A Review on the Current Profile and Challenges of the Sri Lankan Apparel Industry

The Sri Lankan apparel industry serves the country’s economy in various ways. Creating employment opportunities, exporting products to the international market and earning foreign exchange are some of major contributions of the apparel industry. Literature and the annual statistical reports on Sri Lanka’s industrial performance provide evidence for this significant contribution. Though the apparel industry could serve international markets with branded products, it has to face the competition in the world apparel markets. This competition has been created by removing tax benefits of Multi Fiber Agreement and GSP Plus, China becoming the key player in the US and EU apparel imports and increasing the imports to the world apparel market by other countries. Therefore this study describes the current profile of the Sri Lankan apparel industry and hence identifies challenges the industry faces. Reduction in the US and EU apparel imports, labour becoming expensive and scarce resources, poor product and regional diversification, high lead time and dependency on imported raw materials are identified as key challenges to the Sri Lankan apparel industry and hence, this study argues that the industry should find new ways to enter to international markets, identify suitable systematic and structured strategy to improve the industry performance, rethink its positioning in international markets with competitors, incorporate backward integration and further improve the raw material requirement base and the lead time. Also this study underscores the value of diversifying into the fashion industry, signing a new Free Trade Agreement with China, focusing on ethical manufacturing and implementing the “Green Garment Factory” concept and other productivity improvement strategies as emerging trends to successfully meet those challenges.