The Hindu Business Line : Advantages of duty sops, lower lead-time for exports

Industry & Economy - Textiles
Corporate - Overseas Investments

Advantages of duty sops, lower lead-time for exports — Textile cos begin to set up units abroad

Anil Sasi

New Delhi , Oct. 9

INDIAN textile companies have started establishing units in strategic locations abroad to take advantage of reduced export lead-time and duty concessions specific to these countries.

Prominent companies such as Zodiac and Ambattur Clothing have set up base in the Gulf to cut down on export delivery schedules to the European Union and the US. Others such as Raymond and export firm TCNS have established units in Bangladesh, which qualifies for zero duty access to the EU under the benefits extended by the Union to Least Developed Countries. Textile major JCT has acquired a garmenting facility in Senegal to take advantage of the concessions available under the African Growth and Opportunity Act (AGOA) for exports to the US and the EU.

According to a Confederation of Indian Textile Industry (CITI) official, many Indian exporters could be looking at the possibility of setting up manufacturing bases in the Gulf countries, especially with the likelihood of the FTAs (free trade agreement) being negotiated by individual countries with the US coming through.

"There is the major advantage of lower lead time for exports from both the Gulf and Africa to the EU and the US markets. A number of Gulf countries, including the United Arab Emirates, are negotiating FTAs with the US for zero duty access, because of which there have been an increase in enquiries among Indian players about the possibility of setting up units in the Gulf," an official said.

Under the AGOA agreement, duty concessions ranging from 15-27.5 per cent were available for garmentexports from Africa to the US and the EU. While the shipments made by domestic firms abroad did not qualify as Indian exports, the company could bring the money back into the country, as repatriation norms were liberal in most of the Gulf nations, industry players said.

Zodiac had bought a 1.75 million-shirt plant in Dubai late last year, while JCT had acquired a manufacturing facility in Senegal comprising 19,000 spindles, 160 rapier looms and 12 circular knitting machines with matching fabric-processing facilities, along with a garmenting facility capable of producing 2.45 million garments per year. Ambattur Clothing, which has a trouser-making unit in Bahrain, supplies mostly to the US-based buying house GAP.

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