Apparel industry diversifies supply chains

Sri Lanka’s apparel industry is now shifting its supply chain dependence from China to India and the region amidst the COVID-19 pandemic as it continues to receive reduced orders.

In a bid to move out of its dependence on China for its supply chain, the industry is now buying its raw materials from India, Bangladesh, Pakistan and others in the region, Joint Apparel Association Forum Chairman A. Sukumaran told the Business Times.

He noted that moreover they were already working with the government to also fast-track the establishment of the Eravur textile manufacturing zone.

In this respect, they expect the government to hand over the land to the industry by the end of the year to commence work on the construction of the textile manufacturing plants and the zone infrastructure that should happen simultaneously, he explained.

“We have to control the supply chain” to ensure that most of the raw materials will as much as possible be sourced from within the country, Mr. Sukumaran said adding that there are four committed investors interested in investing in the country.

Meanwhile, as the industry continues to work on a tough period since July with reduced orders, “If there is no revival everyone will look at right sizing” depending on the capacity of each organisation, he said.

Sri Lanka apparel exports in the first half of this year had reduced to a total of US$1834.88 million compared to $2620.40 million, a drop in earnings of $785.52 million or 40.28 per cent.

Exports in April recorded the lowest drop of $60 million and in June exports were at a total of $382.28 million compared to $481.40 million in June 2019.

Adjustments will continue to take place until business picks up, he said referring to reducing operations in line with the capacity of the operations. Mr. Sukumaran said that they expect the business to continue in this manner until the end of the year as they continue to receive “the same demand we had a month or two ago.”

The forecasts for a 30 per cent drop for this year remains unchanged and even though stores in the US are opening up buyers are still waiting to decide on future orders, Mr. Sukumaran said.

Orders for Personal Protective Equipment (PPE) production is currently on the decline but Mr. Sukumaran points out that this will never replace the regular business and was simply a “makeshift stop gap.”