Sri Lanka’s economy boasts a thriving export sector, and establishing a strong presence in key markets like the UK can significantly enhance business growth.
According to the UK’s Department for Business & Trade, exports from Sri Lanka to the UK totalled GBP 1 billion across four quarters leading up to Q3 2023, making Sri Lanka the UK’s 82nd largest trading partner in the same period. The same statistics state that the top type of goods exported from Sri Lanka to the UK was clothes, forming 62.9% of all exports with an estimated value of GBP 383.4 million.
Sri Lankan businesses looking to extend their international reach or explore new markets in the UK – particularly in clothing, garment, and apparel exports – can certainly feel optimistic when looking at these numbers. However, the complex nature of international trade can make it difficult for export businesses to succeed against competitors.
To help export companies succeed in expanding overseas, this guide will explore how to export products from Sri Lanka to the UK, covering essential steps and considerations for shipping and the role of robust and reliable international shipping and logistics providers in facilitating seamless international trade.
Peak selling periods in the UK
Understanding the peak selling periods in the UK is crucial for Sri Lankan exporters, especially in the textile and clothing sector. Key occasions such as holiday seasons, festivals, and special events witness a surge in demand for apparel products, both from diaspora and non-diaspora communities in the UK. The former might be looking to acquire specific Sri Lankan ethnic, cultural, or religious wear that they cannot find in the UK, while the latter might want the same or to buy culturally non-specific apparel items for the holidays.
By aligning export strategies with these peak periods, as well as keeping the specific needs of their intended target audience in mind, Sri Lankan businesses can capitalise on increased consumer spending and maximise export opportunities accordingly.
Navigating duties, taxes, and fees in UK exports
When exporting products from Sri Lanka to the UK, it's crucial to understand the various duties, taxes, and additional fees involved. Factoring in these charges is essential for accurate cost estimation and effective financial planning. These costs may include:
Import duty
The UK imposes import duties on certain goods entering the country, which vary depending on the type of product and its classification under the UK's tariff schedule. Import duties are typically calculated as a percentage of the cargo’s customs value, including the cost of goods, insurance, and freight (CIF value). Sri Lankan exporters should consult the UK's Integrated Tariff Schedule to determine the applicable duty rates for their products, or seek the import and export advice of an international logistics company such as DHL.
Value Added Tax (VAT)
Most goods imported into the UK are subject to Value Added Tax (VAT) at the standard rate of 20%, calculated based on the customs value of the goods plus any applicable duties and transport costs. However, certain goods may qualify for VAT relief or reduced rates under specific circumstances. Goods with a value exceeding £600 are also required to clear UK Customs through a valid UK VAT/ EORI number, and shipments may be held by customs if this information is not present on the shipping invoice.
Customs taxes
Exporting goods to the UK requires paying a customs tax, which is charged based on the market value of the goods. This tax is chargeable for shipments worth more than £135 and can be further broken down into cost, insurance, freight, and duty aspects.
Excise duty
Certain restricted goods, such as alcohol, tobacco, and fuel, are subject to excise duty upon importation into the UK. The rates and regulations governing excise duty vary depending on the type of product and its intended use. Sri Lankan exporters of excise goods must ensure compliance with relevant excise duty requirements and obtain any necessary permits or licenses for the importation of restricted items. DHL Express can provide advice on the export trade procedures and additional costs necessary to meet these requirements.
Tariff Rate Quotas (TRQs)
Some products imported from Sri Lanka into the UK may be subject to tariff rate quotas, which impose limits on the quantity of goods that can be imported at preferential duty rates. Exporters should be aware of any TRQs applicable to their products and ensure compliance with quota restrictions to avoid additional duties or penalties.
Other charges
Exporters should consider other potential charges, such as inspection fees, storage fees, and administrative fees levied by customs authorities or logistics service providers. These charges can vary depending on the nature of the goods, the shipping method, and the chosen international shipping and delivery route. DHL is able to provide assistance in navigating these complex charges and ensuring your goods arrive safely, securely, and in a timely manner.
Essential export documentation for the UK market
Sri Lankan exporters sending parcels to the UK are required to prepare essential paperwork, including commercial invoices, packing lists, customs declaration forms, and shipping bills. These export documents play a crucial role in facilitating customs trade procedures and ensuring compliance with regulatory requirements, ultimately expediting the movement of goods across borders. As a leading international logistics and shipping company, DHL Express can provide businesses with the customs expertise needed to ensure smooth and seamless customs and clearance.
Key differences when exporting to the UK vs the EU
In the aftermath of Brexit, there are notable differences and considerations when exporting to the UK compared to European Union (EU) countries. Sri Lankan exporters must navigate new regulatory frameworks, logistical challenges, and market dynamics. Understanding these differences is essential for devising effective export strategies and mitigating potential risks associated with cross-border trade. Some key considerations are:
Customs trade procedures and tariffs
Unlike EU countries, which operate under a single customs union, the UK now imposes its own tariffs and customs regulations which Sri Lankan exporters must familiarise themselves with.
Border controls and checks
With the UK no longer part of the EU's single market and customs union, border controls and checks have been reintroduced between the UK and EU member states. This may result in additional administrative burdens, delays at border crossings, and increased transportation costs for goods moving between the UK and EU countries. Sri Lankan exporters must factor in these potential delays and disruptions when planning shipments to the UK and EU markets.
Regulatory compliance
The UK has implemented new regulatory frameworks and standards governing various industries and sectors post-Brexit. Sri Lankan exporters must ensure compliance with UK regulations, product standards, and labelling requirements when exporting goods to the UK market. This may involve obtaining additional certifications, adhering to specific packaging and labelling guidelines, and ensuring product conformity with UK standards.
Market access and trade agreements
While the UK has concluded trade agreements with certain countries and trading blocs post-Brexit, its trade relationships with the EU and other partners have undergone significant changes. Sri Lankan exporters should closely monitor developments in UK trade policy, including trade negotiations and agreements, to assess the impact on market access and export opportunities. Understanding the evolving trade landscape is crucial for identifying new market opportunities and adapting export strategies accordingly.
Currency fluctuations and exchange rates
Fluctuations in currency exchange rates between the Sri Lankan rupee (LKR) and the British pound sterling (GBP) can impact the competitiveness of Sri Lankan exports to the UK. Sri Lankan exporters should monitor exchange rate movements and implement strategies to manage currency risk, such as hedging or pricing adjustments, to maintain profitability in the UK market.
