UK reforms open door for more Sri Lankan apparel to enter tariff-free
Sri Lanka’s apparel sector is set to gain wider duty-free access to the United Kingdom after the latter announced sweeping reforms to its Developing Countries Trading Scheme (DCTS), allowing manufacturers to source up to 100 percent of garment inputs from any country for final manufacture on the island.
The liberalised rules of origin, due to come into effect in early 2026, are expected to remove long-standing barriers that limited sourcing flexibility and imposed stricter local processing requirements. The changes align Sri Lanka’s preferential access with that of lower-income countries such as Bangladesh, which already enjoy more generous provisions under the scheme.
“We are pleased to confirm further details of the reforms to the DCTS. I know from my discussions with the JAAF, Sri Lankan manufacturers and UK brands that the changes are likely to have a significant positive impact on garment sector in Sri Lanka, while helping lower prices on the UK high street,” British High Commissioner to Sri Lanka Andrew Patrick said in a statement.
Mark Surgenor, President of the Council for Business with Britain, welcomed the move.
“The upcoming changes to the DCTS will further strengthen Sri Lanka’s exports to the UK. This is a particular success story for Sri Lanka’s garment industry where the proposed changes will mean that more of Sri Lanka’s garment exports to the UK could qualify for zero tariffs.
“The Council for Business with Britain is very supportive of these changes and looks forward to continuing our work with businesses to promote trade between the UK and Sri Lanka,” he said.
In addition to the new sourcing flexibility for apparel, the UK in June announced the creation of an Asia Regional Cumulation Group of 18 countries, including India, Pakistan, Vietnam, Bangladesh and Sri Lanka. Under the arrangement, inputs sourced from within the group will be treated as originating in Sri Lanka for products eligible under the DCTS, provided final processing takes place locally.
The expansion of cumulation provisions will make it easier for Sri Lanka to integrate into regional supply chains while retaining tariff-free access to the UK market.
The announcement comes as Sri Lanka, one of the UK’s largest apparel suppliers outside South Asia, faces stiff competition from regional rivals with lower production costs. The relaxation of rules is expected to boost the industry’s competitiveness and support its recovery as the country navigates out of its worst financial crisis in decades.
Under current rules, tariff-free entry to the UK was contingent on sourcing inputs from South Asia and meeting a “double transformation” requirement, which meant fabric as well as garments had to be produced locally.
The UK, Sri Lanka’s second-largest export destination for apparel after the United States, imported US$1.3 billion worth of garments from the country in 2024, according to official data.
