Apparel

UK Grants Major Trade Advantage to Sri Lanka’s Apparel Sector Through Liberalised DCTS Rules

The United Kingdom remains one of Sri Lanka’s most important trading partners and is currently the second-largest export destination for Sri Lankan goods. In a significant move to strengthen trade relations with developing countries, the UK introduced the Developing Countries Trading Scheme (DCTS) with effect from 19 June 2023, granting preferential market access to 65 developing countries, including Sri Lanka. Under this scheme, over 92% of Sri Lanka’s product lines qualify for duty-free access to the UK market.

The benefits of the DCTS were further enhanced with the implementation of liberalised rules of origin effective from 1 January 2026, creating a substantial competitive advantage for Sri Lanka’s export sectors most notably the apparel industry.

Under the revised DCTS framework, Sri Lanka’s apparel manufacturers are now permitted to source up to 100% of their raw materials globally while continuing to enjoy zero-tariff access when exporting garments to the UK. This marks a significant departure from previous requirements and greatly enhances supply chain flexibility, cost efficiency, and production competitiveness.

Sri Lanka’s apparel exports to the UK amounted to approximately USD 660 million in 2024 and USD 610 million during the period January–December 2025. Apparel products account for nearly 73% of Sri Lanka’s total exports to the UK, underlining the critical importance of these liberalised rules for the country’s export earnings and industrial growth.

Another major benefit introduced under the revised DCTS is the simplification of processing requirements, including the removal of the earlier condition that two substantial manufacturing processes must take place in Sri Lanka. These streamlined and flexible rules are expected to significantly improve the ease of compliance and enhance the competitiveness of Sri Lankan apparel exporters in the UK market.

Beyond apparel, the revised DCTS also provides notable advantages to other export sectors. Sri Lankan manufacturers are now permitted to source inputs from the Asia Regional Cumulation Group, comprising 18 countries, while still treating such inputs as originating in Sri Lanka for the purpose of accessing DCTS preferential tariffs. This expanded cumulation facility allows exporters greater flexibility in sourcing raw materials while retaining zero or reduced tariff benefits.

Through these liberalised DCTS rules, Sri Lanka is well positioned to play a more active role in UK and global supply chains. The reforms not only strengthen the apparel sector but also support export diversification, promote sustainable economic growth, enhance employment opportunities, and reinforce free and fair trade relations between Sri Lanka and the United Kingdom.

In this context, Mr. Mangala Wijesinghe, Chairman/Chief Executive Officer of the Sri Lanka Export Development Board (EDB), and Mr. Andrew Patrick, British High Commissioner to Sri Lanka, recently held further discussions on the enhanced trade opportunities arising from the revised UK DCTS. The discussions also focused on Sri Lanka Expo 2026 and upcoming brand promotion initiatives aimed at strengthening Sri Lanka’s presence in the UK market.

These engagements reaffirm the shared commitment of Sri Lanka and the United Kingdom to deepen bilateral trade relations, strengthen cooperation in export development, and further position Sri Lanka as a reliable and competitive trading partner.