Sri Lanka’s apparel industry, the country’s largest export earner and private-sector employer is facing its most serious sustainability crisis in decades, as policy inconsistency under the National People’s Power (NPP) government collides with renewed pressure from US tariffs and weak state intervention.
Employing over 350,000 workers directly, mostly women, and accounting for nearly 40 percent of total merchandise exports, apparel remains the backbone of Sri Lanka’s industrial economy. Yet manufacturers warn that contradictory signals from policymakers, combined with rising global protectionism, are eroding competitiveness at an alarming pace.
The industry is already operating under thin margins following years of economic instability, currency volatility, and rising energy and logistics costs. The re-emergence of higher effective US tariffs Sri Lanka’s largest apparel export market — has further tightened conditions, making Sri Lankan products less competitive against rivals such as Vietnam and Bangladesh.
Industry stakeholders say the NPP government has failed to respond with urgency. While officials speak of value-addition, sustainability branding, and ethical manufacturing, exporters complain that policy clarity is absent, particularly on taxation, labour regulation, and trade negotiations.
Manufacturers point to sudden changes in import duties on raw materials, delays in VAT refunds, and uncertainty over labour reforms as evidence of a government still finding its footing. “We are planning production cycles six to twelve months ahead, but policy changes arrive without warning,” one senior exporter said.
Despite repeated appeals from industry associations, there has been no targeted rescue package, no temporary tariff relief strategy, and no accelerated diplomatic push to mitigate the impact of US trade barriers. Smaller and medium-scale factories, especially outside export processing zones, are the most vulnerable, with several already reducing shifts or freezing recruitment.
Workers ultimately bear the cost. Reduced orders translate into shorter workweeks, income instability, and rising job insecurity threatening the livelihoods of thousands of households.
The apparel sector does not demand protectionism, but predictability. Without coherent industrial policy and swift engagement with key export markets, Sri Lanka risks losing hard-won global supply chain positions.
What is unfolding is not a sudden collapse, but a slow bleed one driven less by global forces alone, and more by domestic hesitation at a critical moment.
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