UK trade reforms: A transformational opportunity for Sri Lanka's apparel industry

SRI Lanka's apparel sector has entered a new phase of opportunity following sweeping reforms to the United Kingdom's Developing Countries Trading Scheme (DCTS), which came into effect on 1 January 2026.

- By A.G.S. Swaminathan Sharma

The revised framework grants Sri Lankan garment exporters tariff-free access to the UK market under significantly more liberal rules of origin, fundamentally reshaping the country's export competitiveness. Under the new rules, Sri Lankan manufacturers can now source up to 100% of their raw materials from anywhere in the world while retaining zero-tariff entry to the UK. This marks a major departure from the previous system, which required regional sourcing and multiple manufacturing processes to be carried out locally. For an industry that accounts for over 60% of Sri Lanka's exports to the UK, valued at approximately USD 675 million, and supports nearly one million livelihoods, this reform represents both an immediate commercial boost and a long-term strategic opportunity.

British High Commissioner to Sri Lanka, Andrew Patrick, welcomed the reforms:

A stronger competitive position in global markets

The relaxation of rules of origin removes longstanding supply-chain constraints that previously increased production costs and limited operational flexibility. Sri Lankan apparel firms can now source fabrics, yarn, and accessories from the most cost-effective global suppliers without risking tariff penalties. This will help reduce input costs, improve price competitiveness, shorten production lead times, and enable faster responses to fashion trends. At a time when global buyers are increasingly price-sensitive, Sri Lanka's ability to deliver quality garments at competitive prices enhances its appeal as a sourcing destination. Major exporters such as MAS Holdings, Brandix, Hirdaramani, Teejay Lanka, and Hela Apparel Holdings are well positioned to benefit from these changes, given their scale, international client base, and compliance-driven operations.

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