Sri Lanka’s textile and apparel sector has entered a critical phase of structural realignment, with fabric import expenditures easing to $2.1 billion in 2025. While China remains the primary supplier, accounting for approximately 45 per cent of the total import volume, the marginal decline in external sourcing highlights a strategic move toward domestic value addition. This trend aligns with the industry’s objective to reduce lead times and improve the ‘speed-to-market’ capability required by global fashion retailers in a volatile trade environment.
Incentivizing vertical integration and local production
The easing of import figures is largely attributed to the operationalization of the Eravur Fabric Processing Park, a dedicated zone designed to localize raw material sourcing. By increasing domestic fabric supply, Sri Lankan exporters aim to bypass the 10-15 per cent cost premium associated with freight and logistics. Industry analysts note, this transition is essential to maintaining the $5.5 billion annual export target, especially as competitors like Vietnam leverage integrated supply chains to offer more aggressive pricing. The focus is now on high-tech synthetic and functional fabrics to meet the growing demand for ‘athleisure’ in Western markets.
Regional dynamics and sustainable sourcing trends
Despite the reduction in total spend, the reliance on high-quality Chinese textiles remains vital for the premium garment segment. However, the ‘Tex-Eco’ mandate is forcing a shift in sourcing patterns, with 2026 projections indicating a 12 per cent rise in demand for recycled and organic textiles. To safeguard margins, the Joint Apparel Association Forum (JAAF) is advocating for deeper trade agreements that facilitate the duty-free entry of raw materials. This dual focus on localizing production while maintaining strategic global partnerships is expected to bolster the sector's resilience against currency fluctuations and external supply chain shocks.
Sri Lanka is a global leader in ethical apparel manufacturing, specializing in premium lingerie, sportswear, and complex knitwear for US and EU markets. The industry targets a $8 billion export valuation by 2030 through vertical integration and green manufacturing. Historically, the sector was the first to adopt ‘Garments without Guilt’ standards globally.
