By: Staff Writer
February 26, Colombo (LNW): Sri Lanka’s apparel and textile sector stands at a critical juncture. Authorities project export earnings of $5.5 billion this year, betting heavily on preferential market access to drive a new growth cycle. At the forefront of this narrative is Export Development Board Chairman Mangala Wijesinghe, who has declared that 2026 will usher in a “major transformation” powered by expanded trade concessions.
The strategy hinges on three pillars: zero-tariff access to the UK under the Developing Countries Trading Scheme, continued advantages under the European Union’s GSP+ arrangement, and reduced US tariff rates. With more liberalised rules of origin, Sri Lankan garments are expected to compete more aggressively in price-sensitive markets.
However a deeper examination suggests that concessions alone cannot guarantee export acceleration.
Although 2025 delivered a respectable 5.34% year-on-year increase toUS $4.91 billion, January 2026 recorded a 2.82% contraction. Officials describe it as temporary volatility. However, global apparel demand remains uneven, shaped by inflationary pressures in Western markets, cautious retail ordering patterns, and supply chain reconfiguration toward ultra-low-cost producers.
Sri Lanka does not compete on price alone. Its comparative advantage lies in ethical manufacturing, compliance standards, and niche, higher-value segments. Transitioning further into value-added categories—technical apparel, sustainable fabrics, and design-led production—requires more than tariff relief. It demands policy coherence, investment incentives, and efficient administration.
Here lies the tension.
Over the past year, exporters have voiced concerns about delays in implementing announced export development programs. Several digitalisation and trade facilitation initiatives remain incomplete. Regulatory unpredictability particularly sudden fiscal adjustments and inconsistent administrative interpretation—has complicated long-term planning.
Export industries thrive on certainty. Buyers commit to sourcing destinations that demonstrate reliability not only in production but also in governance. Frequent policy reversals erode confidence, regardless of tariff advantages.
Moreover, scaling to $5.5 billion will require expanding production capacity, improving logistics efficiency, and strengthening backward linkages in textiles to reduce import dependence. These structural upgrades cannot be fast-tracked through announcements; they require coordinated execution across ministries and agencies.
To be fair, the external trade environment does offer genuine openings. Preferential access enhances competitiveness in markets where even marginal price shifts influence sourcing decisions. But such benefits are perishable if not supported by domestic reform.
The apparel sector remains Sri Lanka’s flagship export industry. Its resilience is proven. The EDB’s confidence signals ambition, which is necessary in a recovery phase. Yet ambition must be grounded in administrative performance.
If the Government addresses implementation delays, strengthens institutional management efficiency, and maintains consistent policy direction, the sector can realistically approach the $5 billion threshold. Without those reforms, however, projections risk outpacing operational readiness.
Trade concessions may open doors but sustainable export growth depends on how effectively Sri Lanka walks through them.