, adding that the company is now working closely with Sri Lankan mills and manufacturers to optimize and expand sourcing from the country.<\/p>\n

\n\tMeanwhile, JAAF\u2019s Yohan Lawrence noted a positive growth trajectory in the European Union market as well.\u00a0<\/p>\n

\n\t\u201cParticularly encouraging is our 13.07 percent growth in the E.U., which demonstrates the success of our strategic focus on strengthening relationships with European buyers and meeting their increasingly stringent sustainability and compliance requirements. Similarly, our continued growth in the U.S. market, despite tighter margins, shows that Sri Lankan manufacturers remain competitive on quality, delivery and ethical manufacturing standards,\u201d he said.<\/p>\n

\n\tThere appears to be positive energy on both sides. Mark Surgenor, president of the Council for Business with Britain (CBB), said the organization was excited about the potential of the reforms to enhance the U.K.\u2013Sri Lanka trade relationship. \u201cThe most significant boost is to the garment sector. But with over 90 percent of products eligible for zero tariffs under the U.K.\u2019s DCTS, we hope exports from other sectors will also seize the benefits arising from the ability to source inputs from a wider group of regional countries. We are keen to see greater utilization of the DCTS, and this will form part of the CBB\u2019s ongoing information sessions aimed at supporting Sri Lankan businesses in growing their trade with the U.K.,\u201d he said.<\/p>\n

\n\tAs Sri Lanka heads to the Source Fashion Exhibition in the UK from January 13 to 15\u2014one of the country\u2019s top sourcing platforms, attracting over 1,000 retailers and buyers\u2014the mood is upbeat.<\/p>\n

\n\tHaving endured severe flooding and damage after Cyclone Ditwah hit the country on Nov. 28, affecting infrastructure, homes, factories and workers\u2019 livelihoods, and after several years of economic crisis and inflation, manufacturers say they have their fingers crossed.<\/p>\n

\n\tThey is also still a lingering hope that reciprocal tariffs imposed by president Trump can still be negotiated down. While neighboring India is. Being threatened with a 500 percent tariff, Bangladesh, Vietnam and Sri Lanka had successfully negotiated down to 20 percent.\u00a0<\/p>\n

\n\t\u201cThe icing on the cake would be if we can finally negotiate U.S. tariffs down from the current 20 percent to 12 percent,\u201d Fernando said. \u201cWe\u2019re hoping there is still room to make that happen too.\u201d <\/p>\n","protected":false},"excerpt":{"rendered":"In what could be viewed as a gift to usher in the new year, the wider tariff-free access…\n","protected":false},"author":2,"featured_media":369430,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[59,57,58,50,2459,2366,56,54,55],"class_list":{"0":"post-369429","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-united-kingdom","8":"tag-gb","9":"tag-great-britain","10":"tag-greatbritain","11":"tag-news","12":"tag-sri-lanka","13":"tag-trade-agreements","14":"tag-uk","15":"tag-united-kingdom","16":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/369429","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=369429"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/369429\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/369430"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=369429"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=369429"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=369429"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}