JAAF welcomes Budget 2027’s export thrust, calls for swift implementation

• Seeks clarity on reducing Enhanced Capital Allowances minimum for SMEs, HS lines covered by the CESS reduction, Indicative Exchange Rate for VAT on Foreign Currency Supplies, National Single Window’s timeline and labour law review outcome

The Joint Apparel Association Forum (JAAF) yesterday welcomed the Budget 2027, which includes a number of the proposals submitted by the JAAF.  

Budget 2027 will strengthen export competitiveness, investment and trade facilitation, JAAF calls for swift and clear implementation so that the benefits reach exporters, workers and investors, it said in a statement.

Apparel remains Sri Lanka’s largest export earner. In 2025, the sector’s exports crossed $ 5 billion, about 32% of total export earnings of $ 17.25 billion. Measures that help exporters compete therefore matter to the wider economy.

JAAF particularly welcomes the following proposals:

Enhanced capital allowance: BOI-approved export-oriented manufacturers investing at least $ 3 million will be able to claim an allowance of 200% of qualifying capital expenditure. This should encourage investment in modernisation, technology and capacity.

Trade facilitation: The National Single Window for Trade will connect exporters in the first half of 2027, supported by an allocation of Rs. 1,990 million. JAAF also welcomes the planned Customs Ordinance reform, the modernisation of the TIEP process and the move towards paperless Customs clearance.

Lower import costs: The 25% reduction in CESS rates across 800 HS code lines is a positive step in the phased reduction of import tariffs.

Support for exporters: Newly VAT-registered exporters will qualify as Eligible Exporters earlier. The Government will also review procedural requirements that can deny legitimate VAT refunds and input tax credits. 

EU partnership: The EU-funded Sri Lanka–European Union Sustainable Trade and Economic Integration Project, worth Rs. 3,430 million over 2027 to 2030, will support export competitiveness and sustainable production.

“Budget 2027 gives exporters a constructive base to build on,” said JAAF Chairman Felix Fernando. “Announcements create confidence, but implementation delivers results. We look forward to working with the Government to ensure these measures are put into practice quickly, so that investors can plan with certainty.”

JAAF looks forward to clarity on several points, in consultation with the Government: Whether the minimum for Enhanced Capital Allowances can be reduced for the SME sector; which HS lines are covered by the CESS reduction, and whether they include raw materials imported for the construction of new manufacturing facilities; clarification on the Indicative Exchange Rate for VAT on Foreign Currency Supplies; the timeline and scope of the National Single Window as it extends to exporters; energy costs and supply stability, which remain critical to manufacturing competitiveness; and, the outcome of the labour law review, in which JAAF hopes to participate through the National Labour Advisory Council.

JAAF also reiterates the importance of continued access to the EU market. The industry supports the Government’s reapplication for GSP+ and will continue to uphold high standards in labour practice, environmental stewardship and good governance. It also remains committed to deepening local sourcing, which strengthens value addition and the resilience of the supply chain.

“The apparel industry employs hundreds of thousands of Sri Lankans and connects the country to the world’s leading brands,” added Fernando. “We are ready to play our part in delivering the growth, investment and jobs this Budget aims for.”

JAAF will continue to engage with policymakers, the private sector and international partners to help build a stable, predictable environment for Sri Lanka’s export industries.