Indian textile units, especially garment manufacturing factories, are expanding to new geographies, mainly Africa. The prime reason is duty-free access to the US and EU markets. Among them are the KPR Group and SCM Garments, both from Coimbatore. The two companies have generated over 1,500 jobs.

For a polycot T-shirt, Indian exporters pay 32 per cent import duty in the US if shipped from India. It is duty-free if exported from Africa. For cotton T-shirts, the duty-free access gives 16 per cent advantage to an exporter. For an industry that works on thin margins in India, this is a substantial advantage even if the buyer does not pass on the entire benefit. By 2030, India is expected to be a net importer of clothing. The African market is also growing. By setting up capacities in Africa, Indian companies can tap the potential in both these growing markets in the coming years.

Indian investments across sectors started coming into Ethiopia after 2008 when Ethiopia came up with an attractive investment policy, and Indian industries were looking at frontiers outside India. Apart from Ethiopia, Kenya is attracting investments from garment manufacturers, while Tanzania and Uganda are also opening up. It is not only Indian factories, but textile companies from China, Sri Lanka, and Bangladesh that are investing in these countries.