Lack of foreign exchange is hampering apparel exporters in Sri Lanka from realizing their potential.

A move by the Central Bank of Sri Lanka requiring apparel exporters to use only local currency for domestically sourced inputs has caused a furore across the biggest foreign exchange earning sector.Fabric and apparel accessory manufacturers sell their products directly to apparel exporters (locally and overseas) hence their businesses are classified as deemed exporters. The entirety of industry invoicing to apparel exporters has always been in dollars, euros or sterling pounds.The raw materials they require for their produce, such as yarns (both cotton and synthetic), dyestuff, chemicals etc., including machinery and spare parts, are not available locally and have to be imported from different countries around the world. The payment for such materials and machinery needs to be settled in dollars. The overall export and deemed export industry is facing serious challenges in logistics, both in terms of cost and lead times.

The country’s apparel industry has a 3,50,000-strong workforce.In addition, apparel exporters want access to key and emerging export markets through Generalized System of Preferences (GSP) Plus trade concessions from the European Union as well as the United Kingdom.

For the first ten months of 2020, Sri Lanka’s apparel and textile exports grew by 21 per cent.