srilankan apparel industry

INTRODUCTION Highest industrial employment generator and the highest foreign exchange earner.

Produce a wide range of international branded clothing such as Victoria’s Secret, Pierre Cardin, Nike, Gap

etc.

BOI approved ventures account for almost 90% of Sri Lanka’s total garment export.

Sri Lanka’s textile and apparel industries could be categorized into 3 groups.

Apparel companies

Textile mills and finishing plants

Companies engaged in accessory manufacture Foreign Rivals

IndiaChinaBangladeshVietnam

Major export countries

European Union

USA

HISTORY• The textile and clothing industry had emerged from a modest beginning in the

early 1950s.

• 1960- Industrial products (300 Categories) began to be manufactured locally.

Major item was textiles and readymade garments.

• Late1960’s that Sri Lanka’s readymade garments began to break into export

markets.

• 1970’s wage/ prices inflation and imposition of trade quotas on exports of

traditional Asian Suppliers of made-up garments.

• After the late 1970s saw a rapid expansion of the clothing industry in Sri Lanka.

– Market-oriented liberal economic policies (1977)

– Multi Fiber Arrangement

• Began to grow significantly in the 1980’s

• In 1985, Martin Trust, began working with Sri Lankan textile

and apparel companies.

• In 1986 and 1987 he established joint venture partnerships

with the Omar Group and the Amelean Group.

• In 2010, most of the exports to the US are from Sri Lanka

(MAS OR Brandix)

Economic impact on 2013…

• Apparel is the second largest sub-sector in the index (FIPI)

• Increase in new orders (unstable situation in Bangladesh)

• Green manufacturing and waste management methods

• Increase demand for local fabrics• Apparel industry

Industrial exports :- 60%Total exports :- 40%

IMPACTS OF INTERNATIONAL & DOMESTIC POLICIES ON TEXTILES & GARMENT INDUSTRY

• Textiles and Garment Industry has an important place in Sri Lanka’s economy.

• The textiles & garment industry began in 1950.

• Economic liberalization policies in 1977 paved the way for local handloom & garment industry to enter the world market.

• It has become the Sri Lanka’s largest export industry since 1986 & also largest net foreign exchange earner since 1992

In the world economy , the textile & garment sector contributed nearly 6% to the world merchandise exports.

World trade in textiles & garments takes place in a highly protected market with tariffs & quantitative restrictions.

MULTI – FIBRE ARRANGEMENT (MFA)

• This is a system of export restrictions imposed by developed countries on textiles & garment exports originating in developing countries to protect the garment industry in developed countries.

• Sri Lanka’s garment exports have been largely governed by MFA since 1978.

THE URUGUAY ROUND AGREEMENT ON TEXTILE & CLOTHING OF WTO

• According to the new rules, the sector is to be fully integrated in to normal rules of WTO.

• Sri Lanka has already fulfilled its commitments.

DOMESTIC POLICIES• Economic liberalization policies in 1977 paved the way

to the market friendly economic environment.• Under the schemes introduced by this policies, Export

of textiles & garments from Sri Lanka under the quota system started in 1978.

• 1992 – administration of the quota system became the responsibility of the Textile Quota Board (TQB)

• TQB was constituted as a statutory body by the Textile Quota Board Act , No 33 of 1996

• BOI & the Textile division of the ministry of enterprises development, industrial policy & investment promotion issues export license. (export visa)

• Recent measures in the 2014 budget National regulatory framework for nano technology

innovation & applications – national science foundation Joint Apparel Association Forum (JAAF) Commercial Hub 2013 – legal frame work to develop Sri

Lanka. Finance Act – Commercial Hub regulation No 01 of 2013 Export Development Board - promote exports during 2013

source: Annual Report , Central Bank of Sri Lanka. 2013

LABOUR POLICIES• Sri Lanka has strong labour policies , clearly stipulates

the working hours, age limits, prohibition of child labour, safety & salaries etc..

Industrial disputes Act No 43/1950 Factories Ordinance No 45/ 1942 Trade Unions Ordinance No 14/1935 Wages Board Ordinance No 27/1941 Termination of Employment No 45/1971 Employees Provident Fund Act No 15/1958 Employees Trust Fund Act No 46/1980

• Import & Export Control Act 1969 – regulates the international business in Sri Lanka

• Intellectual Property Rights – ensure a satisfactory income & job security for fashion designers, within the fashion industry , IP is not enforced, still Sri Lanka could not come up with a suitable law to protect fashion designers.

CHALLENGES• RIGIDITY IN LABOUR LAWS

-our regulations are sometimes not in compliance with international standards.

-restrictions in overtime for female workers-Lose competitiveness to those countries which have flexible

labour legislations

• INTERNATIONAL TREATISES-Trade Agreements-North American Free Trade Agreements-the African Growth & Opportunity Act-Agreement between EU & SL-WTO practices

SUGESTIONS

• Flexible Labour Policies.-wage policies should contain provisions to link wages with

productivity-revised to suit the requirements of modern economies-termination of employment , dispute settlement & other

matters should be amended

• Compliance with international instruments.• Take actions to protect IP Rights of Fashion designers.• Implement programmes & projects to increase high

tech industrial exports.

Wage Differentials Wage differences between industrialized western countries and developing countries was the main reason for shift of textiles and garments industry from the western world to Asian countries.

Productivity of Labour

Productivity of labour is considered very low in comparison with competitors.

Labour productivity in the garment sector improved slowly and gradually over last several years.

Better working conditions, on the job training and better management techniques contributed these improvements.

large number of holidays and loss of man days also adversely affects the productivity of labour.

Current Situation Of Textile Industry

• Today, the textile industry occupies a pre-eminent position in Sri Lanka, producing high quality textiles combined with an industry which is flexible and uniquely capable in servicing leading international brands such as Gap, Next, Jones New York, Nike, Tommy Hilfiger, Speedo, Abercrombie & Fitch, Land’s End, Marks & Spencer etc.

• A wide range of apparel for men, women, girls, boys, children and babies in the categories of fashion-wear, sportswear, work-wear, rain-wear, swim-wear is manufactured and exported with the flexibility of catering to the specific seasons to many countries around the world.  USA and UK are the top markets for Sri Lankan apparel through out the decades.

Current Usage Of IT in Textile Industry

ERP system looks in to all the process from receiving the order to delivering it. It will have several modules that the company has to buy according to their need. And then they can implement it. For example, SAP has mobile platform for mobile phones. It has a CRM (Customer Relationship Management) module.

Some organizations prefer to have a separate CRM software which is distinct to the main ERP system. Therefore, they can implement CRM softwares like SugarCRM and Pivotel.

Planing department needs a different set of softwares to do their work.

These software are specially designed to achieve that task... FastReact is one of the world’s best planing tools for textile industry

Future Of Clothing

SLINTEC’s research into textiles focuses on high-end fabric, ‘smart’ yarn and other technologies aimed at improving the competitiveness of the island’s apparel industry, such as material that lasts longer, is durable and self-cleaning. According to Professor K.M. Nalin de Silva, Science Team Leader at SLINTEC, nanotechnology can help meet the demand for ‘comfort materials’ and materials for newer applications.

At a time of climate change, with scarcity of power and growing water shortages, people are demanding apparel that’s more comfortable in extreme weather conditions and those with self-cleaning fabrics or where frequency of washing can be extended. SLINTEC’s research is trying to develop textiles to meet these requirements.

Magic MirrorBody scanning systems will be used to create digital body models that allow digital products to be draped over them.

THERMOCOOL

THERMOCOOL fiber is produced using nanotechnology which work with the body’s natural thermal capabilities through smart fiber cross-sections. This THERMOCOOL textile is mainly targeted for Tropical countries

THERMOCOOL fiber rapidly evaporates moisture thanks to its unique fiber mix. The fibers are designed to provide added evaporative surface, outstanding moisture transport and allow enhanced air circulation focusing energy on the evaporation process.

USA43%

EU21%

ITALY9%

OTHER26%

EXPORT

Labour DeficiencyWithdrawal of GSP+ facilityLack of TechnologyReduced global market shareBranding IssuesCompetition from other countriesDependence on few Export marketDependence on imported raw materialIncreased financial difficulty of Small

firms

Challenges

Suggestions to Improve

Increase the global market shareFree Trade AgreementImprove the TechnologyInitiate steps to get the GSP+Establish Brand for Sri LankaProvide Financial Support for

SMEImprove efficiency of workforce

CONCLUSION