COLOMBO :
- Upgrades to the Developing Countries Trading Scheme (DCTS) enable Sri Lankan
manufacturers to source up to 100% of inputs for garments (dependent on the item of
clothing) from any country for final manufacture in Sri Lanka. - The changes, due to come into effect in early 2026, will allow more garments
manufactured in Sri Lanka to now enter the UK tariff-free. - Fewer processing requirements will apply resulting in the removal of the rule that two
significant manufacturing processes (e.g. manufacturing of the fabric as well as the
garment) must take place in Sri Lanka.
Sri Lankan garment manufacturers will gain unprecedented access to UK markets under
liberalised trade rules taking effect in early 2026. The reforms enable manufacturers to
source up to 100% of garment inputs from any country worldwide while maintaining tariff-free
access to the UK.
Under the UK’s Developing Countries Trading Scheme (DCTS), Sri Lanka receives benefits
as an ‘Enhanced Preference’ country. Current rules allow tariff free access to Sri Lankan
garments if inputs are sourced from the South Asian region along with restrictions around
processing. The liberalised rules will now offer Enhanced Preference countries (including Sri
Lanka) the same product-specific rules for apparel (chapters 61 and 62) as lower income
countries covered by the scheme (such as Bangladesh) which have ‘Comprehensive
Preferences’.
The British High Commissioner to Sri Lanka Andrew Patrick said:
“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.”
The President of The Council for Business with Britain, Mark Surgenor, said:
“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.”
The enhanced trade arrangements demonstrate the UK’s role as a progressive trade
partner. By simplifying rules of origin, the reforms enable Sri Lankan manufacturers to
compete more effectively in global markets while maintaining preferential access to the UK.
OFFICIAL – FOR PUBLIC RELEASE
OFFICIAL – FOR PUBLIC RELEASE
Notes to editors
The Developing Countries Trading Scheme provides preferential trading arrangements for
65 developing countries. Sri Lanka holds Enhanced Preference status, offering significant
tariff reductions across multiple product categories.
Aside from the changes to product-specific rules associated to garments, the UK announced
in June the creation of a new Asia Regional Cumulation Group of 18 countries that Sri Lanka
can source from for all other products eligible to access UK’s preferential tariff benefits. Input
sourced from another country in this regional group will be considered as originating in Sri
Lanka where the final processing or manufacturing takes place. Increasing cumulation
provisions and adding value to exports in this way supports countries to be competitive by
allowing more products to qualify for preferential tariffs.
New DCTS Asia Regional Cumulation Group - Afghanistan*
- Myanmar
- Bangladesh
- Nepal
- Bhutan
- Pakistan
- Cambodia
- Philippines
- India
- Sri Lanka
- Indonesia
- Tajikistan*
- Kyrgyzstan*
- Timor Leste*
- Laos
- Uzbekistan*
- Mongolia*
- Vietnam**
*This is the first time these countries are part of a DCTS Asia Regional Cumulation
Group.
**Vietnam signed a Free Trade Agreement (FTA) with the UK and is no longer eligible
for the DCTS. It can export inputs to DCTS countries in the group for onward
processing. This is one-way cumulation, and preferential tariffs apply only to
the DCTS country and only to materials that are duty-free and quota-free under the
UK–Vietnam FTA.
