Sri Lanka's income from garment and textile exports to the US will drop by around 20 per cent when trade quotas expire next month an industry expert has predicted.

Tuli Cooray, who heads a committee of Sri Lankan business and government officials which advises the garment and textile industry, said that American buyers are likely to switch to countries with lower manufacturing costs such as China and Mexico.

He said this would lead to a 20 per cent drop in exports to the US, to around US$2 billion in 2005.

However, Cooray added that, whilst most smaller garment makers may have to downsize, the industry should be able to make a good recovery by concentrating on markets nearer to home, such as Japan and India.

Exports of textiles and garments constitute 50 per cent of Sri Lanka's total shipment revenue, with the US market providing the biggest source of income.