Apparel industry eyes textile fabric park
Sri Lanka’s apparel industry has plans to attract Chinese, Indian investors to establish a textile processing park as 80 per cent of fabric is today imported in making garments for exports.
Sri Lanka Apparel Exporters Association (SLAEA) Chairman Rehan Lakhany told the Business Times that the industry is working together with the Board of Investment (BOI) to select land from either Bingiriya or Eravur to establish a zone or park dedicated for manufacturing and processing of textiles.
Mr. Lakhany said that the two areas of Bingiriya and Eravur both have their advantages and disadvantages.
A minimum of five investors will set up at the production plant initially as weaving is not available in Sri Lanka and it is a requirement in the manufacture of garments.
In terms of the GSP + rules there is a country of origin rule as well, he said and in using Indian fabric, Sri Lanka does qualify. However, the apparel industry still needs to import fabric from China as well.
According to the rules of origin under GSP + fabric needs to be sourced from Sri Lanka or an area that qualifies for regional cumulation in order to qualify for GSP +. As a result there is an increase in demand for fabric sourced from Sri Lankan fabric mills and since India also qualifies it is possible to purchase from them too, rather than from countries like China.
He explained that the biggest area that Sri Lanka lacks in is in the purchase of raw material especially fabric.
“So this is an area we are looking at improving,” he pointed out noting that following the land allocations made they would invite respective investors from China and India to establish their manufacturing plants in Sri Lanka.
Also, Mr. Lakhany explained that it is difficult to approach India without ensuring the land is ready to establish this park.
He said that the fabric manufacturing base will ensure speed to market and shorter lead times once the foreign textile manufacturers set up.
The SLAEA chairman also explained that Sri Lanka currently has a few large manufacturers involved in knitting but at least 70-80 per cent of the fabric continues to remain an imported product.
“We are trying to encourage manufacturers to set up in Sri Lanka and then it will be faster to get to the needle point,” he said.
Currently investors from China are said to be relocating their textile manufacturing plants to other countries in the wake of the trade war situation that arose recently between China and the US resulting in high tariffs at the US border.
In this respect, most Chinese manufacturers are said to be setting up plants in countries like Vietnam, Bangladesh, Cambodia and India and today even Sri Lanka seems an attractive destination for them to invest, Mr. Lakhany said.
He also said that the industry is hoping to achieve US$5.5 billion in earnings by the end of the year and a growth of 8-9 per cent.