Sri Lanka’s apparel sector has received a major competitiveness boost following a change to the United Kingdom’s Developing Countries Trading Scheme (DCTS), which from 1 January allows garment exporters to source up to 100% of raw materials globally while retaining zero-tariff access to the UK market, according to EDB.
The rule change, which liberalises the scheme’s rules of origin, represents a significant departure from earlier requirements and materially alters sourcing flexibility for Sri Lankan manufacturers exporting to the UK, the country’s second-largest export destination.
Under the revised framework, apparel exporters are no longer constrained by limits on foreign raw material inputs, nor required to meet previous processing thresholds that mandated multiple substantial manufacturing stages within Sri Lanka. The simplified rules are expected to reduce compliance costs, improve production efficiency, and strengthen the sector’s ability to compete within tightly priced global supply chains.
Apparel exports to the UK were valued at approximately $ 660 million in 2024 and about $ 610 million during January-December. Garments account for nearly 73% of Sri Lanka’s total exports to the UK, making the rule change particularly significant for export earnings and employment.
Beyond apparel, the updated DCTS also expands regional cumulation benefits. Sri Lankan exporters are now permitted to source inputs from the Asia Regional Cumulation Group, which comprises 18 countries, while still treating those inputs as originating in Sri Lanka for preferential tariff purposes. The provision is expected to support broader export diversification and integration into global value chains.
Discussions on the implications of the revised DCTS were recently held between Sri Lanka Export Development Board Chairperson and Chief Executive Officer Mangala Wijesinghe and British High Commissioner to Sri Lanka Andrew Patrick. Talks also covered Sri Lanka Expo 2026 and planned brand promotion initiatives aimed at strengthening Sri Lanka’s presence in the UK market.
The rule change positions Sri Lanka to play a larger role in UK-linked supply chains at a time when exporters face margin pressure and sourcing volatility, reinforcing the apparel sector’s central role in the country’s trade recovery.