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Garments imported at grossly undervalued prices are threatening the domestic industry, representatives of the Sri Lanka Garment Manufacturers Association (Domestic) said.

Huge volumes of inferior ready-made garments are being imported from countries where monetary incentives are given to their exporters. According to customs statistics the revenue collected by the government on importation of ready-made garments (HS Code cat 61 and 62) has been approximately Rs. 169 million in the year 2001 and Rs. 103 million for the first six months in the current year (2002), they said.

"Many large retailers will have a larger annual turnover than this. This is ample proof that most imports are heavily undervalued. It was also pointed out that any visit to our airport will prove that most courier-passengers bring in garments in commercial quantities sometimes even up to 200 Kg per passenger. These are released without proper valuations and at minimal or no duty.

The Association held a special meeting to discuss this crisis situation and to formulate measures to alleviate the threats undermining the existence of the industry, which sustains about 500,000 people in the formal and informal sectors.

A spokesman for the Association said that on a rough estimate, a minimum container load of imported garments per flight from Bangkok find its way into the domestic market.

"A minimum of three flights land at Katunayake International Airport a day from such destinations and its effect on the domestic manufacturer is anybody's guess.

The combined effect has forced the industry to the brink of collapse, thereby seriously threatening the livelihood of many employed in the sector," he said.

The state aims to make the country a high profile centre for garments but in contrast the domestic industry is heavily discriminated against by laws, regulations and other restrictions, preventing the industry to expand and flourish.

Therefore, the state should remove the unfair tariff structure on the local garment manufacturing industry inputs and impose restrictions on the volume/value of imports, to provide a level playing field, to the industry, he said.

"We want to request the government to permit domestic manufacturers to purchase raw materials, accessories and packing materials from the BOI sector on a duty free basis and in Sri Lankan rupees in order to reduce production costs to be competitive," the spokesman said.

The Association said that setting up a minimum floor price for imported garments where there is no value addition by employing Sri Lankans will help the state to increase its present revenue of such imports to a minimum five-fold.

The general consensus of the Association is to maintain viability and safeguard the larger interests of the people who are employed in the industry and to clearly demarcate between the export apparel industry and domestic garment industry with emphasis on the uniqueness of the manufacturers who specialise in the manufacture of garments to suit the climate and the physique, he said.

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