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 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 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 renewal.
However, for Arvind, the move to slash garmenting capacity in the African country is set to be compensated by fresh capital expenditure plans in India.