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Indian Reverse-Sourcing to Create U.S. Factory Jobs

We’re used to outsourced labor from the U.S. to India, but later this year, Indian textilers Alok Industries will reverse the course. The Mumbai-based textile manufacturer, which counts Wal-Mart and Macy’s among its clients, has announced plans to open a mill in the U.S., citing energy savings.

Arun Agarwaal, Alok’s CEO, told the press that the U.S.’s high cotton production was part of his decision–the U.S. is the third-largest cotton producer in the world–but that low energy costs were the determining factor. Energy is currently both cheap and plentiful in the U.S., thanks to a boom in shale oil, or natural gas extracted from shale formations. U.S. energy prices, in fact, are almost 25% of those in India.

The practice of “reverse outsourcing”–or India-based job creation in the U.S. and Europe–has become more common as Indian salaries have increased and Western economies have crumbled. According to Nasscom, Indian technology and business processing companies created as many as 280,000 U.S. jobs between August 2007 and August 2012. But a cotton mill is an entirely different proposition–a factory creates manual labor jobs, rather than jobs for skilled technicians.

The new mill will be located in a formerly closed cotton mill in the Southeast. Neither the mill’s exact location, or the retailer Alok is working with to open it, has been named. At the mill, cotton will be spun into yarn; next, it will be shipped to Latin America for weaving and spinning into woven, knit, and ready-made garments; lastly, it will be returned to the U.S. for retail sales.

Alok, India’s largest integrated textile company, reported third-quarter profits of $45.5 million this February.

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