Fashion is one of the most significant contributors to the Sri Lankan economy each year. The largest segment of the industry involves apparel exports, reaching a total value of $4.8 billion in 2017. That figure was 3% higher when compared to 2016 numbers. About 40% of the country’s total exports involve apparel in some way.
That means the Sri Lankan fashion industry is one of the primary employers too. About 1 in 3 manufacturing jobs in the nation are because of apparel. Unlike other countries which provide value because of cheap labor, this industry focuses on lower value additions to maintain a sharp competitive edge. Since 2002, the industry has supported a 6.3% annualized growth rate and a per capita value of more than $3,200 per person.
The primary products offered by the industry include polyester yarn, denim, gray fabric, and specialized items used for sportswear and lingerie.
Important Sri Lankan Fashion Industry Statistics
#1. Apparel manufacturing dominates the Sri Lankan fashion industry. These jobs account for 90% of the total sector, responsible for production capacities with several global brands, including Liz Claiborne, Victoria’s Secret, and Tommy Hilfiger. Over 2.8 million people are directly or indirectly supported because of the opportunities supplied by the industry. (Sri Lanka Board of Investment)
#2. Most of the 600,000 indirect employment opportunities which are created by the Sri Lankan fashion industry are held by women. (Sri Lanka Board of Investment)
#3. The fashion industry is responsible for 30% of the industrial production which occurs inside the nation. They also provide almost 70% of the industrial exports each year, contributing to 6% of the GDP. (Sri Lanka Board of Investment)
#4. At the moment, the Sri Lankan fashion industry imports $2.2 billion worth of textiles each year, while producing about $850 million domestically. 35% of the imports the industry purchases originate from China, with another 29% coming from India. (Textile Today)
#5. Even with textile tariffs in place, the United Kingdom is the second-largest purchaser of Sri Lankan goods within this industry, averaging over $800 million per year. The United States is the largest customer, however, purchasing $2.1 billion worth of fashion goods annually. (Textile Today)
#6. Over 1,000 garment factories are currently operational in Sri Lanka. About 5% of the nation’s total employment is based in the fashion sector in some way. (Textile Today)
#7. 80% of the exports sent to the United Kingdom involve garments. The UK is responsible for over 30% of the fashion exports shipped to the EU-28 from the Sri Lankan fashion industry, along with 10% of the total British exports. (LKI)
#8. 25% of the total exports achieved by the industry are destined for the United States, with 70% of them being apparel-related. (LKI)
#9. The reliance on Chinese imports for textiles by the fashion industry in Sri Lanka means a 10% increase in price would cause a 25% spike in export costs for customers. (World Bank)
#10. Up to 5% of the normal average export turnover each year may be used for investments by fashion industry providers, assuming the foreign entities are operating within apparel-related markets. (LKI)
#11. Up to $2 billion is expected to be saved each year thanks to import changes required by the Sri Lankan government. New rules involving sizing, dyeing, and finishing are expected to streamline internal fashion processes over the coming years. (LKI)
#12. 15% of the available work labor within the nation is utilized by the fashion industry, with 8 out of 10 potential employees being women. (MAS Fabric Park)
#13. 71% of the factories supplies goods and services to the Sri Lankan fashion industry are based in the Western Province, creating over 60% of the employment opportunities for workers in the region. (The Island)
#14. Apparel performance within the fashion sector rose by $50 million between 2015 to 2016, despite an ongoing suspension of the GSP+ status for the industry. (Textile Today)
#15. The Sri Lankan fashion industry is the second-largest supplier of brassieres to the United States and the European Union, accounting for around 10% of the market supply at each destination. (Textile Today)
#16. The fashion industry in Sri Lanka is also the third-largest provider of swimwear in the United States, achieving an 8% share. Indonesia and China are the only two primary competitors for this States-based market. (Textile Today)
#17. Most of the major brands are still in the entry-level stages of their relationship with the Sri Lankan fashion industry, having a national presence for fewer than 10 years. (The Island)
#18. Without the GSP+ status in Europe for the Sri Lankan fashion industry, all products are received with a full tariff. If the status were to be reinstated, the industry would see 70% of their exports receive a preferential rate, including 20% which would enter with zero taxes. (Textile Today)
#19. Since the GSP+ status was removed by the UK in 2010, the share of apparel exports to the region has declined by 2%, while exports to other European nations have risen by as much as 11.5%. (LKI)
Sri Lankan Fashion Industry Trends and Analysis
Despite the many advantages offered by the Sri Lankan fashion industry, its desire to provide competitive wages for its workers hurts its chances on the global export market. The sector currently holds about 1% of the current market share, placing it outside of the Top 10 fashion producers right now.
Continued pricing schemes which keep the value-added costs low will help the industry grow in the next 5-year and 10-year forecast periods. Countries like Bangladesh, which often dominate the fashion industry because of the low minimum wage (usually below $100 per month), have experienced price increases in recent years. That cost change, combined with an emphasis in mature markets making socially responsible purchases, provides hope for strong growth in future years.
The Sri Lankan fashion industry offers a minimum wage that is still $25 more than what is paid in Bangladesh, even after the December 2018 wage increase received by Bangladeshi workers. The current minimum wage in Sri Lanka for fashion and apparel is $120 per month.
The global leaders of fashion manufacturing expect to see annual increases reach 3% through 2028. The Sri Lankan fashion industry should achieve average growth in the 6% range for at least another decade.
It may be slow and steady progress, but the fashion industry in Sri Lanka is catching up. By 2022, it should be a Top 10 provider in this category.
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