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ile manufactures. In turn it allowed countries like India, Pakistan and Sri Lanka to enter the industry with guaranteed markets. It was first introduced in 1974 and will end in 2005. As a result there was a world wide boom in the textile and apparel export industry in the mid 1980s.

200 GARMENT FACTORIES PROGRAMME (200 GFP)

8.In view of the infrastructure facilities and close proximity to the port and airport facilities etc. most textile and clothing manufacturers concentrated their operations in or around the Western province, where the country’s capital is located. As a result, unemployment – one for the major problem faced by Sri Lanka continued to remain high in the other parts of the island. Growing unemployment resulted in youth unrest in most of the rural areas. Thus, in 1990,a Cabinet Sub-Committee recommended that garment factories should be opened in provincial areas other than the Western Province. Consequently, the 200 garment factories programme (200 GFP) was launched with the idea of opening at least one garment factory in each of the 200 Assistant Government Agent (AGA) divisions. The main incentive which encouraged the private sector to take part in this programme was quotas. For this purpose, the remote areas of the country were classified into three categories, namely non-difficult, difficult and most difficult. Quotas were allocated on the basis of the location for the industry. The more isolated and difficult the area, the higher was ‘the quota allocated. While about 40 percent of the areas were identified as difficult, just over 40 percent fell within the most difficult category. The rest, just fewer than 20 percent, were classified as non difficult. In addition to quotas, the factories setup under the 200 GFP were also offered various other incentives such as tax holidays or lower corporate taxes, duty-free importation machinery and raw materials, loans from foreign currency banking units, etc. as the main thrust behind the 200 GFP was the high unemployment in the rural sector, each factory was intended to employ at least 500 workers. By the end of 1996, there were 154 factories in commercial operation under this programme, providing 76,821 employment opportunities.

CHAPTER THREE

THE ROLE OF TEXTILE AND CLOTHING INDUSTRY IN THE

SRI LANKAN ECONOMY

1.The common features of developing countries are high rates of population growth, high rates of unemployment, low savings, insufficient capital formation, low investment, high capital output ratio, rudimentary technology and cheap skilled and unskilled labour. These countries are also mainly exporters of primary agriculture products. Further being too small to achieve economies of scale in their domestic markets, these countries have adopted export led growth policies which are designed to generate foreign exchange and expose the productive factors of the country to the stimulus of competitive influence.

2.The textile garment industry there for became the initial response of developing countries to this call for export led growth. Being a labour intensive industry requiring a small capital base. Production of textile and apparel shifted to developing countries in the 1960s. It provided employment for a large number of persons earned foreign exchange allowed for diversification of the export industry