Sri Lanka's apparel exports saw strong demand in the first quarter of 2015. The US and the European Union accounted for 89 per cent of total apparel exports. In fact, Sri Lankan apparel exports to the EU and the US increased by 10.9 per cent and 8.8 per cent respectively. Knit garment exports increased by 11.7 per cent while exports of woven apparel increased by 7.1 per cent in the 2014 calendar year.

The knit manufacturing segment is showing growth potential with many countries looking at Sri Lanka as a potential manufacturer for this range of garments. A significant development during the year was the commencement of negotiations to regain the GSP Plus facility for Sri Lanka. If re-instated, the GSP facility will provide concessionary access for Sri Lankan apparel into the EU and will enhance the growth potential of the entire apparel industry.

GSP Plus would allow duty free exports for Sri Lanka. This price differential will significantly boost European demand for Sri Lankan apparel. The concessions will make sourcing fabric within Sri Lanka more attractive and will also reduce the cost of imports from Sri Lanka into EU countries.