The History of Garment and Apparel Industry of Sri Lanka.

The apparel industry is the single largest source of export revenue to Sri Lanka. It accounts to about 50%
of total exports from the country and employees 15% of the country’s workforce.
Even though the textile and apparel industry started to spread in the island in 1950s, it was to
accommodate the local demand and was heavily backed by the government. In the 1960’s established
manufacturer’s shifted their attention to the export market. As a result in 1965 Hentley Garment Ltd.
managed to send the first batch of ready-made garments, a shipment of shirts from Sri Lanka to the
USSR. This was under a bilateral trade agreement between the governments of the two countries. Apart
from Hentley eleven other pioneers who took the industry to the next level can be identified. They are
Bernard Boteju, Velona, Hirdaramani, Bentley Industries, Lanka Weaving Mills, Ceylon Dia Shirt
Company, Candy Garments, Seylon Knit-Wear Industries, Noortex Garments, Maxims, and DM
industries.
When the new opportunity showed signs of a lucrative future the government was more interested in
inviting foreign manufacturers to start plants in the country. After the political reforms in 1972 the
highly protectionist and hardline restrictive economic policy that prevailed in the era encouraged the
pioneers of many local industries to achieve the government’s goals of a self- sufficient economy. It also
shifted its attention to a more export oriented economy. As a result East Asian manufacturers were
lured into the country by providing both financial and non-financial incentives including tax holidays. In
the early 1970s the government introduced the Local Investment Advisory Committee (LIAC) to back up
the export oriented industries. Through this initiative special forex allocations, fiscal and tax incentives
were provided for selected 2500 companies including 2000 textile and apparel related industries. This
trend was further strengthened with the signing of the multi-fiber agreement (MFA) in 1974.
This agreement which was very impactful for the global textile and garment industry governed the world
trade in the sector from 1974 to 2004. It introduced a quota system according to which the trade was
governed for three decades. By this time textile and garment industry was no more a profitable industry
in the Western Europe and the America basically due to high wages which led to high production costs.
Although the MFA can be considered as a short-term protectionist measure taken by developed
countries to back up their local industries preventing a sudden extinction, it was a very favorable turning
point for some developing countries including Sri Lanka. At the same time some other developing
countries lost their export income due to shifts in manufacturing.

. Fabric used for export apparels were almost 100% sourced from overseas.Given the above circumstances Sri Lankan share of the industry was expanded by two types of global manufacturers. Singapore and South Korea shifted manufacturing to Sri Lanka which was an attractive destination for the industry. Hong Kong-$1. The open economic policies enabled the import of quality raw materials needed to cater to the requirements of developed markets. This was due to several factors. On the other hand high energy requirements in the textile production sector made Sri Lanka uncompetitive. However the local textile industry could not keep pace with the apparel sector. The industry showed a tremendous growth starting in the 1980’s.64. South Korea-$1.65. Most of these requirements were fulfilled by Japan. By 1980s Sri Lanka had the lowest wage rates in Asia.89. On the other hand rapidly declining industry in the more developed states of America and the Europe due to high labor costs also came to Sri Lanka. Although the country was self-sufficient in textiles for domestic consumption the produce did not meet the necessary quality requirements for export apparel. In the early 1980s the country had a concentrated fabric manufacturing industry with the major share in the public sector catering exclusively to home consumption. The prevalence of cheap and quality labor was the main favorable consideration for the industry to thrive here. With the advent of the global trends the country needed heavy capital investments in machinery and technical expertise. This inability to backwardly integrate has been a major barrier throughout the history of apparel industry in the country which has prevented the nation from reaping full benefits of the industry. Furthermore being centrally located in the globe the island provided the shortest lead times and convenient shipping routes to Europe. At that time India had an established apparel and textile industry therefore Sri Lanka became an alternative to India for global customers. Taiwan-$1.28. Textile mills needed sophisticated machinery which were very expensive rather than cheap labor which was crucial in the apparel industry. Hourly wage in Sri Lanka-$0. The government also took measures to introduce textile and apparel industry related curriculums to national higher education institutes as a foresighted investment for the development of the industry. Due to quota hopping established manufacturers in countries like Hong Kong. In 1978 the open economic policy was introduced to the country thus helping the island’s economy more receptive of the trends in the global economy. Taiwan. Sri Lanka did not manufacture fabrics with international quality. The geographical and demographic closeness of the two countries also should have been a supporting factor in this regard. The investment friendly environment attracted global entrepreneurs into Sri Lanka.

blouses until then. 5 textile mills and 16 apparel production plants were destroyed. Only a handful of manufacturers who could provide the best of cost. He pioneered the “speed sourcing” initiative for American retailers through more than two dozens of joint ventures with Sri Lankan companies. He has served in the capacity of cleared advisor to the United States Department of Commerce with regard to textile trade issues. Joint ventures opened up by these companies partnering with foreign companies to produce a part of the international quality fabric inside the country. By the year 2001 there were more than 1000 apparel manufacturing plants operating in the country but foreseeing the expiry of the MFA many factories were closed down. Brandix Group. The Board of Investment of Sri Lanka also encourage and facilitate the development of the industry. Another turning point in the industry which has paved way for the current success of Sri Lanka as a total apparel solutions provider took place in 1985. After 2004 even more plants who were unable to survive in an unprotected market with innovative concepts collapsed. Because of this support given by Martin Trust he is widely considered as the “father of apparel industry in Sri Lanka” and has been recognized and awarded by the Government of Sri Lanka. MAS Holdings and . At this time Martin was the president and CEO of MAST Industries which was founded by him and which later became known as Limited Brands a leading American fashion retailer. Martin Trust. Furthermore Sri Lanka started to become a specialist manufacturer of lingerie after these initiatives which was producing garments such as shirts. Limited Brands into the country. However there was no long-term negative impact. The ‘200 Garment Factory Plants’ project is also a milestone in the history of the industry for the fact that it transferred factories out to rural areas of the country.In 1983 ethnic disturbances textile and apparel industry was the worst hit industry. especially knitted fabric. In 1986 he entered into a partnership with Omar brothers (Brandix Group today) and in 1987 with Amalean brothers (MAS Holdings today). Tax holidays and other benefits are awarded to BOI approved ventures. quality and innovation survive now. Both these are thriving ventures in the country today as word-class manufacturers providing total apparel solutions in an international scale. an American specialist in international trade related to textile and apparel trade invested heavily in Sri Lanka. Furthermore several other factors ensured their survival. They also expanded to neighboring countries like India and Bangladesh seeking better opportunities making the groups multinational. Through his contacts he managed to bring world renowned fashion brands such as Triumph. In fact about 90% of all textile and apparel related ventures operating today in the country are BOI approved.

Hydramani are the forerunners in this quest for excellence. However Sri Lanka still holds its reputation for quality and environmental and social sustainability while some other cheaper competitors are accused of unethical practices including the use of child labor. In 2013 the textile and apparel sector was responsible for 43% of total export earnings of Sri Lanka with the US and the EU being the major customers. However the industry as a whole has managed to sustain in the country. sweat shops etc. . These three are among the 50 most important suppliers in the world. Catering to global fashion giants prove the heights reached by the textile and apparel industry in Sri Lanka. Sri Lanka has also managed to develop as a total apparel solution provider from its humble beginnings as a contract manufacturer. competition from China and the presence of cheap alternatives such as Bangladesh. ‘Garments without Guilt’ is an initiative by Sri Lanka apparel to market their products on this theme. The fierce global competition which can hardly be matched by cost keeps the key players busy to come up with innovation and radical concepts which can in turn expand their capability. shortage of labor. high energy costs. The slight set back of the industry on Sri Lanka is attributed to facts such as rising labor cost.