Business
Importance of GSP for apparel sector
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.
Business
ADB-funded Thalaiyadi plant serves as blueprint for vulnerable dry zones in Sri Lanka
Sri Lanka should adopt a diversified water-security strategy, says chief engineer
By Sanath Nanayakkare
For generations, the Jaffna Peninsula has relied almost entirely on an underground freshwater lens. With no major perennial rivers to lean on, the region has long walked a tightrope between water scarcity, seasonal droughts, and a creeping groundwater salinity that has challenged communities across the North. Today, however, a monumental shift is underway along the windswept Vadamaradchi coast.
To understand how Sri Lanka is rewriting its water security playbook, one need only look to the Thalaiyadi Seawater Reverse Osmosis (SWRO) Plant.
V. Vijayakanth, Chief Engineer of the Jaffna Kilinochchi Water Supply and Sanitation Project (JKWSSP), recently explained the engineering marvels, environmental safeguards, and long-term vision driving this landmark infrastructure project.
“Building a multi-million-gallon desalination plant on an open, deep-sea coastline facing the Indian Ocean was no small feat,” he said.
Vijayakanth noted that the project required extensive marine, geotechnical, and ecological investigations before a single pipe was laid.
“The scale of the marine installation was striking: an intake and outfall system featuring roughly 1,300 metres of large-diameter pipeline, buried two metres beneath the seabed in water depths reaching up to 12 metres. Because ocean work is strictly dictated by nature, the team had to mobilise an excavator-mounted barge from India and execute a complex offshore operation within a very tight window before the onset of the monsoon.”
“One of the greatest historical hurdles of reverse osmosis technology has been its heavy appetite for electricity. To keep operational costs in check, the Thalaiyady plant integrates state-of-the-art isobaric pressure-exchanger energy recovery systems. These devices capture hydraulic energy from the high-pressure brine reject stream and transfer it directly back to the incoming seawater feed – recovering roughly 95% of available energy and slashing power requirements.”
“Environmental stewardship was equally central to the design. To prevent high-salinity discharge from harming the marine ecosystem, the plant utilizes an offshore outfall equipped with specialized diffusers positioned more than 500 metres from the shore. This ensures rapid mixing within a tightly monitored zone, safeguarding local marine life,” he said.
The impact of the plant is already tangible on the ground. Producing water that meets rigorous national quality standards (SLS 614:2013), the facility feeds into a vast transmission network linked to elevated service reservoirs. These tanks regulate hydraulic pressure across sprawling distribution routes, bringing relief to areas historically plagued by hard, brackish water.
Currently, about 1,600 households in the Karaveddi Zone are actively connected to the desalinated supply, with water flowing across a regional network stretching from Kodikamam and Jaffna City down to distant island communities like Delft, Kayts and Punguduthivu.
The peninsula’s total daily drinking water demand hovers around 50,000 cubic metres for a population of roughly 600,000. Operating at full capacity, the Thalaiyadi plant yields 24,000 cubic metres per day – meeting nearly half of the region’s current needs.
Yet, planners are already looking decades ahead. Driven by economic development, tourism, and proposed industrial zones like Kankesanthurai, projected potable water requirements for domestic, commercial, and industrial needs are expected to climb from 95,000 cubic metres per day in 2025 to 135,000 by 2045, and 175,000 by 2065. Meeting this future trajectory will require a diversified national strategy combining desalination with surface-water preservation and rainwater harvesting.
When asked whether Sri Lanka should lean exclusively on seawater conversion amid intensifying climate volatility, Vijayakanth emphasised the need for a balanced approach: “Sri Lanka should adopt a diversified water-security strategy, prioritising sustainable surface-water development, groundwater protection, rainwater harvesting, water conservation, treated wastewater reuse and catchment protection. Desalination can complement these sources as a valuable climate-resilient and drought-proof option where appropriate.”
Backed by financial and technical collaboration from the Asian Development Bank (ADB), the project has given the National Water Supply and Drainage Board (NWSDB) invaluable expertise in advanced desalination management. Crucially, a two-year hands-on training program is ensuring that local technical staff master everything from membrane upkeep to preventive maintenance.
As climate variability accelerates, Thalaiyadi serves as a vital proof-of-concept. While energy-intensive desalination cannot replace conventional freshwater sources everywhere, Vijayakanth emphasises that it stands as an indispensable, drought-proof shield for Sri Lanka’s vulnerable dry zones – turning the ocean itself into a secure foundation for the nation’s future.
Business
Tropic Of Linen takes new form at The Shoppes at City of Dreams
Sri Lankan fashion label Tropic Of Linen recently opened the doors to its second boutique, located at The Shoppes at City of Dreams.
For over a decade, linen has formed the core of the brand’s inspiration and business ethos. Its textures, movement, and natural irregularities carry through the striking interior of Tropic Of Linen’s newly opened second store. Large sculptural forms in wind-worn sandstone sit against softer curves, while a grand olive tree anchors the heart of the store, reaching up toward a skylight and giving life to the entire space.
Drawing on her background in fine art and design, co-founder Minha Akram envisioned a layered, sensory interior intended to draw people into the world of Tropic Of Linen and invite them to linger.
Business
ANC Education celebrates ‘Class of 2026’ at graduation ceremony in Colombo
ANC Education held its 2026 graduation ceremony at BMICH, Colombo, celebrating graduates across multiple programmes. The cohort included 53 BBA graduates from Northwood University, 22 Psychological Sciences graduates from Northern Arizona University, 320 Pearson BTEC HND graduates, and 29 BTEC Level 7 graduates, alongside foundation, diploma, and transfer pathway students. Senior representatives from partner institutions attended.
Best Performer Awards recognised outstanding academic achievement. The event honoured years of hard work and support from families and educators. Since 2002, ANC has provided local and international pathways. Graduates now pursue careers, further studies, or international opportunities.
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