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The future of Sri Lanka’s garment industry

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Santosh Menon

The Narendra Modi visit and what it means for the Sri Lankan garment sector

A 44% Trump tariff Could seriously impact Sri Lankan business and thereby FDI and jobs says Sri Lanka’s Garment industry.

Sri Lanka is just stabilizing after the economic crisis. Stringently following IMF norms and increasing the tax base etc. have yielded results. And the country is moving towards recovery. Debts have been deferred to 2028, when it needs to be repaid.

And there are two ways to ensure that happens- opening the economy – get valuable FDI and increase tax base so more revenue is collected from the people’s earnings.

The garment industry in Sri Lanka has been a key earner of foreign exchange – over the years the garment industry has earned a high of 5.95 billion USD in 2022 to 5 billion USD in 2024.

The US market contributes 70% of this forex at around 3.5 billion USD in 2024. At a 44% tariff Sri Lankan garments may become uncompetitive in the US market and clients could move to other countries for garments. This could mean a serious impact on jobs plus a blow to much needed FDI. There are still many steps that can be taken to address this. Renegotiate tariffs with the USA, find ways to diversify the garment market (easier said than done) and other market related strategies. But these are for the future, today the uncertainty in this regard is palpable.

And now the Prime Minister of India, Narendra Modi visits the island.

Currently Sri Lanka is allowed to export only 8 million pieces of garments into the huge Indian market. Data suggests that per capita purchase of garments in India is 24. Which means the population has a staggering need for 33 million garments. The size of the garment market in India is 100 billion USD. The broader textile and garment market in India is valued at 220 billion USD expected to be 646 billion USD in 2033. A projected growth rate of 12 % p.a.

A civilizational twin in clear and present danger. An opportunity for its big economic power in the neighborhood to ease its fears. And offer free access to Indian markets. Genuinely and sincerely. Without non-tariff barriers like specifying which ports it can enter through etc. A surprise announcement from the PM saying we feel your angst and we will do our utmost to safeguard your economy will not only be well received but it would further improve the sentiment for an India Sri Lanka economic embrace.

A 3 billion USD export into India will be but a pin prick in Indias giant apparel market. But could be a lifeline for Sri Lanka’s ailing economy.

Of course, it’s not a simple exercise of replacing US market with India market. But having access to India would help garment companies strategize on how to make an impact in India. Given some of the big names in garments in Sri Lanka already have some presence in India, having Indian market option available will ease the tensions and potentially save jobs.

But this serendipitous opportunity to help the neighbor in need comes exactly on the day of the visit of the Indian leader

Narendra Modi is known to make use of such opportunities.

India is a democracy. And a decision like this can’t be taken on a whim. Clearly many interests in India would want to stay protected. But India must be able to strategically employ its economy size for long term connections especially with the neighbors. And Mr. Modi can be very persuasive.

Now that the Indian PM Narendra Modi visits the island, he has an opportunity to ease the situation.

Santosh Menon is the President of Lanka India Business Association- LIBA and can be reached at president@liba.lk.

By Santosh Menon, President of Lanka India Business Association (LIBA)



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Needs of populace hit by Cyclone Ditwah seen as waiting to be addressed

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Lionel Bopage: ‘Recovery painfully slow.’

By Hiran H. Senewiratne

The government is yet to address fully the needs of the Cyclone Ditwah affected populace though one year has elapsed. The devastation cost the country more than US $ 4.1 billion, an Australia-based Chartered Engineer of Sri Lankan origin said.

‘Cyclone Ditwah affected more than 2.2 million people in 25 districts, which is considered to be one tenth of the population. However, only 39 percent of the allocated funds have been spent to date, the speaker, a one-time General Secretary of the JVP, now living in Australia Lionel Bopage said.

He made these comments at a Rotary Club Colombo South monthly meeting held at the Kingsbury Hotel, Colombo recently.

Bopage quoted from a Loughborough University research report published in February to the effect that Sri Lanka has under invested in prevention but over invested in recovery.

Bopage added: ‘The largest single economic category affected were not buildings but the agriculture sector which provides livelihoods for the majority of affected persons. Therefore agricultural livelihoods have been hit most.

‘More than 58,000 hectares of paddy lands were flooded in the Eastern districts alone, while 46 reservoirs reached critical spill level or failed outright following the disaster.

‘A rapid education sector assessment found that 1,682 schools were affected and more than 555,000 children were unable to attend schools. Further, 622 water supply schemes had been left non-functional and apart from that 11300 homes were damaged or destroyed. But reconstruction is happening at a very slow pace.

‘Tens of thousands of households in the hill country and in the East are still living in damaged properties and on unstable slopes drawing water from schemes that have not been restored.

‘ A Post Disaster Needs Assessment put the cost of resilience at US$ 3.4 billion but restoration work is happening at a slow pace even with foreign donor assistance.’

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WB forecast buoys bourse but weak investor participation slows momentum

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By Hiran H. Senewiratne

The CSE yesterday kicked off on a positive note due to a World Bank forecast that Sri Lanka could achieve 4.4 percent economic growth this year but later lost momentum due to weak investor participation.

Amid those developments both indices moved upwards. The All Share Price Index went up by 132 points while S and P SL20 rose by 21.02 points.

Turnover stood at Rs 1.97 billion with three crossings. Those crossings were; Lanka IOC 2.7 million shares crossed to the tune of Rs 470 million; its shares traded at Rs 127, CCS 2.7 million shares crossed to the tune of Rs 315 million; its shares sold at Rs 118 and JKH five million shares crossed for Rs 91.5 million; its shares traded at Rs 18.30.

In the retail market companies that mainly contributed to the turnover were; Commercial Credit and Finance Rs 126 million (1.3 million shares traded), Lanka IOC Rs 98 million (775,000 shares traded), Asiri Surgical Hospitals Rs 77 million (7.6 million shares traded), Commercial Bank Rs 51.3 million (307,000 shares traded), Sampath Bank Rs 46 million (325,000 shares traded), HNB Rs 37 million (98000 shares traded) and Tokyo Cement Rs 31 million (393,000 shares traded). During the day 50 million share volumes changed hands in 14547 transactions.

It is said that the petroleum sector performed well, especially Lanka IOC, while in the banking sector counters, especially Commercial Bank and Sampath Bank performed well. In the manufacturing sector, JKH impressed.

TAL Lanka Hotels announced that it has scheduled an Extraordinary General Meeting on October 29 to obtain shareholder approval for a proposed Rs 1.87 billion rights issue. The proceeds will be utilized for the repayment of bank borrowings, part refurbishment of the Taj Samudra Hotel in Colombo, settlement of vendor liabilities, and general corporate requirements.

Yesterday the rupee was quoted at Rs 330.95/331.05 to the US dollar in the spot market, weaker from Rs 330.85/95 the previous day, while bond yields were quoted broadly steady, dealers said.

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Huawei continues to showcase practical AI applications at Sri Lanka AI Week 2026

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Sri Lanka AI Week 2026 continued into its second day bringing together government, industry, academia and technology partners to explore practical applications of artificial intelligence. As the AI Technology Partner for the second consecutive year, Huawei showcased 18 use cases spanning government, education, finance, industry, green energy and everyday life, demonstrating how AI can be applied to real-world needs.

Prime Minister Dr. Harini Amarasuriya visited the Huawei exhibition together with officials from the Ministry of Education, Higher Education and Vocational Education, experiencing the Smart Classroom, AI in Education and MindGraph by Beijing Normal University demonstrations. The Smart Classroom demostration highlighted how connected technologies can bring teachers and students in different locations into a shared learning environment, while the AI in Education showcase demonstrated how AI can support teachers, enhance learning and enable more personalised education. The Prime Minister praised the efforts of the Ministry of Education, Higher Education and Vocational Education, Huawei and their partners to demonstrate practical applications of AI in education, noting the role of technology in supporting teachers, expanding learning opportunities, and advancing a more inclusive, equitable and future-ready education system.

Later in the day, Deputy Minister of Digital Economy Eng. Eranga Weeraratne, Deputy Minister of Industry and Entrepreneurship Development Chathuranga Abeysinghe, Secretary to the Ministry of Digital Economy Waruna Sri Dhanapala, and Chinese Ambassador Wei Huaxiang visited the Huawei exhibition and explored the AI Hands-On Classroom AI Empowering Industry, AI in Education and Smart Classroom demonstrations. Deputy Minister Weeraratne praised Huawei’s practical approach to showcasing AI applications, noting their relevance to Sri Lanka’s digital transformation across education, industry and skills development. The engagement also extended across the wider AI ecosystem, with industry professionals, technology partners, academics and other visitors engaging with the demonstrations and expressing appreciation for Huawei’s practical approach to applying AI across different areas of society and the economy.

Daniel Wu, CEO of Huawei Sri Lanka, said that Huawei will continue bringing global experience, technology and ecosystem resources to Sri Lanka, while working side by side with local partners to build local capabilities, develop local talent and create real value for the country. “I believe that by working together, we can make AI not only more intelligent, but also more local, more inclusive, and more meaningful for everyone,” he said.

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