Indian apparel firms stitching from Colombo
Sri Lanka is currently witnessing an influx of Indian companies moving their manufacturing of garments to Colombo to gain advantage from the US tariff concessions.
Around 20 companies including some large scale producers of apparels marketing to the US have arrived in Colombo, sources said, adding that three and five year-leases have been worked out for this purpose.
With Sri Lanka imposed a 20 per cent tariff hike compared to 50 per cent for India some companies in these neighbouring states are shifting their operations to Colombo, industry sources said.
An increasing number of businesses have arrived from India and have leased some Sri Lankan factories creating a lot of movement, it was noted.
However, there is uncertainty whether they will move out if and when the tariffs should come down, it was stated.
Moreover, two factories owned by Hela have been taken over by a Singapore-based investor backed by Bangladeshi interests in June this year.
It is observed that if this trend continues there could be an increased workforce attracted to this sector due to the growing expansion in the number of new operations establishing in Sri Lanka from these countries. Joint Apparel Association Forum (JAAF) spokesman Yohan Lawrence said that although there is an interest from Indian companies he cannot state the exact number of companies that are looking for manufacturing space in Sri Lanka.
He noted that Sri Lankan companies continue to receive orders for the next season.
Meanwhile, exporters are currently facing another concern with the repeal of the SVAT coming into force on October 1.
Mr. Lawrence noted that the concern here is whether authorities will stick to the 45 days within which the refunds will be made to exporters.
He noted that in line with this issue apparel exporters are concerned that Sri Lanka does not offer a competitive landscape for exports.
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