By: Staff Writer
July 10, Colombo (LNW): Sri Lanka’s domestic garment manufacturers are urging the government to introduce a significant increase in import taxes on clothing, warning that the survival of the local fashion industry is under serious threat.
The call was made during a media briefing this week at the Ceylon Chamber of Commerce, where former Sri Lanka Brands Association President, P. Yasotharan, proposed a three- to four-fold hike in the Commodity Export Subsidy Scheme (CESS) levy on imported apparel.
Yasotharan argued that the domestic sector is fighting a losing battle against a deluge of low-cost imported clothing—often of questionable quality—that dominates the market by exploiting tax gaps and bypassing regulatory scrutiny.
He described the current environment as deeply unbalanced, with foreign products swamping local shelves whilst Sri Lankan manufacturers struggle to stay afloat under stricter tax, labour, and quality controls.
The local apparel market, valued at approximately Rs.700 billion, sees less than 35 per cent of its demand being met by homegrown producers, according to Yasotharan. “It’s not that our people can’t compete—it’s that they’re not being allowed to,” he said. “Our seamstresses and tailors have world-class skills. What they lack is a fair market.”
Currently, the CESS levy adds a nominal Rs.50 to Rs.100 on an imported garment—a cost that is easily absorbed by mass importers and online retailers. Domestic producers say this minimal charge is inadequate to deter the flow of cheap clothing that undermines their pricing structure.
Yasotharan insists that increasing the CESS by 300 per cent to 400 per cent would bring the retail price of imported garments closer to that of locally made products, creating a level playing field. “If foreign brands can still compete at that price, then we welcome the competition,” he added. “But right now, we’re losing not because we’re inferior, but because the rules are skewed.”
The CESS, a para-tariff applied at the border in addition to other import duties, has long been a point of contention. Whilst the previous administration—under pressure from the International Monetary Fund—announced intentions to phase out such levies in favour of a more unified tax system, the 2025 National Imports Tariff Guide confirms that CESS charges on apparel remain intact, at least for now.
However, the proposal has sparked concern amongst consumers already grappling with high living costs. The rising popularity of international e-commerce platforms and budget-friendly fashion retailers has expanded choice and affordability for shoppers. An abrupt price surge, critics warn, could reduce access to affordable clothing for many households.
Nonetheless, Sri Lankan manufacturers maintain that without urgent intervention, the domestic sector risks further marginalisation. As Yasotharan put it, “If we allow this to continue, we may end up a nation of consumers with no producers.”
