Indian garment exporters are increasingly relocating their production to East African nations, with prominent companies like Gokaldas Exports and Raymond Lifestyle leading the charge. This strategic shift is a direct response to recent changes in global trade policies, most notably the imposition of high tariffs by the United States on goods from India.

The primary reason for this move is a reported 50 per cent US tariff on Indian exports, allegedly a penalty for India's continued purchase of Russian oil. This steep tariff has made Indian garments significantly less competitive in the American market, forcing exporters to find alternative manufacturing locations to maintain profitability and service their US clients.

East African countries such as Ethiopia and Kenya have become appealing alternatives. They offer a significant advantage through trade agreements like the US African Growth and Opportunity Act (AGOA), which provides them with duty-free or low-tariff access to the US market. This offers a substantial cost benefit compared to the high tariffs faced by Indian goods.

In addition to trade benefits, East Africa presents other attractive factors. Wages in some of these countries are considerably lower than in India - reportedly as low as one-third of Indian labor costs - which helps reduce overall production expenses. Furthermore, African governments are actively working to attract foreign investment by offering incentives like tax breaks, land concessions, and streamlined regulations. The region also boasts a young and growing workforce, providing a large labor pool for the labor-intensive garment industry.

However, logistics can be a major hurdle, especially for landlocked countries like Ethiopia, where transporting goods to and from ports can be both time-consuming and expensive. The lack of a robust local upstream industry means manufacturers must often import raw materials like fabrics, which can increase lead times and costs.

Indian companies also need to renegotiate terms with their American buyers, some of whom may be wary of receiving products from new, less-familiar locations due to potential disruptions or quality control issues. Political instability in some parts of East Africa adds another layer of risk for foreign investors.