Garment factories in Sri Lanka are closing down. One reason is enhanced electricity tariffs. Since factory owners are finding it hard to compete with other countries that have much lower overheads, they are taking steps to shift to other countries.

One company which has three factories in Sri Lanka has decided to shut down and has asked its 5,000 workers who will lose their jobs to apply for employment to its factories in India. The US, EU and the UK comprise about 86 per cent of Sri Lanka’s total apparel exports. But despite impressive exports so far in 2022 the industry envisages a 25 per cent to 30 per cent decline in the remainder of the year. This is mainly due to the economic downturn’s impact on future orders from the US and EU, while the war in Ukraine has pushed up logistics and energy costs.

Sri Lanka’s apparel exports fell nine per cent in November 2022. Exports to the US were down by 17 per cent while shipments to the EU (excluding exports to the UK) saw a marginal drop of three per cent and exports to the UK fell by 29 per cent.

The apparel industry is Sri Lanka’s largest exporter , employing nearly one million both directly and indirectly, across 350 manufacturing plants island wide.