COLOMBO: Sri Lankan apparel exports to the EU are expected to increase due to the DogiEFA warp knit facility in the MAS Fabric Park in Thulhiriya. The availability of warp knitted fabric in Sri Lanka will help increase exports to the EU with the help the GSP+ scheme.
The GSP+ trade concession scheme gives duty free access to Sri Lankan ready made garments into the EU. The trade scheme was operational since July 2005. However, many local apparel exporters could not use the scheme to export duty free into the EU because domestic value addition was too low.
To qualify for GSP+ benefits, local garments have to show over 50% domestic alue addition and domestic double transformation. This was not possible due to the high percentage of imported inputs. Although garment exports are worth US$ 3 billion annually the industry imports around US$ 1.6 billion worth of fabric and accessories as inputs.
Earlier the entire domestic demand for warp knitted fabric was imported. But now the fabric will be made in Sri Lanka. This would allow more Sri Lankan garment manufacturers to qualify for GSP+ benefits and would also increase European buyer demand for Sri Lankan garments.
Current demand for warp knitted fabric is between 8-10 million metres per year, which is expected to increase to about 15 million metres per year by 2010.
The government is taking action to retain the GSP+ scheme for Sri Lanka beyond 2008. The GSP+ scheme is a unilateral, preferential trade scheme from the EU that allows Sri Lanka to export around 7,200 items into the EU, duty free. Sri Lanka is the only country in South Asia to get this benefit. The GSP+ is given to countries that are seen as ‘vulnerable economies.’ But countries must also ratify and implement a number of international conventions on political, human and labour rights and environmental standards to qualify for the GSP+.