The United Kingdom’s Developing Countries Trading Scheme (DCTS) implemented liberalised rules of origin for apparel earlier than expected, delivering an immediate competitiveness boost to Sri Lanka’s garment industry.
Under the revised framework, Sri Lankan manufacturers can now source 100% of inputs globally while retaining duty-free access to the UK market, removing a long-standing constraint that required two substantial manufacturing processes to be performed domestically.
- UK accounts for ~15% of Sri Lanka’s apparel exports (≈ USD 675 million annually)
- Manufacturers gain full flexibility in fabric sourcing without losing tariff benefits
- Industry estimates USD 150–180 million in incremental apparel exports in 2026
- Sri Lanka now competes on equal footing with Bangladesh and Cambodia under UK preferences
The reform effectively shifts Sri Lanka from a rules-constrained sourcing model to a globally integrated, export-oriented value chain.
Exporters and policymakers have described the move as transformative.
The UK High Commission termed the reform an “unprecedented gain”, highlighting its role in improving market access, diversifying exports, and strengthening bilateral trade.
Despite enthusiasm, industry leaders caution that benefits are not automatic:
- Speed in buyer engagement and order conversion is critical
- Delays in execution could blunt first-mover advantage
- Relationship-driven sourcing will decide who captures volume
The DCTS reform illustrates how rules of origin—not just tariffs—shape competitiveness in global apparel trade. For Sri Lanka, the combination of:
- Duty-free UK access
- Global input sourcing
- ESG credibility
- Agile manufacturing
If executed decisively, 2026 could mark Sri Lanka’s strongest repositioning in UK apparel trade in over a decade.
