A ready source of cotton, the second-largest ginning and pressing capacity among Indian states, relatively cheap electricity, and a large pool of skilled workers have attracted up to Rs12,000 crore investments into Andhra Pradesh (AP) in the last two years. Both domestic and foreign textile companies and investors, who are interested in expanding capacity to meet growing demand from overseas and local buyers.
Colombo-headquartered Brandix Lanka and MAS Holdings have led foreign companies moving to AP while domestic investors including Gokuldas Exports, India’s biggest exporter of finished apparels, Vrindavan Textiles, Orient Craft, Texcrop Syndicate, Raheja Builders and the Coimbatore-based South India Mills Association or SIMA, among others, are setting up facilities in the state.
“Indian garment exports are seeing a huge window of opportunity open up, helped by two factors—the restriction on Chinese textile exports to the European Union and the US till 2008, and the abolition of (textile) quotas,” rating agency Crisil’s research analyst Dhimant Kothari and two colleagues said in a recent report on the textile sector.
The report projects Indian garment exports will cross Rs65,000 crore by fiscal 2010, from the current level of Rs28,000 crore. In the same period, domestic apparel sales will expand 10-11% annually to reach up to Rs105,000 crore on the back of rising income levels and increasing preference for readymade garments, Crisil said.
“We expect most of the textile projects in AP to take off before 2010-end and achieve annual textile exports of $5 billion (Rs21,650 crore),” the commissioner of handlooms and textiles T. Satyanarayana Rao, predicted.
Brandix is setting up an integrated apparel supply chain city over 1,000 acres of land near Visakhapatnam at an investment of $1 billion spread over the next five years.
The company has an ambitious aim: To make India the manufacturing hub for the South Asian garment industry, pushing back competition from Bangladesh and Sri Lanka. The Brandix complex has bagged a special economic zone (SEZ) status by the ministry of commerce, which exempts it from tax and excise payouts on its exports business.
Three other textile projects also have been granted SEZ-status under the government’s Scheme for Integrated Textile Parks. These are the Rs350 crore Hyderabad Hitech Textile Park at Kothur in Mahaboobnagar district, a Rs40 crore Pochampally Handloom Park at Pochampally in Nalgonda district, and the Hindupur Vyapar Apparel Park costing Rs300 crore at Hindupur in Anantapur district.
MAS, a $700-million Sri Lankan textile and apparel major, is setting up Asian Apparel Fabric Technology Park at Chintavaram in Nellore district at an investment of Rs2,500 crore spread over five years. The company expects to attract global brands such as Marks & Spencer, Victoria's Secret, Nike, GAP, Adidas and Speedo to the park and promises to provide employment to around 31,000 people. It is currently in the process of acquiring land, K.R. Narayanan, a MAS representative in India, said.
Around 70km away from Chintavaram, SIMA is setting up its textile park at Naidupet near Nellore at an investment of Rs2,000 crore. Says K. Selvaraj, SIMA’s secretary general, “Low tariff of power and availability of cotton are the two major advantages that led many of the major textile projects from across the country to move to AP.”
While electricity costs up to Rs4.30 a unit in Tamil Nadu, it works out to as low as Rs2.60 in AP, after subsidies offered by the state government are included. “Typically, power accounts for around 30-35% of conversion costs in textile industry,” Selvaraj said. AP, which produces around 30 lakh bales of cotton accounting for 16% of the country’s cotton production, consumes just a third of that.