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SPAL said it is actively allocating UK and EU orders to Sri Lanka to optimise landed costs and lead times | Photo Credit: SIVA SARAVANAN S
Avinashi-based garment exporter SP Apparels Ltd (SPAL) is positioning its Sri Lanka operations as a major growth driver from FY27, leveraging duty-free access to the UK and European Union and rising customer interest amid global sourcing realignment.
The company’s management said that its Sri Lanka platform, expanded through the acquisition and integration of four factories, has reached an installed capacity of about 1,650 machines and is on track to achieve normalised operations from the first quarter of FY27. Meaningful revenue contribution is expected to begin from the second quarter of the next financial year, once utilisation stabilises.
“Customers increasingly view India and Sri Lanka as a single, integrated sourcing base for SPAL,” Chairman and Managing Director P Sundararajan said during the company’s post-results conference call. “Sri Lanka offers duty-free access to the UK and EU, skilled labour, and flexibility across product categories, making it a natural extension of our India operations.”
The renewed momentum follows recent trade developments, including the India–EU free trade agreement and progress on India–UK negotiations, which have improved visibility for global apparel buyers. While India continues to face tariffs in the US market, Sri Lanka’s duty-free status for UK and EU exports has strengthened its attractiveness for European programmes.
SPAL said it is actively allocating UK and EU orders to Sri Lanka to optimise landed costs and lead times, while retaining flexibility to route production between India and Sri Lanka depending on customer requirements, he said.
The company has also added new customers through its Sri Lanka operations, with initial orders expected to commence in Q1 FY27 and scale up from Q2. Three of the four factories are expected to reach near-full utilisation by Q3 FY27, while the fourth unit may take an additional six months to stabilise.
Beyond basic knitwear, SPAL is using Sri Lanka to expand into higher-value and more complex categories. The management highlighted the country’s capability in woven garments, fashion wear, and specialised products, supported by a multi-skilled workforce familiar with diverse fabrics such as polyester, modal and blends.
“Sri Lanka factories are versatile and can handle everything, from babywear to women’s fashion and specialised garments,” Sundararajan said. The recent policy changes now allow duty-free re-export to the UK even when fabrics are sourced from outside the region, including China, he added.
In January 2025, SPAL entered Sri Lanka, which now provided revenue of ₹37 crore in the first nine months of FY26 and is expected to close the year at about ₹50 crore, he said.
SPAL has reiterated its consolidated revenue target of ₹2,000 crore by FY27, with Sri Lanka playing a central role in servicing incremental EU and UK demand as global buyers diversify sourcing away from higher-risk geographies.
“Our diversified footprint across India and Sri Lanka positions us well to capture market share as sourcing strategies recalibrate,” said Sundararajan. Sri Lanka expansion does not require significant fresh capital expenditure, as additional machines can be added within existing facilities, he added.
On the location advantage that Sri Lanka provides, the company in the investor presentation said it has efficient raw material transfer with overnight shipments from Tuticorin Port to Colombo Duty free trade to Europe and UK markets. There is abundant labour availability with easy access to skilled labour and is historically acclaimed for its skilled craftsmanship and quality in knitted and woven products.
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