History of Sri Lankan Textile and Apparel Industry

Last Updated on 13/03/2021

History of Sri Lankan Textile and Apparel Industry

Harshani Wijendra
Sri Lanka Institute of Textile & Apparel Technology (SLITA)
Email: harshani_bipasha@yahoo.com


The Global Textile Industry, particularly the Apparel Industry has seen remarkable changes in the past few years. The Garment Manufacturing Industry and the Garment Companies in developed countries are now always on a lookout for cheap source of garment production. The days are gone when textile garment industry was concentrated in the consumption hubs of US, EU and other developed countries of the world. The clothing wholesale supply is increasing worldwide in all the sectors of the industry, whether it be men’s clothing, women’s clothing, kids wear or infant wear. The elimination of global export quotas has led to a shift towards low cost countries having strong and established Clothing Industry especially the Asian countries. And Sri Lanka is one among those Asian Countries.

The global textile mills market is forecast to reach $961.0 billion in value in 2021, an increase of 28.5% since 2016. The global apparel manufacturing market is forecast to reach $992 billion in value in 2021, an increase of 26.2% since 2016. At present few countries like Bangladesh, Thailand, Cambodia, Sri Lanka, Pakistan contribute major share in Forex earnings of their country from Textile and Clothing trade, though their share in the world market is not very significant.

global apparel market 2020
Fig: Value of the global apparel market

History of Sri Lanka Textile & Apparel Industry:
Sri Lankan textile and apparel industry had emerged from a modest beginning in the early 1950s A few pioneering industrialists who started out on an uncertain course at this time, confident their manufacture to only some popular items of garments and catered essentially to local demand. By the end of the 1950’s there was a reversal in policies and the economy moved towards restrictions on imports and a policy of import substitution in industry began to be perused. While the major basic industries were reserved for the state; a wide range of consumer goods industries were opened to the private sector, which was provide with various investment incentives and a protected market. Over the decade of the 1960’s as many as 300 categories of industrial products began to be manufactured locally. Among this range of products a major item was textiles and another readymade garments, though from the outset raw materials required for the garments industry were imported.

It was in the late1960’s that Sri Lanka’s readymade garments began to break into export markets. Sri Lanka’s shirts had found acceptability in markets such as the UK and Soviet Union and a leading shirt manufacture began exporting up to Rs: 2 million worth of product annually to the USSR, within the bilateral trade agreement between Sri Lanka and the USSR.

Around 1972 there was a change in outlook towards the industry as existing policy was altered to allow certain sectors to adapt an export oriented approach. Special foreign exchange allocations and other fiscal and tax incentives were offered to selected export oriented industries under this package. In the first six years of the 1970’s over 2500 industrial units received approval from the Local Industries Approve Committee (LIAC) and of these nearly 2000 were in the product group of Textiles and Textile based industries. By the mid 1970’s wage/ pries inflation and imposition of trade quotas on exports of traditional Asian Suppliers of made-up garments such as Hong Kong, Taiwan, South, Korea and Singapore made Sri Lanka more attractive location for the industry. New units began to be established in collaboration with foreign capital/marketing, while production was being upgraded through import.

The period after the late 1970s saw a rapid expansion of the clothing industry in Sri Lanka. The impressive growth witnessed during this period can be attributed to two major factors. The first is the market-oriented liberal economic policies introduced in 1977. The market friendly economic reforms, which identified the private sector as the engine of growth, places greater emphasis on the export-led industries.

Sri Lankan Textile & Apparel Industry
Fig: Sri Lankan Textile & Apparel Industry

The second important factor which contributes to the remarkable expansion of the Sri Lanka textile and clothing industry is the Multi Fibre Arrangement (MFA). Sri Lanka is one of the countries that benefited from the quota hopping investments. The overseas manufactures of garment that relocated their production facilities in Sri Lanka include firms from both and Newly Industrialize Countries (NICs) in East Asian and Europe. While the NIC firms moved their operations mainly as a means of “quota hopping” the motivation for producers of countries such as Germany and the UK to move into Sri Lanka was the rising production costs in their home countries. Given the ability to separate to different stages of the clothing industry, these overseas producers were able to disintegrate their production lines into low-cost countries like Sri Lanka without much difficulty. Investments by these two categories of foreign manufacturers fueled the growth of the Sri Lankan apparel industry to a large extent. In fact, the factories set up as joint ventures and wholly owned foreign companies account for almost half of the total exports earning from garments.

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