Host of home grown apparel makers to set up manufacturing facilities in Ethiopia

Indian enterprises, both large and mid-sized are putting in millions of dollars for setting up manufacturing facilities in Africa’s oldest independent country, Ethiopia which is a promising sourcing destination for global manufacturers despite Modi government aggressively pushes its ‘Make in India’ programme.

Host of home-grown apparel makers are enticed to Ethiopia, as the Ethiopian government is offering attractive incentives to draw foreign investors, such as land on decades-long lease, cheap power and duty-free exports to key markets like the US and Europe.

Fabric-to-apparel maker Raymond will be investing $100 million over the next two-three years for a garmenting unit in Awasa, a lake-side city, which will be one of its largest facilities.

Sanjay Behl CEO, Raymond said that there are two major manufacturing costs – labour and power. The labour costs in Ethiopia are 50% cheaper compared to India and power tariffs one-third. They have looked at various options including Ethiopia, Vietnam and Myanmar, and have decided to go for Ethiopia because of its favourable political and economic climate.

Arvind, another Indian textiles major, will set up a six-million-piece garment plant in Ethiopia. Its director and CFO Jayesh Shah pointed out that, among various factors, the long-term lease for factories that the Ethiopian government offers is one of the main attractive propositions for the company’s decision to invest in this east African nation. There is also single-window clearance for industrial projects.

Kanoria Textiles, too, is setting up a project in Ethiopia, as it is the most favoured low-cost destination for apparel makers on the lines of Vietnam, Bangladesh and India. It is not only Indian textile companies that are making a beeline for Ethiopia – companies from China, Korea and Turkey too are investing in this African nation.