India’s Arvind slashes clothing production capacity in Ethiopia

India’s Arvind Limited is scaling back its garment production capacity in Ethiopia amid uncertainty over the renewal of the US Africa Growth and Opportunity Act (AGOA). The company, however, has earmarked ₹200 crore for increasing the capacity of its advanced materials division and garment business, as well as cost optimization projects for the fabric business over the past year. 2022-23 financial year.

“During the year, we completed the restructuring of some of our facilities across India and also began to phase out capacity in Ethiopia. We had shared that the AGOA treaty has somehow been canceled for the time being and hence the duty free exports from Ethiopia to the US have been halted. As such, the traffic for that location has gone down, so we’ve started to sort of reduce the footprint there. So our installed capacity has dropped to about 50 million pieces or so,” Samir Agrawal, chief strategy officer at Arvind, told analysts on a post-earnings call recently.

Indian Arvind Ltd. is gradually reducing its clothing production capacity in Ethiopia amid uncertainty over the renewal of US AGOA benefits. The company, however, has earmarked ₹200 crore for increasing the capacity of its advanced materials division and garment businesses, as well as cost optimization projects for the fabrics business over the past year. 2022-23 financial year.

Adopted in 2000, AGOA offers countries in sub-Saharan Africa duty-free access to the United States. It was renewed in 2015 until 2025, but faces uncertainty over its extension.

The main challenge in this segment has been the continuous rise in prices of all raw materials, mainly cotton, which has continued to climb even though the new crop hits the market around November, he informed.

Fibre2Fashion (DS) News Desk

Michael O. Stutler