The absence of a strong fabric base is hampering exporters in Sri Lanka from manufacturing a large volume of apparels for export to the EU under GSP Plus due to their inability to meet the country of origin rules.

In 2018, Sri Lanka exported apparels to EU at a year-on-year growth of 3.9 per cent, whereas it was a much impressive 5.7 per cent to the US. Sri Lanka, together with Indonesia, has submitted a joint application to EU seeking permission to use fabrics from Indonesia to make apparels in Sri Lanka. Similarly, the country is talking to South Korea as well to buy fabrics from them.

The EU is Sri Lanka’s second largest trading partner, next to India. With GSP Plus, Sri Lanka’s exports to the EU have increased 18 per cent. Sri Lanka’s apparel exports account for 60 per cent of the country’s exports to the EU. In June 2017 the country regained GSP Plus from the EU. The facility was reinstated following Sri Lanka’s positive steps towards restoring human rights in the country. It took one-and-a-half months for the ratification of the agreement with the EU for the market expansion to commence in earnest. The expansion fructified in the month of July. From July 2017 Sri Lanka’s export figures grew 10.34 per cent year-on-year.