The textile trade between India and Sri Lanka, involving both large-scale manufacturers and SMEs, has become a vital component of the inter-country industry dynamic. Today, the textile sector serves as a significant pillar for their bilateral trade, propelled by Sri Lanka’s ethical manufacturing practices and skilled workforce, complementing India’s diverse industrial expertise. This symbiotic collaboration fosters
growth and innovation in both nations’ textile industries.
Companies engaged in textile trade
India and Sri Lanka have a deep-rooted history of collaboration in the textile and garment sector, driving mutual growth. For instance, Brandix, a leading apparel manufacturer with a strong presence in both Sri Lanka and India, stands as a prime example of leveraging cross-border collaborations to drive mutual growth and prosperity. Brandix has strategically partnered with several Indian stakeholders to establish a 1000-acre vertically integrated Manufacturing Park in the state of Andhra Pradesh. Additionally, within the park, three other Sri Lankan companies – Teejay, specialising in weft knitted fabric manufacturing; Econopack, focused on the production of corrugated boards and cartons; and Shore To Shore (Pvt.) Ltd., providing brand identification and packaging solutions–are also operational.
Sri Lankan womenswear and accessories brand Avirate entered the Indian market, following a host of international brands that are betting on the buregeoning lifestyle segment. In 2021 Reliance Retail Ventures Limited (RRVL) acquired the ‘amante’ umbrella brand from MAS Brands, a wholly-owned subsidiary of MAS Holdings, Sri Lanka. Aditya Birla Fashion and Retail Ltd.’s clothing brand Peter England forayed into the Sri Lankan market with an exclusive outlet in Colombo in 2016.
Furthermore, Ensemble, a multi-brand luxury Indian fashion retailer, introduced the Sri Lankan womenswear brand KT Brown to India, exclusively launching the label in-store and online.
Aitken Spence Apparel, a wholly-owned subsidiary of Aitken Spence, serves as a key partner for Reliance Industries (RIL), sourcing raw materials from India and selling finished products back to Reliance for domestic and export markets.
First Steps Babywear ventured into Sri Lanka in 2018. Similarly, babywear manufacturer Jay Jay Mills also has a manufacturing unit in Sri Lanka. Additionally, Krishna Lamicoat Pvt. Ltd., an Indian manufacturer of papers/polyfilm for CAD-CAM operations, has a manufacturing unit in Colombo.
Recently, MAS Amity Pte. Ltd., a subsidiary of MAS Holdings, signed a joint venture agreement with Tata Group’s Trent for the joint development of intimatewear business in India.
Key trade agreements between India and Sri Lanka
India and Sri Lanka have several key trade agreements specifically focusing on the apparel and textile sectors, aimed at promoting bilateral trade and investment in these industries. One of the most significant agreements in this regard is the India-Sri Lanka Free Trade Agreement (ISFTA), which came into effect in 2000. Under this agreement, both countries agreed to reduce or eliminate tariffs on a wide range of goods, specifically textile and apparel traded between them, facilitating greater market access and promoting bilateral trade and investment.
Additionally, the Comprehensive Economic Partnership Agreement (CEPA) between India and Sri Lanka was proposed to further enhance economic ties by addressing non-tariff barriers and promoting services of trade and investment. However, negotiations on CEPA have faced challenges and the agreement is yet to be finalised.
Furthermore, India and Sri Lanka are also members of regional trade blocs such as the South Asian Free Trade Area (SAFTA) and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), which include provisions for trade in textiles and apparel amongst member countries. These regional agreements complement bilateral agreements and contribute to the overall promotion of trade and investment in the apparel and textile sectors in the region.
While existing trade agreements have laid the foundation for bilateral trade between India and Sri Lanka, there is indeed a need for more agreements to further boost trade and economic cooperation.
For example, expanding the scope of existing agreements such as ISFTA to include more products and sectors can help diversify trade and enhance economic integration between India and Sri Lanka. Similarly, finalising agreements like CEPA, which focus on addressing non-tariff barriers and promoting services trade, can unlock new opportunities for both countries.
Facilitating trade: Sri Lanka opens vostro accounts in India
Sri Lanka, amongst eight nations, initiates vostro accounts in India, streamlining trade in rupees. This eases fabric imports for Sri Lankan garment units, boosting their access to Indian markets.
India’s rupee-centric trade policy has gained traction globally. Eight countries, including Sri Lanka, have opened 50 Special Rupee Vostro Accounts (SRVA). This facilitates Indian importers to transact in rupees, easing payment processes and reducing reliance on the US dollar. With Sri Lanka adopting this approach, its garment units have gained enhanced access to the Indian market. This shift proves beneficial amidst Sri Lanka’s recent economic crisis, aiding its fabric imports from India, which saw a notable surge to US $ 593.261 million in 2022, up from US $ 565.848 million in 2021.
India offers a great manufacturing base
India boasts a robust manufacturing base, particularly evident in its significant presence within the global textile and apparel market. The country’s textile and apparel sector is not only substantial but also positioned for rapid expansion in the foreseeable future. With India being the fastest-growing major economy globally and experiencing a burgeoning middle-class, coupled with increasing urbanisation and brand consciousness, the demand for fashion is growing. Consequently, the market is increasingly inclined towards high-quality products offered at competitive prices. Moreover, India presents a conducive business environment for investment, a fact affirmed by our first-hand experience. A testament to this is Brandix India Apparel City (BIAC) in Atchutapuram Mandal, Visakhapatnam, Andhra Pradesh, which exemplifies successful apparel operations by an international entity within India.
Brandix’s decision to invest in India has been propelled by several factors. Firstly, the unwavering support of the State Government, coupled with the early recognition of the potential of ‘Made in India’ by its clientele, have played a pivotal role. Location too has helped in this decision-making process, encompassing considerations such as factor costs, power and water supply stability, worker availability and training, market accessibility and the imperative for customers to diversify their sourcing locations.
The chosen location, initially a greenfield site, offered a surplus of individuals eager to partake in the apparel industry – a significant motivating factor for us. Then the Government’s commitment to developing essential infrastructure, including water, power and road networks leading to the industrial park, further facilitated our endeavour. By laying a strong foundation and collaborating with the right partners, we anticipated leveraging India’s inherent potential to scale up operations – a foresight that proved accurate. Furthermore, we have personally undertaken the training of over 80,000 individuals from the vicinity, with women comprising a substantial 80 per cent of our workforce.
To sum it up, India and Sri Lanka’s textile partnership fuels economic integration, leveraging strengths for industry growth. Expanding agreements and investing in infrastructure and skills will ensure continued success.
