A new path for the Sri Lankan apparel industry under the United Kingdom's new trade scheme

With the new trade rule relaxations, set to come into effect from January 1, 2026, under the Developing Countries Trading Scheme (DCTS) introduced by the United Kingdom, a new era has dawned for Sri Lanka's apparel industry.

 This new mechanism grants duty-free access to the British market for Sri Lankan-manufactured apparel, which is expected to create a significant boost in the country's export sector.

Under the new reforms, local manufacturers will have the ability to source 100% of the raw materials required for their products globally from any country. Despite this, they will continue to enjoy duty-free benefits in the United Kingdom. The relaxation of strict rules, which previously mandated that two main production processes must take place in Sri Lanka, is a prominent change among the key modifications of this new scheme.

The apparel sector already accounts for over 60% of Sri Lanka's total exports to the UK, and these changes are expected to further contribute to the growth of that revenue. The value of these trade transactions with the United Kingdom, which is the second-largest market for Sri Lankan ready-made garments, is already close to US$675 million.

Under the new regulations, a special group including 18 Asian regional countries has been introduced, allowing Sri Lankan exporters to secure preferential tariff benefits while sourcing raw materials from regional partners. This flexibility will enable Sri Lanka to compete on equal terms with other competitive countries in global supply chains.

This tax relief is not limited to apparel but also extends to a wide range of goods such as food and electronic equipment, and the agreement applies to 65 developing countries. British High Commissioner to Sri Lanka, Andrew Patrick, points out that supporting Sri Lanka's economic growth and export diversification through the relaxation of rules of origin is a primary objective of the British government.

These relaxed import policies, introduced by the UK Department for Business and Trade, are expected to further strengthen trade relations between the two countries. An open invitation has also been extended to exporters to take advantage of these zero-tariff benefits offered under DCTS.