It all began with cautious relief. The United States, which had initially proposed a steep 44 per cent tariff hike on imports from Sri Lanka, dialled it back, first to 30 per cent, and eventually to 20 per cent. This revision helped level the playing field for Sri Lankan exporters in comparison to the regional competitors and now follows the revamped Developing Countries Trading Scheme (DCTS) from the United Kingdom.
Starting in early 2026, Sri Lanka will benefit from significantly expanded access to the UK market under the DCTS. Classified as an ‘Enhanced Preference’ country, Sri Lanka stands to gain from liberalised trade terms—specifically, the removal of sourcing restrictions that had long constrained the flexibility of its apparel manufacturers.
Sri Lanka’s apparel exports are expected to witness renewed momentum following the UK’s announcement of liberalised trade rules under its revamped Developing Countries Trading Scheme (DCTS).
The new rules of origin will permit Sri Lankan manufacturers to source up to 100 per cent of garment inputs from any country while maintaining duty-free access to the UK.
Under the current rules, garments eligible for duty-free access to the UK had to be manufactured using inputs sourced within the South Asian region. This means restricted procurement options. However, the newly announced policy change will allow Sri Lankan garment manufacturers to source up to 100 per cent of their inputs from anywhere in the world—and still qualify for zero tariffs upon entry into the UK, as per reports.
This change effectively puts Sri Lanka on par with countries like Bangladesh that benefit from ‘Comprehensive Preferences’ under the same scheme.
This reform marks a pivotal shift in trade dynamics. Industry insiders are already hailing it as a “breakthrough”. According to the Joint Apparel Association Forum (JAAF), the move represents a strategic recognition of Sri Lanka’s global standing as a responsible and resilient sourcing destination. JAAF Secretary General Yohan Lawrence reportedly noted that by removing barriers to input sourcing, the UK has created a more equitable playing field for Sri Lankan exporters, allowing them to offer better value to international brands and British consumers alike.
The implications go beyond mere convenience or cost-cutting. For a country still recovering from one of its most turbulent economic periods in recent memory, the timing of this development could not be more crucial. The apparel sector is one of Sri Lanka’s largest foreign exchange earners, employing hundreds of thousands of people and supporting numerous ancillary industries. By simplifying access to a high-value market like the UK and easing production constraints, the policy shift is expected to fuel export growth and bolster competitiveness.
Additional policy upgrades add to the good news. As per reports, under the Asia Regional Cumulation Group—a new mechanism introduced within the DCTS—Sri Lanka can now source garment inputs from 18 partner countries, including India, Pakistan, and Indonesia, while still having those materials recognised as Sri Lankan-origin for trade purposes.
Mark Surgenor, President of the Council for Business with Britain, reportedly called the DCTS reform a “success story” for Sri Lanka’s export economy. He emphasised the growing percentage of garments that will now qualify for zero tariffs and reaffirmed the council’s continued support for fostering trade relations between the two nations.
The global apparel market is incredibly competitive, and for Sri Lanka, which is charting a course out of economic turbulence, the strengthened trade relationship with the UK offers more than short-term relief—it provides a viable pathway to sustainable growth. The reforms could help the nation’s apparel industry to attract higher-value orders and elevate its global profile.
Expectedly, there is now a renewed sense of purpose among the Sri Lankan garment exporters.
Fibre2Fashion News Desk (DR)
