Under the current FTA, Sri Lanka is permitted to export 8 million pieces of ready-made apparel
to India without applicable duties. The JAAF (Joint Apparel Association Forum), the apex body
of Sri Lanka apparel is hopeful to move beyond this quota, as FTAs carry the propensity to offer
immense trade opportunities for both countries.
As Sri Lanka recovers from the worst economic crisis since independence, the role of the
merchandise export sector has never been more important. Unfortunately, the apparel industry
is showing a decline of 20% in exports of textiles and apparel, driven mainly by a reduction in
demand in the primary apparel export markets. We believe that India, as our closest trading
partner, could offer a lifeline to the country, whilst also benefiting Indian fabric manufacturers.
A brief history of Indo-Sri Lanka trade relations under the ISFTA
The ISFTA which came into operation on 1st March 2000, has built a vibrant history between
the two South Asian nations in both trade and investments for more than two decades. Since
the operationalization of the ISFTA, Sri Lanka’s export trade has multiplied 18 folds from USD
47 million in 1999 to USD 815 million in 2021. Sri Lanka has also been able to promote a
diverse range of products under the ISFTA. Moreover, nearly 70% of Sri Lanka’s exports to
India use FTA provisions.
With the removal of port restrictions and fabric requirements in 2013, Sri Lankan exporters were
encouraged to utilize this quota despite apparel items being on India’s negative list. With this,
total earnings from apparel exports to India which stood at USD 5.18 million in 2008 and
increased to USD 77.51 million in 2018 indicating impressive growth. (Refer Table 1 below
which charts the industry’s growth under the ISFTA).
