UK Reforms Unlock New Opportunities for Sri Lankan Apparel Exports

As of August 22nd, 2025, the UK is preparing to implement a significant trade reform that is expected to greatly benefit Sri Lanka's apparel sector. The new DCTS (Developing Countries Trading Scheme) will be introduced in early 2026, introducing a more liberal approach to rules of origin.

One of the key changes is the UK's decision to merge and enlarge the current regional cumulation groups within Asia, forming a new Asia Regional Cumulation Group that will encompass 18 countries, including Central Asian nations, Mongolia, and Timor Leste. This reform is a major win for Sri Lankan garment manufacturers, as they can now source up to 100% of their inputs from any global market while still enjoying zero-tariff entry into the UK.

This newfound flexibility is a significant improvement over previous trade agreements, as it minimizes restrictions on processing and places Sri Lankan apparel on equal footing with countries that receive "Comprehensive Preferences" under the DCTS. The UK is a crucial market for Sri Lanka's apparel industry, with exports increasing by 20.4% to $67.33 million in June 2025.

The JAAF (Joint Apparel Association Forum) secretary-general, Yohan Lawrence, has praised the reform as a "timely recognition of Sri Lanka's role as a resilient and responsible sourcing destination." The advocacy efforts by the UK High Commission, Sri Lanka's Department of Commerce, and local industry stakeholders have been instrumental in facilitating this change.

The updated rules are poised to increase exports, enhance operational efficiency, and reinforce the longstanding trade relationship between Sri Lanka and the UK. Sri Lanka's apparel industry is the nation's top export contributor, directly employing over 350,000 individuals and indirectly supporting over a million people within its supply chain. In June 2025, the country saw a 5.2% increase in apparel exports, hitting $439.39 million.