Sri Lanka: Apparel's New Growth Engine?

Sri Lanka is increasingly viewed as a complementary manufacturing base for Tamil Nadu's apparel industry, supporting growth and offering enhanced sourcing flexibility. SP Apparels Ltd projects its Sri Lankan operations to generate ₹150-200 crore by March 2027, as its recently acquired factories reach peak operational efficiency.

The company has focused on integrating systems and improving delivery performance and productivity. With most of its 1,650 machines in Sri Lanka deployed for exports, SP Apparels anticipates its operations will become self-sustaining by March. Expansion plans include job-work arrangements to add capacity without significant capital investment.

Meenakshi India Ltd initially partnered with a Sri Lankan factory to navigate US tariff uncertainties. While duty-free access to the EU for Sri Lankan apparel provides a distinct advantage over Indian exports, an India-EU Free Trade Agreement could narrow this gap. Sri Lanka's established apparel ecosystem and skilled workforce continue to support significant export volumes to major markets like the US and Europe.