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Gulf garment makers rushing to Hyderabad

Agencies - Hyderabad

Over 30 garment manufacturing companies from the Gulf region, with a combined annual export potential of over US$ 500 million, have evinced keen interest to shift their bases to Hyderabad. The companies propose to exploit India’s low manufacturing and product cost advantages, keeping an eye on the US$ 350 billion global garment market.

Following the phasing out of muti-fibre arrangement (MFA) by the end of this year coupled with the global majors’ decision to outsource garments from India, the garment makers, with an annual export potential ranging from US$ 10 million to US$ 50 million each, are rushing to Hyderabad, according to chief investment consultant (apparel exports) to AP government Mr S K Kanodia. The state government has already taken the initiative to set up a mega garment city on the outskirts of Hyderabad in 200 acres with an estimated investment of Rs 30 crore to provide the basic infrastructure facilities, Mr Kanodia said. The mega garment city will come up at Maheswaram, near the proposed international airport. “The state government continues to interact with these Gulf companies on various issues and expects to complete the basic infrastructure facilities before June,” Mr Kanodia said.

Meanwhile, the first Apparel Export Park (AEP), built on over 170 acres of land at Gundlapochampalli, has been sold. Thirty-two companies, including two from the Gulf, have taken possession of land. While eight companies have commenced their production and started exports, another eight companies are in the process of starting their operations, he said. The recent government’s marketing exercise in the Gulf countries had attracted these garment makers, he said. Despite the opening up of the world trade by January next, these companies find it difficult to compete in the global market owing to high cost of labour and infrastructure. They also have the disadvantage of procuring raw materials from countries like India to manufacture garments, which further cut short their competitiveness in the global markets, he said. Though China, being the major competitor for India in garment exports, one of the reasons for these companies to look at India for their operations is the cheap labour and production costs and the availability of quality raw materials, he pointed out. The recent decisions of global retail majors such as Wal-Mart and JC Penny to outsource garments worth over US$ 12 billion from India over a period of time have provided an added advantage for these companies to choose India as the base, Mr Kanodia said. He is, however, non-committal on the investment potential and timing of their entry into Hyderabad.