In May last year, the Coimbatore-based integrated textile manufacturing company KPR Mill Ltd inaugurated its first overseas garment unit in Ethiopia’s Mekelle Industrial Park. KPR is not a lone example of Indian firm setting up garment manufacturing unit in Ethiopia. SCM Garments, again from Coimbatore, occupies the factory
adjacent to KPR’s.
So why are Indian textile units, especially garment manufacturing factories, expanding to new geographies, such as Africa? The prime reason is the duty-free access to the US and the EU markets. For example, for a polycot t-shirt, Indian exporters pay 32 per cent import duty in the US if shipped from India. If exported from Africa, it is duty-free. Similarly, the duty-free access gives 16 per cent cost advantage to an
exporter of cotton t-shirts. Another reason is rising labour cost in India
due to its economic growth. It is estimated that labour costs in Ethiopia
is 50 per cent less than in India. For an industry that operates on thin
margins in India, cost savings achieved through duty-free access to developed markets and lower labour cost is substantial.
While the African continent has become an emerging sourcing destination for apparels, the continent’s textile value chain is highly fragmented. Hence, there is a huge potential for investment in backward integration. Similarly, the majority of African textiles and apparel manufacturing companies are looking for technology upgradation to produce large volumes of high-quality textile items for exports.
Africa’s global textile and clothing trade at $37 billion in 2017 showed
a growing deficit. In fact, African ring spinning capacity has faced decline with installed capacity declining from 5.2 million spindles in 2010 to
3.5 million spindles in 2017.
The continent’s share in the US and Europe imports market has been stagnant around 2.4 per cent and 7 per cent respectively, thus indicating potential to grow by leveraging preferential market access. Realising the fact that textile can effectively accelerate Africa’s industrialisation, governments are giving necessary attention to promote the industry. Africa is the last frontier especially for textile industry with most of the African nations promoting and reviving their textile Industry. In this scenario, machinery manufacturers have a good potential and ITME AFRICA 2020 is the right time and right place for them.
Being seat of African Union and one of the major countries in the continent, Ethiopia is expected to take a lead in modernisation of textile industry and position itself as a pivot for technology sourcing for Africa. Given its close tie up with African countries, India, which accounts for around 3 per cent of the total global textile machinery exports, stands
to gain from the growth of garment manufacturing industry in Africa.
As Africa gears up to become the next global manufacturing frontier, Ethiopia is likely to emerge as the hotspot for apparel sourcing in Africa.
adjacent to KPR’s.
So why are Indian textile units, especially garment manufacturing factories, expanding to new geographies, such as Africa? The prime reason is the duty-free access to the US and the EU markets. For example, for a polycot t-shirt, Indian exporters pay 32 per cent import duty in the US if shipped from India. If exported from Africa, it is duty-free. Similarly, the duty-free access gives 16 per cent cost advantage to an
exporter of cotton t-shirts. Another reason is rising labour cost in India
due to its economic growth. It is estimated that labour costs in Ethiopia
is 50 per cent less than in India. For an industry that operates on thin
margins in India, cost savings achieved through duty-free access to developed markets and lower labour cost is substantial.
While the African continent has become an emerging sourcing destination for apparels, the continent’s textile value chain is highly fragmented. Hence, there is a huge potential for investment in backward integration. Similarly, the majority of African textiles and apparel manufacturing companies are looking for technology upgradation to produce large volumes of high-quality textile items for exports.
Africa’s global textile and clothing trade at $37 billion in 2017 showed
a growing deficit. In fact, African ring spinning capacity has faced decline with installed capacity declining from 5.2 million spindles in 2010 to
3.5 million spindles in 2017.
The continent’s share in the US and Europe imports market has been stagnant around 2.4 per cent and 7 per cent respectively, thus indicating potential to grow by leveraging preferential market access. Realising the fact that textile can effectively accelerate Africa’s industrialisation, governments are giving necessary attention to promote the industry. Africa is the last frontier especially for textile industry with most of the African nations promoting and reviving their textile Industry. In this scenario, machinery manufacturers have a good potential and ITME AFRICA 2020 is the right time and right place for them.
Being seat of African Union and one of the major countries in the continent, Ethiopia is expected to take a lead in modernisation of textile industry and position itself as a pivot for technology sourcing for Africa. Given its close tie up with African countries, India, which accounts for around 3 per cent of the total global textile machinery exports, stands
to gain from the growth of garment manufacturing industry in Africa.
As Africa gears up to become the next global manufacturing frontier, Ethiopia is likely to emerge as the hotspot for apparel sourcing in Africa.