Boost for Sri Lankan garment sector as UK launches new trade measures

• Liberalised rules of origin will now allow for more garments manufactured in Sri Lanka to enter UK tariff-free 
• Further measures will make it easier for countries like Sri Lanka to trade, supporting jobs and growth   
• UK businesses and consumers to benefit from more competitively priced products

On July 10, the UK government unveiled a package of reforms to simplify the imports from developing countries like Sri Lanka.

The upgrades to the Developing Countries Trading Scheme (DCTS) make it easier for businesses to trade with the UK and help lower prices on the UK high street.   

The changes, announced as part of the UK’s wider Trade for Development offer, aim to support economic growth in partner countries including Sri Lanka while helping the UK businesses and consumers access high-quality, affordable goods. This announcement builds on the UK’s Trade Strategy published last month. 

New measures include simplifying rules of origin, enabling more goods from countries such as Sri Lanka, Nigeria and the Philippines enter the UK tariff-free — even when using components from across Asia and Africa.  

The announcement follows engagement with the UK businesses and international partners, major importers and trade associations. This included the Sri Lankan government and Joint Apparel Association Forum (JAAF). The most significant positive change for Sri Lanka is that the rules of origin for the garments sector specifically will be liberalised. The changes will ensure that the DCTS countries can now source their materials from a wider range of nations and will give the manufacturers from countries such as Sri Lanka the opportunity to take advantage of zero percent tariffs on garments. These changes are expected to be in place by early 2026.

The British High Commissioner to Sri Lanka Andrew Patrick said, “This is a win for the Sri Lankan garment sector and for the UK consumers. With the UK being the second largest export market and garments making up over 60 percent of that trade, we know the manufacturers here will welcome this announcement.  We want Sri Lanka to improve the utilisation of the UK’s DCTS for a wider range of goods, not just garments. 

With the Sri Lankan government’s ambition to grow exports and with the simplification of rules of origin for other sectors too, we strongly encourage more exporters to explore how they can benefit from the preferences offered by the DCTS. The UK remains committed to working towards creating shared prosperity for both our countries.”

Responding to the announcement, JAAF Secretary General Yohan Lawrence said, “We warmly welcome the UK’s Trade Strategy. The JAAF has worked very closely with the UK government to work on solutions to improve utilisation of the scheme. We are delighted that for garments, it will now be possible to source more raw material regionally and continue to qualify for duty free export to the UK. This will be a game-changer for our trade with the UK under the DCTS. 

We believe that the changes will also deliver significant improvements against the objectives of the scheme. At around US $ 675 million in value, the UK is the second largest market for Sri Lanka apparel, accounting for close to 15 percent of apparel exports, while the industry supports a million livelihoods across the country. This announcement will help secure employment opportunities and ensure sustainable growth in Sri Lanka by allowing us to compete on equal terms with our major competitors and we expect exports to increase significantly when the new rules come into effect.”

Launched in 2023, following the UK’s exit from the European Union, the DCTS is the UK’s flagship trade preference scheme, covering 65 countries (including Sri Lanka) and offers reduced or zero tariffs on thousands of products. It is one of the most generous schemes of its kind in the world. The recent changes further improve this offer. This will open up new commercial opportunities for the UK businesses to build resilient supply chains, invest in emerging markets and tap into the fast-growing economies.