As China gradually scales back its apparel manufacturing, Sri Lanka stands to gain market share. Even though its apparel prices are higher than competitors’ but Sri Lanka produces more sophisticated products, though there is room for improvement on lead times and product range and availability. Manmade fibers account for 50 per cent of Sri Lanka’s industry inputs. Apparels form the bulk of exports.

The island could enter into more trade agreements to help diversify export destinations for existing products, such as active wear and intimate apparel. It can expand into new products such as formal wear and high end outer wear that require higher skills and position itself as a regional apparel and textile trade hub taking advantage of its infrastructure advantage. The country needs to attract foreign investment by adopting clear investment policies, which currently remain at only two per cent of GDP.

Other steps Lanka can take include increasing exports of apparel, reducing import tariffs and getting into more trade deals that would widen market access. The country should also promote industrial relocation and attract more workers to relieve its labor shortage, increase integration with South Asia and reduce tariffs for the import of manmade fibers.