Apparel Sourcing Intelligence - Worldwide

Indian-owned factory “to start making denim in Ethiopia by May”

Kanoria Africa Textile, the Ethiopian subsidiary of Kanoria Chemicals & Industries, an Indian chemicals conglomerate, reportedly started yarn production in mid-February in preparation for producing denim by May in what our records indicate is the first Indian textile announcement about Ethiopia to materialise

Kanoria announced its plans for the factory, a 155,000 plot at Bishoftu (Debre Zeit) in Oromia province, in April 2013. With a capacity for 120 mn metres of denim, it says it will employ 600 people, and get at least some of its cotton locally.

Kanoria is not the only Indian investor in Ethiopia garment and textile industry: but it is so far the only one we can find whose ambitious promises have materialised.

  • In 2010, Spentex promised the Ethiopian government it would export a “billion dollar worth of products a year in seven years’ time”, from investments through associate CLC  Industries  including a 100 tonne a day spinning mill and 25,000 hectares of cotton plantations.  In late 2012, the government terminated the company’s lease, claiming CLC had not fulfilled its contractual obligations. A spokesperson for CLC offered a different account. “It was an illegal breach of contract by the government,” said Praveen Mishra, Operations Manager for CLC’s Ethiopian subsidiary. Three months after signing the contract in Jan 2011, Mr. Mishra said, the government reclaimed 5,000 ha claiming the land was not part of the lease area. “They took the land by force using the police,” Mr. Mishra said, which spooked the company to point where they slowed down investment considerably. Six months later, Mr. Mishra said, the government served them a termination notice. The company has since closed its office in Ethiopia.
  • In May 2014, Mumbai-based ShriVallabh Pittie (SVP) group launched a  $550 mn investment in Ethiopia to set up “Africa’s largest cotton mill in Ethiopia” Construction was due to start by 2015, but no more has been heard. This may not mean nothing ever will be, of course.
  • In September 2014, India’s Arvind announced it was planning an Ethiopian garment plant – though we can find no record of any previous Arvind investment in garment making.

Kanoria probably will not be the last Indian textile-related business to start production at a widely-publicised new Ethiopian project. But its compatriots’ record in delivering promises made in India is weak.