weighted score 4.3 · ten dimensions
Sourcing Attractiveness Index · ten dimensions
Sri Lanka
Labour cost, supply base depth, logistics infrastructure, trade access, and innovation scores for Sri Lanka as a sourcing destination.
Labour cost competitiveness
8
Garment sector wages highly competitive. Unskilled labour abundant and affordable. Post-crisis emigration has tightened skilled labour supply but overall cost position remains strong.
Supply base depth
3
Strong in garments, tea, rubber, and spices but narrow overall. No meaningful electronics, chemicals, or machinery supply chains. Limited tier-2 and tier-3 supplier ecosystems outside textiles.
Logistics & infrastructure
4
Colombo is a major transshipment hub with good east-west connectivity. Domestic road and rail infrastructure is adequate but not world-class. Interior logistics add cost and time.
Workforce skills
5
Highest literacy in South Asia (~92%). Good English proficiency relative to regional peers. Strong garment sector skills. Post-crisis brain drain has reduced availability of technical and engineering talent.
Scalability
6
Garment sector can scale within its niche. Small island economy limits overall production capacity ceiling. No geopolitical decoupling risk — neutral positioning is an advantage for Western buyers.
Ease of doing business
3
Post-crisis regulatory uncertainty. Bureaucratic friction in customs and licensing. IMF programme is driving reforms but implementation is uneven. Currency controls have eased but confidence remains fragile.
Trade access & tariffs
3
EU GSP+ reinstated 2017 — duty-free access for 6,000+ tariff lines. No comprehensive FTA with the US. SAFTA provides limited regional preferential access. Trade access is strong for EU-bound garments but narrow otherwise.
Sustainability baseline
3
Garment sector has invested in ethical and sustainable positioning. Renewable energy share is growing but coal dependency increasing. National ESG reporting frameworks are nascent. Factory-level sustainability varies significantly.
Innovation & IP
4
Limited domestic R&D investment. Patent filings minimal by global standards. Some innovation in garment sector sustainability and process efficiency. University-industry linkages underdeveloped.
Quality standards
4
Top-tier garment factories meet international standards (WRAP, SA8000, OEKO-TEX). Quality management in other sectors is less mature. Third-party audit infrastructure exists but depth is limited outside textiles.
Labour & Cost Competitiveness
Labour & Cost Competitiveness
- Wage levels
- Sri Lanka offers highly competitive labour costs for garment manufacturing, with minimum wages substantially below China and comparable to Bangladesh. The garment sector is the country's largest export earner, with a strong ethical positioning — several major brands source from Sri Lanka specifically for its relatively better labour standards in apparel.
- Literacy advantage
- Sri Lanka has the highest literacy rate in South Asia at approximately 92%. This translates into a more trainable workforce and stronger quality control capabilities compared to regional competitors such as Bangladesh or Myanmar.
- Post-crisis labour market
- The 2022 economic crisis and sovereign default triggered significant emigration of skilled workers, particularly to the Gulf states and Europe. This brain drain has tightened the skilled labour market and created upward wage pressure in technical roles, though unskilled garment labour remains abundant.
Supply Base & Logistics
Supply Base & Logistics
- Garment sector strength
- Sri Lanka's garment and textile sector is well-established, with vertically integrated factories supplying major Western brands. The sector has developed a niche in ethical and sustainable apparel production, differentiating from lower-cost competitors.
- Colombo port
- Colombo is a major Indian Ocean transshipment hub, ranking among the top container ports in South Asia. Its strategic location on the east-west shipping lane gives it natural connectivity advantages. The Colombo International Container Terminal (CICT) is operated by China Merchants Port Holdings.
- Limited diversification
- Beyond garments, tea, rubber, and spices, Sri Lanka's manufacturing base is narrow. Electronics, chemicals, and machinery supply chains are underdeveloped. Buyers seeking complex manufactured goods will find limited supplier depth.
Trade Access & Business Environment
Trade Access & Business Environment
- EU GSP+ status
- Sri Lanka's EU GSP+ preferential access was reinstated in 2017 after being withdrawn in 2010 over human rights concerns. GSP+ provides duty-free access for over 6,000 tariff lines into the EU — a significant competitive advantage over MFN-rated competitors.
- 2022 crisis aftermath
- Sri Lanka's sovereign default in April 2022 triggered an IMF Extended Fund Facility programme. The economy has stabilised but fiscal constraints remain severe. Currency depreciation, import restrictions, and capital controls affected business operations throughout 2022-2023.
- Ease of doing business
- Bureaucratic complexity, inconsistent regulatory enforcement, and post-crisis policy uncertainty create friction for foreign buyers. Port clearance times and customs procedures, while improving, remain slower than best-in-class Asian competitors.