Arvind Limited gradually cuts down its garment capacity in Ethiopia

With uncertainty looming over extension of the African Growth and Opportunity Act (AGOA) Treaty, Arvind Limited is gradually cutting down its garment capacity in Ethiopia.

“During the year we completed a restructuring of some of our facilities across India and also started to gradually bring down capacity in Ethiopia. We had shared that the AGOA Treaty has been kind of cancelled for now and hence duty-free exports from Ethiopia to the US have been halted. As such, the traffic for that location has come down, so we have started kind of reducing the footprint there. So, our installed capacity has come down to about 50 million pieces or so,” Samir Agrawal, chief strategy officer at Arvind, told analysts in a post-earnings call recently.

Enacted in 2000, the treaty, which offers duty-free access to the US from sub-Saharan African countries, was renewed till 2025 in 2015 but faces uncertainty over its further renewal.

However, for Arvind, the move to shash garmenting capacity in the African country is set to be compensated by fresh capital expenditure plans in India. According to Agrawal, during FY23, the company set aside Rs 200 crore towards capacity augmentation in its advanced material division and garmenting businesses, as well as certain cost optimisation projects for fabric business.