The United Kingdom continues to be one of Sri Lanka’s most significant trading partners, currently ranking as the second-largest destination for Sri Lankan exports. In a strategic move to bolster trade relations with developing nations, the UK launched the Developing Countries Trading Scheme (DCTS) on June 19, 2023. This initiative extends preferential market access to 65 developing countries, including Sri Lanka, where over 92% of product lines now qualify for duty-free entry into the UK market.
The DCTS’s benefits are set to expand further with the introduction of liberalised rules of origin, effective January 1, 2026. These changes are expected to provide a substantial competitive edge to Sri Lanka’s export sectors, particularly the apparel industry.
Under the updated DCTS framework, Sri Lankan apparel manufacturers can source up to 100% of their raw materials globally while maintaining zero-tariff access for garment exports to the UK. This significant shift from previous requirements enhances supply chain flexibility, cost-effectiveness, and production competitiveness.
Sri Lanka’s apparel exports to the UK reached approximately USD 660 million in 2024 and USD 610 million from January to December 2025. Apparel products comprise nearly 73% of Sri Lanka’s total exports to the UK, highlighting the critical importance of these liberalised rules for the country’s export revenue and industrial growth.
Another key feature of the revised DCTS is the simplification of processing requirements, notably the removal of the earlier condition necessitating two substantial manufacturing processes in Sri Lanka. These streamlined rules are anticipated to significantly ease compliance and bolster the competitiveness of Sri Lankan apparel exporters in the UK market.
Beyond the apparel sector, the revised DCTS offers notable advantages to other export sectors. Sri Lankan manufacturers can now source inputs from the Asia Regional Cumulation Group, consisting of 18 countries, while still considering these inputs as originating in Sri Lanka for DCTS preferential tariffs. This expanded cumulation facility grants exporters greater flexibility in sourcing raw materials while preserving zero or reduced tariff benefits.
Through these liberalised DCTS rules, Sri Lanka is positioned to play a more active role in UK and global supply chains. The reforms not only fortify the apparel sector but also support export diversification, promote sustainable economic growth, enhance employment opportunities, and strengthen free and fair trade relations between Sri Lanka and the United Kingdom.
In this context, Mr. Mangala Wijesinghe, Chairman/Chief Executive Officer of the Sri Lanka Export Development Board (EDB), and Mr. Andrew Patrick, British High Commissioner to Sri Lanka, recently engaged in discussions regarding the enhanced trade opportunities stemming from the revised UK DCTS. The discussions also touched on Sri Lanka Expo 2026 and upcoming brand promotion initiatives aimed at bolstering Sri Lanka’s presence in the UK market.
These engagements reaffirm the shared commitment of Sri Lanka and the United Kingdom to deepen bilateral trade relations, strengthen cooperation in export development, and further establish Sri Lanka as a reliable and competitive trading partner.
