Country: Sri Lanka

Sri Lanka’s apparel sector exports have gone through tough phase – from positive in H1 to negative in the next two months of the current year. In the first eight months, country’s apparel exports to the US plunged (-) 0.90 per cent to US $ 1.17 billion from US $ 1.18 billion last year. The quantity also came down (-) 2.84 from 321.8 million square metres to 312.7 million square metres.

In the first seven months, apparel exports of Sri Lanka to the European Union also dropped (-) 5.99 per cent from Euro 934.47 million in 2015 to Euro 878.45 million in 2016. While the woven sector declined by (-) 11.8 per cent, the knitted registered a decline of (-) 1.34 per cent.

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However, the country’s exports, which are small in volume, to Canada continued to rise at a decent pace. In the first eight months, the value of exports was up 8.93 per cent. While the country saw 11.10 per cent growth in woven category, in knitted segment it registered growth of 7.36 per cent.

Sri Lanka is aiming to increase its apparel exports to three large economies –  EU, India and China, by negotiating on ‘GSP (Generalised System of Preferences) Plus Facilities’ with the EU and is in talks with China to increase its apparel exports. Sri Lanka is also hopeful that India will remove the current quota of 8 million duty-free pieces given under the ISFTA (Indo-Sri Lanka Free Trade Agreement).

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It may be mentioned here that Sri Lanka’s apparel exports registered 4 per cent growth in 2015 and a GSP Plus Facility with EU would surely aid exports growth, according to Joint Apparel Association Forum (JAAF), the apex body which guides Sri Lanka apparel industry.

The South Asian nation is also hoping for a favourable outcome from the ongoing preferential trade negotiations with India and China. The Economic and Technology Co-operation Agreement (ETCA) between India and Sri Lanka is currently at final stage of negotiations. This agreement is likely of opening India’s apparel import market for Sri Lanka, and remove the current quota of 8 million under the current ISFTA between the countries. The Chinese Government is also probable of offering a more flexible situation for Sri Lankan apparel exports.

Sri Lanka’s textile and garment exports stood at US $ 4.7 billion in 2015 with future projections of increasing this figure to US $ 6 billion by 2019.

If reports are to go by then Sri Lanka is expected to facilitate stocking of large quantity of cotton from international sellers from this month onwards, and supply it to various markets, thus projecting Colombo as a cotton hub. This will also enable mill owners in India and other south Asian countries to procure cotton at a much cheaper rate. Recently a seven-member delegation from Southern India Mills’ Association visited Sri Lanka and had discussions with Sri Lanka Ports Authority officials in this regard.

The delegation told a news daily that they saw the facilities at Colombo Port, the Free Trade Zone warehouse and logistics services, and have also sought for 30 days storage of containers with free demurrage. It has been informed that cotton not only from Africa but from other countries can be stored at the Colombo Port which is then to be shipped to textile mills in India (mainly in southern part) and other south Asian countries.

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About 50 per cent of India spinning capacity is in south and shippers bring in cotton to Malaysia and supply to the buyers in south Asian countries. The transit time is three to four months. This transit time will be decreased if cotton is stocked in Colombo.

Traders also pointed out that cotton merchants need the flexibility of selling to Indian and other markets throughout the year. Countries such as Bangladesh and Vietnam buy imported cotton throughout the year. The advantage Sri Lanka will have in this regard is its better connectivity to Karachi, Chittagong, Singapore and Vietnam.

Government of Sri Lanka is aiming to get duty-free access to the Indian market for its apparel products during talks on free trade deals scheduled to start next week.

Minister International Trade and Strategic Development, Malik Samarawickrama said, “We will ask for the total abolition of the quota for garments and the enhancement of the quota for tea. India allows only 8 million pieces of apparel per year. This is too small. Among other issues to be addressed are testing procedures and non-recognition of Sri Lankan standards.”

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An Indian delegation will be visiting Sri Lanka next week to begin talks on the framework of Economic and Technical Cooperation Agreement (ETCA). The week after that, a Chinese delegation is expected to visit the country for talks on a Free Trade Agreement (FTA). An FTA with Singapore is also on the cards. The main objective behind signing of these agreements is Sri Lanka’s aim to increase its export share in the global market.

MAS Holdings, a technology apparel design-to-delivery solutions provider based in Sri Lanka, is collaborating with Flex, an American international supply chain solutions company that offers design, manufacturing, distribution and aftermarket services to original equipment manufacturers, to develop new wearable technologies to be incorporated in clothing.

Mahesh Amalean, Chairman of MAS Holdings, averred, “Global partnerships have always played a key role in MAS’s success, helping us move into new frontiers in process, product and technology. This exciting collaboration with Flex is the next iteration, enabling us to work together by integrating technology into apparel and delivering revolutionary products to the consumer.”

The partners look forward to developing next-generation wearables and smart clothing, optimized by key innovations in technology, textiles and fabrics. The collaboration also aims at bring new products to market, with sketch-to-scale product development, to provide apparel brands with a simplified development process for integration of next generation wearable technology with a streamlined and improved efficient supply chain.

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“In addition to being a leading innovator in textiles and apparel, MAS has been a valued partner on many previous wearables projects Flex has worked on, including the Lumo Run product, launching later this year,” remarks Mike Dennison, President of Consumer Technologies Group – Flex. ‘Lumo Run’ is an example of ‘smart clothing’ that combines fashion, technology and function, with the potential to be ‘every athlete’s portable running coach’, a collaborative initiative by Lumo Bodytech, MAS and Flex.

Throughout contemplation of the impending effect of ‘Brexit’ on Sri Lanka’s economy, especially for the garment sector which counts UK as one of its major export destinations, experts believe there won’t be any major impact of the ‘Brexit’ over the country’s apparel sector.

The observation was made by Dr. Amila Kankanamge, President of Colombo Chamber Of Commerce as he expressed his views on Britain’s exit from the European Union stating that Sri Lanka needs to develop a strong local economy which is unaffected by international incidents. “However this does not imply that our national economic model should be created based on European political and economic factors,” he adds.

Also Read – UK fashion industry in dilemma after Brexit

Kankanamge stated that since clothing is a basic human necessity, a large number of countries around the world produce and buy apparels. And hence, it is decisive to develop a second market place for the products so that in case of crisis in the main market, goods could be sold through this alternative market until the situation is resolved.

He further said that Sri Lanka should have a proper methodology to monitor the behaviour of the international marketplace so that the country could issue local products for sale accordingly in the regional as well as international markets. Kankanamge concluded by stating that if Sri Lanka maintains good quality in the apparels produced locally, it would not lose its position in the global market.