Garment exporters warn of market share loss over rising costs

Sri Lanka is gradually losing its market share to more competitive nations like Vietnam, Bangladesh, and India due to escalating production expenses driven by fuel price hikes and electricity tariff increases.

Speaking to a local media outlet, Sri Lanka Chamber of Garment Exporters Vice President Rumesh Perera stated yesterday to The Daily Morning that the recently declared 18 per cent electricity tariff hike for domestic consumers using over 180 units placed extra pressure on garment factories currently dealing with growing operational costs.

Rumesh Perera explained that factories are yet to feel the immediate shock because they are supplying orders that are already secured. However, when calculating expenses for future production, the cost per garment unit rises. He warned that failing to offer competitive pricing to clients creates a risk of losing a significant volume of orders to competing nations.

Whilst certain large-scale factories transitioned to green energy options, the majority of garment factories in Sri Lanka remain heavily reliant on the national power grid. Rumesh Perera noted that the garment sector faces a major challenge, adding that the industry can sustain itself if the Government introduces a scheme to provide lower-priced electricity for manufacturers.

Manufacturing costs in Sri Lanka stood higher than those of rival nations even before the latest tariff adjustments. Rumesh Perera mentioned that factory workers recently received wage increases following the new basic salary requirements for the private sector. He observed that further salary increases are impossible without losing profit margins and risking order losses, while factory workers simultaneously face a rising cost of living.

The garment industry remains the largest industrial export sector in Sri Lanka, generating over 40 per cent of total merchandise export revenue and contributing approximately seven per cent to the national gross domestic product. The sector provides direct employment to over 350,000 individuals and leads the country in female workforce participation and ethical manufacturing practices.