Kanoria Africa Textiles, a wholly-owned subsidiary of Kanoria Chemicals and Industries Ltd, said here on Tuesday that it has completed its “integrated denim project” in Ethiopia.

The unit, located about 50 km from capital Addis Ababa, has an annual capacity of 12 million metres, and has been set up at an investment of $50 million (around ₹325 crore).

“The African textiles industry has huge potential for manufacturing and exports. Ethiopia is a $51-billion economy but currently imports almost all of its textiles. This provides a significant opportunity to Indian companies,” said RV Kanoria, the company’s Chairman and Managing Director.

The project — in which Kanoria Chemicals holds an 80 per cent stake with the rest being held by Hong Kong-based Fung Capital — is expected to provide direct employment to 500 people and indirect employment to 20,000 in the garments sector.

The company expects to generate about $25 million (about ₹162.5 crore) annually through the project.

AGOA extension The US recently extended the African Growth and Opportunity Act (AGOA) by 10 years, and Ethiopia is among the nations covered by the Act. Also, the Ethiopian government is providing a host of incentives to foreign investors, Kanoria pointed out, adding that these factors make exports from that country an attractive proposition.

“Through the AGOA, the US and EU markets can be accessed duty- and quota-free. This provides an opportunity for us to export significantly, and further the ‘Made in Africa’ brand, which has taken off in recent years,” he added. It will use about 5,000 tonnes of cotton each year. The raw material is at present being sourced from Pakistan and African countries such as Sudan, as a drought has hit cotton production in Ethiopia.

Falling cotton output is a concern, along with infrastructural shortcomings like road connectivity and undeveloped ginning processes, but improvements are expected in the short term, said Kanoria.

“The work on the Lamu port corridor is under way and will help improve road networks up to Ethiopia. A number of free trade agreements have also been signed with neighbouring countries, which will improve access. That is why this project is a long-term bet,” he said.

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