Indian textile mills are setting base in Ethiopia. Ethiopia offers ready-to-use sheds, income tax breaks and training subsidies and offers tax-free gateways into the US, Europe and China.

KPR Mills from Tirupur has started a unit in Ethiopia. Other prominent textile players to have followed suit are Raymond, Arvind, Best Corporation and JJ Mills. KPR has invested in a capacity of 10 million units, providing employment for nearly 1000 people. Raymond’s plant in Ethiopia has a capacity of two million jackets.

Besides the labor cost, which is 50 per cent lower compared to India, another big advantage is that land and building are readily available. So it is just a plug and play model with cheap power.

While Bangladesh has free trade agreements with major importing countries, the Indian industry is struggling to get into a similar arrangement. Negotiations have been more or less futile as any concession given to Indian textiles must come with commensurate concessions to other products that the textile importing country might want to export to India. Import duties generally range from 10 to 18 per cent for most European products but could go up to as much as 28 per cent for certain categories. In comparison, Bangladesh imposes little or no duty on the products it imports.