Sri Lanka’s apparel industry, the country’s single largest export earner, continued to post healthy growth in July 2025 despite looming uncertainties over United States tariffs and the European Union’s review of the GSP+ trade concession.
According to the Joint Apparel Association Forum (JAAF), export earnings rose 9.84% year-on-year in July, reaching $455.16 million compared with $414.38 million in July 2024. The strongest expansion came from the European Union (excluding the UK), where shipments jumped 26.69%, underscoring the importance of GSP+ access in sustaining competitiveness.
Exports to “other” destinations grew 24.24%, while the UK market posted only a marginal increase of 0.72%. The United States — traditionally Sri Lanka’s largest buyer — recorded a 2.7% decline, raising concerns over potential fallout from trade policies and buyer shifts.
For the first seven months of 2025, cumulative apparel exports totaled $2.92 billion, up 9.09% from $2.67 billion during the same period in 2024. EU shipments led with an 18.2% increase, followed by growth of 11.02% to “Other” markets, 5.65% to the UK, and 2.91% to the US.
A JAAF spokesperson said the steady performance reflected the sector’s resilience and ability to adapt to evolving buyer requirements on speed, quality, sustainability, and compliance. “The growth in July and over the first seven months highlights Sri Lanka’s firm position in global markets, particularly the EU. However, sustaining this momentum will require expanded trade opportunities, value addition, and supportive policy frameworks,” the spokesperson added.
Current Challenges and Risks
Despite the encouraging numbers, analysts caution that external headwinds could dampen the outlook. The United States, which accounts for nearly 40% of Sri Lanka’s apparel exports, has already imposed additional tariffs on several product categories under its ongoing trade policy review. Although Sri Lanka has so far avoided the worst of these measures, industry experts warn that escalating protectionism could erode competitiveness against low-cost producers such as Bangladesh and Vietnam.
Meanwhile, Sri Lanka’s access to the EU’s GSP+ preferential trade scheme, which grants duty-free access to most apparel categories, remains under review due to governance and human rights concerns. Any suspension of GSP+ would directly impact earnings, particularly given that the EU has emerged as the strongest growth market in 2025.
Industry Outlook
Looking ahead, JAAF and exporters are pushing for a diversification strategy, targeting emerging markets in Asia and the Middle East to reduce dependency on the US and EU. Greater emphasis is also being placed on high-value segments, including sustainable fashion, digital design integration, and nearshoring strategies to meet buyers’ fast-changing demands.
The apparel sector contributes nearly 6% of Sri Lanka’s GDP and employs over 350,000 workers directly. Industry leaders stress that a clear policy direction, consistent trade diplomacy, and investment in innovation and value addition will be critical to safeguarding the sector’s future growth.
