Halting of duty-free exports from the country and reduction in traffic has led to Arvind reducing garmenting capacity in Ethiopia. Last year, Arvind restricted some facilities across India and started reducing capacity in Ethiopia. Cancellation of AGOA Treaty led to the company reducing its installed capacity in Ethiopia to about 50 million pieces, notes Samir Agrawal, Chief Strategy Officer.

Introduced in 2000, the AGOA treaty offers duty-free access to the US from sub-Saharan African countries. Although the treaty was renewed in 2015 till 2025, it still faces uncertainty over further renewal. To compensate for the reduction of garment capacity in Ethiopia, Arvind plans to augment capacity in India during FY23. The company will invest Rs 200 crore towards capacity augmentation in advanced material division and garmenting businesses, besides cost optimization projects for fabric business.