LNP – Sri Lankan apparel brands demand 300-400% CESS hike to combat ‘cheap’ imports

Sri Lanka’s domestic clothing brands are calling for a drastic 300 to 400 percent increase in the Commodity Export Subsidy Scheme (CESS) levy on the imported apparel, arguing it is a critical step to ensure the survival and competitiveness of the local industry in its own market.

The proposal was put forward by former Sri Lanka Brands Association President P. Yasotharan, during a press conference held at the Ceylon Chamber of Commerce in Colombo, this week.Â

He argued that such a measure would level the playing field against a flood of cheap, often substandard, imported garments that are stifling the local manufacturers.

Yasotharan claimed that the local apparel market is valued at a substantial Rs.700 billion, yet the contribution from the domestic entrepreneurs is less than 35 percent. He attributed this imbalance to unfair competition from the importers, who leverage the tax loopholes and dump low-cost products, undermining the local businesses that adhere to the national tax and quality standards.

“By increasing the CESS tax on those imports by three or four times, we can create a market where the price is comparable to that of the locally manufactured garments,” Yasotharan stated.Â

“If they can compete at that price, with the competitiveness and standards that these online players talk about, then we have a fair market. Our people can sew beautifully. Our people can provide high-quality clothes to this market.”

The CESS is a para-tariff, a tax levied on specified goods at the point of import, in addition to the other standard duties. Currently, it adds a relatively modest Rs.50 to Rs.100 (approximately US $ 0.15-US $ 0.30) to a single shirt.Â

The previous government, with the backing of the International Monetary Fund, announced plans to phase out para-tariffs like the CESS and consolidate them into the main customs duty structure. However, this policy shift is yet to be fully implemented and the latest 2025 National Imports Tariff Guide confirms that specific CESS levies on clothing remain in effect.

For the Sri Lankan consumers, already navigating a challenging economic climate, the proposal raises immediate concerns about the affordability and choice. The rise of international e-commerce sites and budget-friendly import retailers has provided access to a vast array of styles at prices the local brands often struggle to match.