Sri Lanka Apparel Sector Targets Upstream Investment as U.S. Trade Pressure Rises
Sri Lanka’s apparel industry is looking beyond garment manufacturing to strengthen its next phase of export growth. The sector is calling for more investment in fabric mills and upstream manufacturing while seeking improved trade access to the United States.
The push comes as Sri Lanka targets $8 billion in apparel exports by 2030. The industry body Joint Apparel Association Forum (JAAF) says dependence on imported materials remains a major constraint. Domestic production currently meets only about one-third of demand for synthetic yarn and fabric.
Sri Lanka’s apparel and textile exports reached $5.02 billion in 2025, up 5.4% from $4.76 billion a year earlier. The US remained the largest market at $1.95 billion, followed by the EU at $1.58 billion and the UK at $680 million.
However, the industry remains heavily dependent on imported inputs. The US Department of Commerce estimates that Sri Lanka’s apparel sector spends about $2 billion annually on inputs, primarily fabric. It identifies grey fabric, denim, polyester yarn, and specialized fabrics as investment opportunities.
JAAF is therefore seeking incentives to attract foreign investment into fabric mills and encourage existing manufacturers to reinvest in upstream facilities, trims, and packaging.
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The US Department of Commerce estimates that Sri Lanka’s apparel sector spends about $2 billion annually on inputs, primarily fabric.
The U.S. market has become a parallel focus for the sector. Sri Lanka's exports to the US reached $3.15 billion across all products in 2024, making it the country's largest single export market. Sri Lankan officials have continued discussions with Washington on trade terms. In July 2026, the U.S. moved Sri Lanka into a 10% Section 301 tariff rate after the country committed to stronger measures against forced-labor imports.
Sri Lanka is also gaining greater flexibility in the UK market. From January 2026, revised Developing Countries Trading Scheme rules allow eligible Sri Lankan apparel producers to source 47.5% to 100% of garment inputs globally, removing the previous double-transformation requirement.