Business

Importance of GSP for apparel sector

Published

5 years ago

2021/07/24

Sahan Weerasooriya

An apparel worker

By Jeevith Senaratne

Sri Lanka’s apparel industry – which accounts for 47 per cent of the nation’s exports and 15 per cent of industrial employment – is critical to our national economic health and well-being. Therefore, ensuring that the industry remains strong and resilient should be very high on our list of national priorities.

Given this backdrop, managing Sri Lanka’s relationships with key trading partners becomes highly significant, especially the few that we have preferential trading relationships with. A case in point is the European Union (EU).

The Generalised System of Preferences (GSP) or GSP, a preferential tariff system of the EU, one of our main export markets, plays a key role in Sri Lanka’s export competitiveness – and in the apparel industry’s success story. We cannot afford to lose access to our second largest export market, but the risk of that happening is real.

Here’s a situational summary: the European Parliament asked the European Commission (EC) to consider suspending Sri Lanka’s GSP+ status (explained a few paragraphs below), which it had restored in 2017 after first revoking it in 2010. The EC’s decision-making processes are however, grounded in economic rationale, and different from the calculus of the European Parliament, whose considerations are primarily political.

The timing is significant; the current GSP regulations will expire on 31st December 2023, and the renewal of the scheme is under review at present. This matters for another important reason: two other markets that the Sri Lankan apparel industry hopes to enter – Japan and Australia – also have GSP schemes, modelled on the EU. The EC’s actions could – potentially – affect those plans.

There are other reasons GSP+ access needs to be protected; look at the economic benefits that the apparel industry has contributed, the jobs it has created, its impact on economic development across the country, the reduction between rural and urban incomes that it has enabled and how it has empowered women by dramatically increasing their participation in the workforce.

Apparel accounted for 59 per cent of our country’s merchandise exports in 2020: $4.4 billion out of $7.7 billion, and just a shade under 5.5 per cent of GDP. It employs 350,000 people directly, and roughly twice that number indirectly. Women are 78 per cent of the industry’s employees, compared to the national average of 34 per cent for female participation in the workforce.

A 2018 study by the data analytics and insights company Kantar found that employees in the apparel industry were proud of being part of it; women felt empowered and glad to have economic independence. Additionally, earnings of people moving from rural to urban apparel industry jobs, boosts incomes in rural Sri Lanka, reducing rural poverty substantially.

A brief explanation of what GSP is, and how it works will help understand why retaining it is important. In essence, GSP+ is a special incentive arrangement aimed at sustainable development and good governance in vulnerable, low and lower-middle income countries. Vulnerability is assessed based on a country’s imports and economic diversification.

GSP+ countries – there are 7 others apart from Sri Lanka – have to implement 27 core international conventions on human rights, labour rights, protection of the environment and good governance. The EU reduces customs duties for the products under the general GSP arrangement to 0 per cent for GSP+ countries. GSP+ benefited roughly $1.9 billion of Sri Lanka’s exports to EU countries in 2019.

In its 2019 annual report, the EU said apparel accounted for 48 per cent of the 184 billion Euro under GSP+. This number highlights how vital being eligible for GSP+ is to remain competitive in accessing the European market.

Since we import a little over half the raw materials used in the apparel industry, we cannot, under current EU rules, get zero duty benefits on the full value of apparel exports to the EU, which were $1.2 billion in 2019. Zero duties were allowed on $586 million, or roughly 42 per cent.

That’s because we use a large part of imported content in our apparel. GSP+ has conditions called ‘country of origin’ rules, whereby you can only benefit from zero duty if the product was made from fabric that originated from a SAARC country.

The upcoming fabric processing park at Eravur gains additional importance in light of this. This fabric park is a project that has been under consideration for a long time; and when completed, it will add to our raw material processing capacity and enable import substitution. The decision by the GoSL to expedite this park will be a major boost to the Sri Lankan apparel manufacturer as it will allow for a greater utilization of GSP+. The zone will have a central wastewater treatment facility which is of significant value to investors in a fabric park.

In layman terms, at least in apparel, the loss of GSP+ would on average make Sri Lankan exports to the EU 9.5% more expensive than it is in the status quo. This “surcharge” would come on the back of Sri Lankan apparel already being more “expensive” than that of our competitors.

Rather than being cost-competitive like some competitor nations, our apparel industry focuses on value addition, estimated at close to $2.4 billion on $5.3 billion of apparel exports in 2019 (after deducting costs of raw material imports), or 52 per cent. With strategic initiatives like the fabric park in Ervaur, we can aim towards 65% value addition within Sri Lanka in the not-too-distant future. However, the viability of ventures such as the fabric park hinge on investors being able to reap the full reward presented through the existence of preferential trade agreements.

All News Advertisement

Business

Sri Lanka’s first generative AI‑powered, trilingual insurance assistant

Published

23 hours ago

2026/07/10

Thilina Walpola

Sri Lanka Insurance Corporation General Limited (SLICGL) unveiled Beechat, the country’s first generative AI‑powered insurance assistant, heralding a milestone for Sri Lanka’s insurance industry and move towards digital services.

Beechat is designed to transform the customer experience. Available through the SLICGL website (https://www.slicgeneral.com/) and customer portal, the Assistant offers customers instant access to policy information, real-time claim status updates, and insurance-related help 24 hours a day, seven days a week.

For customers, Beechat makes insurance simpler and always available. Instead of waiting in queues, calling hotlines, or being limited to business hours, customers can check policies, track claims, and receive instant answers in Sinhala, Tamil, or English, empowering every customer, whatever their language, to manage their insurance with ease.

The inclusivity ensures every customer, regardless of language preference, can engage with insurance services seamlessly. The AI‑driven platform reduces complexity, eliminates delays, and builds trust. Ultimately, Beechat transforms insurance from a process often seen as slow and complicated into a smooth digital journey that fits modern lifestyles.

The launch of SLICGL Beechat is strategically important for the organization because it strengthens its position as a leader in innovation within Sri Lanka’s insurance industry. Introducing the country’s first generative AI‑powered, trilingual insurance assistant, SLICGL demonstrates a commitment to digital transformation and technology‑driven service excellence.

The initiative reaffirms the company as forward‑thinking and customer‑centric and differentiating from competitors who still rely on traditional service models. It signals to industry stakeholders that SLICGL is setting new standards for accessibility, efficiency, and convenience in insurance.

Pioneering AI‑driven customer engagement, the company sets a new benchmark. Beechat demonstrates how technology can elevate insurance from a traditional service into a dynamic, futuristic experience, strengthening SLICGL’s relationship with the people it services. (SLICGL)

Business

‘Lanka Tractors returns with a historic Colombo 11 showroom’

Published

23 hours ago

2026/07/10

Thilina Walpola

Lanka Tractors Limited officially reopened its original showroom in Colombo 11, marking the return of one of Sri Lanka’s most recognised agricultural machinery companies and the official launch of the ACE Tractor brand in the country.

Located at 343 Olcott Mawatha, Colombo 11, the showroom was ceremonially declared open by Chief Guest Dudley Sirisena, Chairman of the Araliya Group of Companies, in the presence of Upul Jayasuriya, Chairman of Lanka Tractors Limited, Thilina Abeysuriya, Managing Director, Nishantha Yapa, Head of Business, and Rajiv Gunawardena, CEO of Asia Asset Finance PLC.

Originally established in 1971 as the State Trading (Tractor) Corporation, Lanka Tractors was restructured in 1991 and became one of Sri Lanka’s largest importers and distributors of agricultural machinery. Over the decades, the company represented internationally renowned brands including Massey Ferguson, Kubota and TAFE, earning the trust of generations of Sri Lankan farmers through quality products, technical expertise and dependable after-sales support. The reopening of its original Colombo 11 showroom, first established in 1982, marks the revival of an institution that has played a pivotal role in the mechanisation of Sri Lankan agriculture for more than five decades.

The company’s revival commenced in late 2025 through an exclusive partnership with ACE Tractors, the agricultural division of Action Construction Equipment (ACE) Limited, one of India’s leading engineering and manufacturing companies. ACE manufactures tractors, agricultural machinery, construction equipment and industrial equipment, with annual production capacity exceeding 9,000 tractors, exports to more than 37 countries, and a dealer and service network spanning over 100 locations worldwide.

Prior to the commercial launch, Lanka Tractors adopted an extensive validation programme to ensure the products were ideally suited to Sri Lankan farming conditions. Three introductory models—the ACE VEER 3000 (26 HP 4WD), ACE DI 350 NG (40 HP 2WD) and ACE DI 450 NG (45 HP 4WD)—underwent rigorous field testing across multiple agricultural regions under the supervision of ACE technical specialists. Following several product refinements based on local operating conditions, the tractors were introduced to the market in April 2026.

Business

Akurugraphy exhibition opens at Geoffrey Bawa Space in Colombo

Published

23 hours ago

2026/07/10

Thilina Walpola

The desire to communicate and be understood is at the heart of what it is to be human. In contemporary life, digital infrastructure underpins how we work, live, and share information, but the letterforms that carry our languages are rarely neutral.

Arkurugraphy, a new exhibition at the Geoffrey Bawa Space, explores the history, culture, and future of letterforms across Sri Lanka’s three official languages. Presenting the decade-long practice of Colombo-based type foundry Mooniak, it examines how decisions about the digitisation of Sinhala, Tamil, and Latin scripts impact legibility and carry deep consequences for who is seen, who is heard, and whose language endures.

Writing systems carry human thought and knowledge across time and space. Letterforms can become a form of cultural artefact, unique graphic symbols representing identity and belonging. Today, these inherited letterforms often take shape as digital fonts, their design demanding fluency across history, aesthetics, linguistics, and technical standards. Akurugraphy asks audiences to look at letterforms beyond the act of reading: to appreciate their form, trace their past, and consider the decisions that impact their future.

Akurugraphy brings together typographic specimens, archival material, and software development spanning Mooniak’s full body of practice. It is a celebration of letterforms as art and an examination of the technical and political stakes of designing scripts for the digital age. As part of the exhibition, the Geoffrey Bawa Space will host a programme of monthly talks, curatorial tours, workshops, and children’s programmes.

Akurugraphy is open Wednesday through Sunday, 10:30 a.m. – 5:30 p.m., and will be on view until 8 November 2026. The exhibition is designed to be accessible and welcoming to all visitors. The Geoffrey Bawa Space offers step-free access and wheelchair accessible facilities. Tactile elements are available throughout the exhibition. More information is available at geoffreybawa.com/akurugraphy .