Today, apparel exports constitute to about 50 per cent of the island nations' export basket in terms of forex earnings. The shift in textile manufacturing capacity from developed nations to developing countries saw huge capacity being created for apparel production in order to take advantage of the low wage costs. At present there are about 850 apparel units in the country.

But, over the years this advantage of lower labour costs began to diminish with increasing wages and the nation is now forced to resort to various measures in a bid to maintain its competitiveness.

The textile industry in Sri Lanka is unique in the sense that it is mainly as an outsourcing base. The fabric is imported duty free from countries such as India, Pakistan,Hongkong, China, Korea, Indonesia etc and converted into an apparel and exported predominantly to the US. There is very little support that is given by the local industry in the process. The country does not produce cotton as it does not have sufficient land mass under irrigation and the returns from other cash crops is much more than that of cotton. Naturally, the spinning capacity is very low and is estimated to be about two to three lakh spindles.

There are a few weaving and processing facilities and they mainly cater to the domestic markets. Recently, some international players have set up joint ventures, especially in knitting. But what the nation is looking for is a substantial increase in its weaving, processing and finishing capacities in a bid to bring down the costs especially when Sri Lankan rupee is depreciating consistently against the dollar, according to Lakdas D Fernando, chairman, Sri Lanka Apparel Institute.

By integrating backwards the freight component, the impact of currencydepreciation on fabric imports can be reduced. This is where India can play an important role by entering into joint ventures he said, adding that by sheer proximity the textile industries of both the countries can benefit. He also added that the country was offering incentives such as tax holidays for setting up projects.

Other major steps taken by the industry there include setting up of a design base which the country lacks today. Efforts are also on to build brands.