Sri Lanka’s idle textile factories have been badly hit by political and economic uncertainties. These state-of-the-art facilities offer a good opportunity for Indian companies to take over and start production immediately.
A report by Reuters in May said that Sri Lanka’s apparel export earnings could slump by $1 billion this year. Apparel is Sri Lanka’s largest industrial export and earned $5.95 billion in 2022, helping the country as it weathered its worst financial crisis since independence in 1948, triggered by a record reduction in foreign exchange reserves.
Explaining the reasons for setting up operations in Sri Lanka, a leading Indian apparel player said the Sri Lankan factories are idle for August, and this is the right time for the company to get into Sri Lankan manufacturing setup when the factories are already running with a full workforce. They have not pruned their workforce as yet and it is ideal to acquire factories with a full workforce because getting the workforce in Sri Lanka is as challenging as in India.
Avinashi, Coimbatore-based textile major SP Apparels Ltd plans to take over an existing idle factory as it plans to set up a subsidiary in the island country. The company has shortlisted some factories and in consultation with its customers will go ahead with the plans. It is looking at the running factory to immediately get additional capacity. The factory will be up and running from Q4, later part of Q4, or from Q1 FY2025, he said while discussing the company’s first quarter financial results.
A spokesman of SP Apparel explained the reasons for selecting Sri Lanka where there is political instability and economic instability instead of Bangladesh, Vietnam, or Cambodia, Sundarrajan said, Yes, there are the possibilities of looking at Bangladesh or Vietnam or Cambodia. He said Vietnam and Cambodia are completely working on the Chinese model, which will not suit the company. China has been investing in big factories in Vietnam and Cambodia.
He said only Bangladesh and Sri Lanka are the two options available. Bangladesh is always risky from the customers’ point of view, and given a chance they would like to move the business as much as possible to India as there are still issues related to compliance, fire safety, and the workmen unrest. There are also cultural problems to handle. Sri Lanka is a better choice, he said.
Sri Lanka’s idle textile factories attracting Indian textile players
