Sri Lanka set to grow amidst fluid supply chains
South Asia is being looked at by companies in Britain, India, and the US for extensions in exports this year, particularly as they look for diversification of their supply chains, which will be a massive opportunity for Sri Lanka, an international trade analyst said.
Britain is targeting South Asia through the Developing Countries Trading Scheme (DCTS), affected in January this year. This scheme incentivises British businesses to partner with regional exporters in products like apparel to source 100 per cent of raw materials globally while retaining duty-free access to the UK.
US sees tech exports as an opportunity from India – especially in Bangalore, the analyst said, noting that major US tech firms, such as Google, Amazon, and Microsoft, are speeding up offshoring to India. “Bengaluru (Bangalore) persists as a key focus for tech, for over 35-40 per cent of India’s total IT exports. Bangalore is facing global competition but is investing heavily in infrastructure for the next 25 years to maintain its status as a tech hub,” he told the Sunday Times Business. Meanwhile Indian rubber and coconut-based companies are eyeing Sri Lanka to export out of, he said.
He noted that this year will witness strong ‘South South’ trade growth, with India, Vietnam, and Korea predicted to be the highest growth markets for British tech.
Indian apparel firms are also looking for more capacity expansions in Sri Lanka owing to the high US taxes for apparels in India. “Due to high US tariffs on Indian goods, including textiles, Indian apparel firms are aggressively looking to expand capacity in Sri Lanka. Around 20 companies, including large-scale producers, have moved or are contemplating moving manufacturing to Colombo to utilise favourable trade conditions,” an apparel manufacturer who also exports said. He noted that Sri Lanka has its own challenges with a sizable US tariff since last August. The country is considered a more efficient and compliant base compared to India, which has faced a steep 50 per cent tax increases in certain categories.
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