Feb 18, 2020
Indian firms eyeing Africa for apparel manufacturing
Feb 18, 2020
Abundant young talent, simple trade agreements, income tax breaks, cheap labour and power, friendly tax laws, strategic geographical position and the announcement of African Continental free trade area (AfCFTA) makes Africa the preferable destination for apparel manufacturing industry. The easy availability of land also favours industry growth in Africa.
Tapping the global market is on the radar for several African governments, and they are implementing policies for helping the garment and textile industries flourish. The African Growth and Opportunity Act (AGOA) also helps boost the industry as it allows African countries to export apparel to US in a duty-free mode.
Countries like Kenya and Ethiopia are becoming prominent garment manufacturing hubs in Africa, followed by Rwanda, Uganda and Tanzania to a great extent.
India-based Raymond is one of the companies to have recently signed an MoU with the Ethiopian government to set up a garmenting facility. "Countries like Ethiopia are wooing global and Indian textile players by doling out sops and benefits for shifting or partially relocating manufacturing capacities in textile. This has potential of shifting value addition and job creation abroad with implications for India’s manufacturing growth and Make-in-India campaign," Sudhir Soundalgekar, director – Projects, Raymond, told Fibre2Fashion.
Ethiopia has duty-free access to the US under AGOA for 10 years till 2025, and also duty-free access to EU under GSP.
Another Indian company to set up a garment unit in Ethiopia is KPR Mill Ltd, which has opened its factory in Mekelle Industrial Park under a collaborative partnership with ITC's Supporting Indian Trade and Investment for Africa (SITA) programme.
The textile and apparel industry in Africa has grown rapidly in past couple of years, and is estimated to grow at a CAGR of ~5 percent over the next five years. The industry can grow even faster if the countries focus on improving some of the grey areas like infrastructure, strategic supply chain, and skill management.
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