Ghana Export Promotion Authority (GEPA) – the state agency charged with responsibility for developing and promoting the export of non-traditional products, is taking considerable steps to boost Ghana’s garments and textiles industry as the Authority is bent on fully utilize and leverage on the opportunities that present itself at the major global textile gathering scheduled for Ethiopia next year.
Dubbed India International Textile Machinery Exhibitions (ITME) Africa 2020, the business gathering will serve as an avenue to connect business to business as well as government to business to enable participants to engage in sustainable partnerships with potential investors for onward development in the sector.
The move is to reverse the negative growth rates the textile industry has recorded recently. Recent Non-Traditional Export data released by GEPA indicates that the textile industry performed poorly in the industrial arts and craft sub-sector.
For instance, Ghana’s garment industry recorded growth rate of 15.1 percent in 2008, but this has since dropped to 0.8 and 0.3 percent in 2014 and 2015 respectively. Subsequently, the sector recorded a contraction growth rate of 1.4 percent in 2016. What this means is that, Ghana’s garment industry has been declining in what is proving to be a sustained recession.
These instances therefore bring to the fore on the need Ghana has to partner with investors most especially from India during the event in order to develop the sector. Thus, when the Chief Executive Officer (CEO) of GEPA, Madam Afua Asabea Asare recently made commitment that her outfit would support the sector by sponsoring exporters in the textile and garment industry together with stakeholders to participate in the ITME 2020 in Ethiopia is commendable.
Currently, the value of global fashion industry is estimated to be around US$2.4 trillion, with an annual growth of 5.5 percent. Africa accounts for below 5 percent of this value, while Asia and the USA share 80 percent of the market.
With the implementation of the Africa Continental Free Trade Area (AfCFTA) scheduled for July 2020, most African countries are putting effective measures in place aimed at harnessing the potentials and opportunities in the sector.
Currently, a number of countries in Eastern and Southern Africa are already exporting several billions of garments worldwide, whiles Ghana still exports a little more than US$30 million Under the Africa Growth Opportunity Act (AGOA) as the combined apparel and footwear market in sub-Saharan Africa is estimated to be around US$31 billion. Ghana will have a difficult time competing with those countries within Africa when the AfCFTA commences if effective measures and policy framework are not put in place to address the situation.
About ITME 2020
According to the Chairman of the India ITME Society, Mr. Hari Shankar, the event is deemed to be more than a routine exhibition as various meet-ups including technical and investment seminars have been incorporated, further urging Ghanaian business community to see the platform as an opportunity to maximise the needed potential and growth in the sector.
“ITME Africa 2020 brings on table Society’s Expertise, India’s strength in Textiles, Ethiopia’s aspiration and abundance in opportunity all in all together for ‘Prosperity to Africa through Textile and Textile Technology”, he reiterated.
As one of the largest textiles economies in the world, India is taking a new frontier in the area of promoting and facilitating trade in the textile sector by way of introducing to the African continent a complete solution to textile production through affordable technology and skills development among others.
Instructively, many African countries including Ghana are rated among the fastest growing economies in the world. With strong growth and increasing population, India is taking steps to strengthen fashion and textile industry in the continent by way of promoting trade, hence the ITME in Ethiopia.
Interestingly, the EXIM Bank of India together with various banking and non-banking institutions with favourable business financing solutions will engage with participants as the International Trade Centre – a development agency that supports internationalization of Small and Medium—sized Enterprises would facilitate the business to business meetings.
Prior to the event, a number of business delegations from India have recently been to Ghana to explore various business opportunities in the country. To formalize this process, the High Commission of India in Accra had arranged regular business engagements with various Ghanaian business chambers aimed at fostering bilateral trade and investment in Ghana.
This points to the nation that India is far more than prepared to assist Ghana to develop its textile and garment industry. What needs to be done on the part of Ghana is to demonstrate a deliberate effort to channel substantial investment. It is important to note that GEPA has taking the lead in this process and as such other stakeholders, both government and private institutions must follow suit.
Textile Industry & Market Growth in India (Credit: India Brand Equity Foundation)
India’s textiles sector is one of the oldest industries in Indian economy dating back several centuries ago. For instance, the country’s overall textile exports during 2017-18 Financial Year (FY) stood at US$39.2 billion in 2018 FY and is expected to increase to US$82.00 billion by 2021 from US$31.65 billion in 2019 FY.
Reports indicate that the Indian textiles industry is extremely varied, with the hand-spun and hand-woven textiles sectors at one end of the spectrum, while the capital intensive sophisticated mills sector at the other end of the spectrum. The decentralised power looms/ hosiery and knitting sector form the largest component of the textiles sector.
The close linkage of the textile industry to agriculture (for raw materials such as cotton) and the ancient culture and traditions of the country in terms of textiles make the country’s textiles sector unique in comparison to the industries of other countries. The Indian textile industry has the capacity to produce a wide variety of products suitable to different market segments, both within India and across the world.
In similar terms, a close collaboration with Ghana in a move to invest considerably into the textile sector would also yield these same good results if the planned project and assessment are carried out effectively.
Market Size (India)
The Indian textiles industry is currently estimated to be more than US$250 billion from previously US$150 billion. Importantly, India’s textiles industry contributed seven percent of the industry output (in value terms) of India in 2017-18. It contributed two percent to the Gross Domestic Products (GDP) of India and employs close to 50 million people. The sector contributed 15 per cent to the export earnings of India in 2017-18. Most notably, the production of raw cotton in India is also estimated to have reached 36.1 million bales in 2019 FY.
With regards to investment in the country’s textile sector, it has witnessed a spurt in investment during the last five years. The industry – both dyed and printed, has attracted Foreign Direct Investment (FDI) worth more than US$3.12 billion between 2000 to 2018.
Some of the major investments in the Indian textiles industry are but not limited to the following: for instance, in May 2018, textiles sector recorded investments worth US$4.19 billion since June 2017.
Again, the Government of India announced a special package to boost exports by US$31 billion, create one crore job opportunities and attract investments worth US$11.93 billion from 2018 to 2020. As of August 2018, the sector generated additional investments worth US$3.78 billion and exports of US$854.42 million.
In contrast to Ghana, it must be emphasised that the continuous investment spared India’s textile’s market and in fact, the same level of resilient with regards to investment most especially from government and the private sector must be encouraged, if Ghana wants to replicate the successes chalked in India’s textile’s industry.
There must be deliberate policy framework and initiatives geared towards developing Ghana’s textile industry which must come in the form of digitalization – the use of modern machinery equipment just as the ones being used in India, soft loans to the business community as well as creating the needed environment that will enable businesses in the sector to compete.
India Government’s Initiatives
The Indian government has come up with a number of export promotion policies for the textiles sector. It has allowed 100 percent FDI in the Indian textiles sector under what it calls “automatic route”. Among some of the interventions and initiatives taken include the following.
Firstly, the Directorate General of Foreign Trade (DGFT) has revised rates for incentives under the Merchandise Exports from India Scheme (MEIS) for two subsectors of Textiles Industry – Readymade garments and Made ups – from 2 percent to 4 percent.
Again, as of August 2018, the Government of India increased the basic custom duty to 20 percent from 10 percent on 501 textile products, to boost Make in India and indigenous production as well as taking adequate steps measures including Amended Technology Up-gradation Fund Scheme (A-TUFS) – a scheme intended to create employment for many people and enable investments worth US$14.17 billion by 2022.
Finally, the government introduced a programme -Integrated Wool Development Programme (IWDP) meant to provide support to the wool sector starting from wool rearer to end consumer which aims to enhance the quality and increase production of wool to feed the sector.
These measures culminated in a number of achievements and key among them include increase of employment in the sector and direct intake of FDI.