Apparel industry stakeholders are making a concerted effort to create a sustainable fabric supply base within the country.
“Though the goods exported to EU are eligible to the GSP+ benefit, we are unable to meet the country of origin rule. The main issue is that Sri Lanka lacks a fabric supply base to meet the demand of export oriented apparel. The available fabric is only knitted fabric.
The capacity available is fully absorbed by the industry. As a result, a part of the knitted and woven fabric requirement is being imported,” Joint Apparel Association Form General Secretary Tuli Cooray said.
Total imports of fabric goes well beyond US $ 2 billion annually. Whether GSP+ is there are not, having its own fabric base will ensure a sustainable apparel industry, he said.
The proposal to set up a textile development park in Eravur has been recognised in the government manifesto. “We believe that action will be taken by all relevant institutions to get the project going. We have requested the BOI to set up a zone exclusively for textile manufacturing.
A minimum of three plants will be promoted by us. We are willing to undertake missions to explore the possibility of attracting investment since China is looking for attractive sites for such investments,” he said.
The setting up of the zone will have multiple effects, the biggest advantage will be the ability to control the outflow of foreign exchange in the procurement of fabric by minimising imports. If the plants are given access to domestic markets, the domestic consumption will be able to improve their delivery, at a lesser cost since factory JIT (Just In Time) supply will enable minimum inventory cost whereby the delivery speed could be enhanced.
An exporter would enjoy the preferential benefits from countries when such treatment is offered because of their ability to meet deadlines. We hope that the government will pay attention on this request and take immediate action to set up these zones by allocating land to prospective investors. With the launch of manufacturing zones, simultaneous development will take place. In a matter of 10 to 12 months we will have a strong supplier base. This will ensure that we meet the demand of the apparel buyers and we look forward to make our apparel industry sustainable and future ready, he said If you analyse the progress of the world apparel industry, the retailers are directing the suppliers to go to places to where preferential tariff treatment is guaranteed. That is why production is taking place in many countries in Africa and Asia.
In general practice, the country of origin rule, developed by the Western world on clothing is a system called double transformation, meaning fabric has to be woven or knitted from yarn and from that fabric the garment is made.
This is yarn forward principal.Countries producing garments such as Sri Lanka should be able to meet the country of origin rule, so as to ensure that the preferential treatment offered by the parties are met without which the Most Favoured Nation (MFN) is not applicable.
For example, in our case we have the biggest beneficiary scheme, the GSP+. All products that we manufacture are eligible for the GSP + benefit, but we have not been able to enjoy this benefit because we cannot meet the country of origin rule.
Elaborating on this, Cooray said that in 2017, Sri Lanka exported products to the value of Euros 1,533 million to the EU market of which goods worth Euros 1,529 million could have enjoyed preferential treatment. But we got only for Euros 646 million representing 42.23 percent. Since we did not have the fabric base or we could not import the required fabric from India and Pakistan, we did not get the full benefit. The same thing happened last year as well. We exported to the value of Euros 1,555 million, but GSP + was given only for goods worth Euros 732 million representing 47.1 percent.
Courtesy: Sunday Observer
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