Trade and Innovation in the Textile and Clothing Industry in
Sri Lanka

The abolition of the quota system which governed much of the international trade in apparel till 2005 was the biggest challenge confronting the industry. Despite stiff competition from low cost producers from other countries, Sri Lanka has managed to survive due to a number of innovative initiatives undertaken by the industry with support from the Sri Lankan government. Whilst the industry led by some of the large scale manufacturers have established themselves as credible suppliers to some of the big brand names in the apparel trade, they are constantly striving to remain competitive by offering innovative solutions to their customers. This study examines how trade has affected innovation in the textile and clothing sector in Sri Lanka. More specifically, it looks at how intensified competition in the light of the phasing out of the Multi-Fibre Arrangement (MFA) phase-out has led to a number of innovative measures being undertaken in the textile and clothing industry in Sri Lanka to face the challenges of a quota free environment.

Janaka Wijayasiri and Jagath Dissanayake
Trade and Agriculture Directorate of the OECD, Paris