For the garment sector to experience any genuine benefits, the Joint garment Association Forum (JAAF) emphasised the need to go beyond the current export quota in the India-Sri Lanka Free Trade Agreement (ISFTA).
While Sri Lanka is now allowed to export eight million pieces of ready-made clothing to India duty-free, the apex body of Sri Lanka apparel is confident that this will be increased since FTAs have the potential to provide significant trade prospects for both nations.
“Unfortunately, the apparel industry is showing a decline of 20 percent in exports of textiles and apparel, driven mainly by a reduction in demand in the primary apparel export markets. We believe that India, as our closest trading partner, could offer a lifeline to the country, whilst also benefiting Indian fabric manufacturers,” said the JAAF in a statement.
It was noted that the role of the merchandise export sector has never been more crucial as Sri Lanka recovers from the biggest economic crisis since independence.
Sri Lanka’s export commerce has increased 18 times since the ISFTA’s implementation, from US $ 47 million in 1999 to US $ 815 million in 2021. Under the ISFTA, Sri Lanka has also been able to market a variety of goods.
Furthermore, the FTA provisions are used in around 70% of Sri Lanka’s exports to India. Despite all of these achievements, the eight million export quota, according to the JAAF, prevents the garment industry from fully benefiting from the ISFTA.
It was cited as an example of how Sri Lanka imports more from India than it does export. While the overall revenue from garment exports to India in 2022 was only US $ 149.28 million, US $ 146.47 million in yarn, US $ 311.78 million in knitted fabrics, and US $ 278.38 million in woven fabrics were imported from India.
However, the JAAF welcomed the continuing FTA negotiations between India and Sri Lanka and is optimistic that they will be advantageous for both nations. The JAAF asked that the eight million piece cap be lifted while the FTA was still being finalised so that Sri Lanka could utilise it as a way to enhance its garment exports to India.
