Facebook Pinterest Search Icon SourcingJournal_horiz Tumbler Twitter Shape photo-camera graph-trend Shape latest-news icon / user
You will be redirected back to your article in seconds

Made in Telengana: A New Hot Spot in India

Rivet’s 2021 winter issue has dropped! This in-depth issue examines the steps the global denim industry is taking to minimize its impact on the environment, from implementing zero waste production and design processes to establishing greenhouse gas emissions goals aligned with the Paris Agreement.

Always on the lookout for better options with less bureaucracy and a faster turnaround, manufacturers have been making a move toward Telengana in Southern India. With its promise of 15-day clearance for new projects, substantially lower land prices and cheaper labor costs, it’s easy to understand the attraction.

The 1,200-acre Kakatiya textile park in Warangal, 90 miles from the state capital of Hyderabad, for instance, has recently drawn companies including Korean manufacturer Youngone, and Kerala-based manufacturer Kitex Garments Ltd., among others.

Telengana, one of the youngest states in India, formed in 2014, is not new in pledging ease of business, but manufacturers say they are finding the difference in real, practical terms.

Drawn by the more agile government policies, Ikea opened its first store in India in Hyderabad in August of 2018. Amazon unveiled its largest company-owned campus in the world in Hyderabad in 2019, and has its largest fulfillment center in Telengana. The city is expected to bow eight new malls by 2023, adding to the existing 12, showing rapid retail growth.

Last month, Kitex Group, one of the world’s largest kids’ wear manufacturers, signed a memorandum of understanding with the Telengana government and is making a 24 billion rupee ($325 million) commitment to moving its manufacturing base from Kerala in the south.

The decision garnered considerable buzz.

“I got offers from 12 other states in India, as well as from Bangladesh, Sri Lanka, Doha, etc.,” Sabu M. Jacob, chairman and managing director of the Kitex group, told Sourcing Journal. Kitex, which has a production capacity of 732,000 pieces of clothing a day, had a turnover of 140 billion rupees or $1.86 billion in 2019-20.

Jacob explained his frustration at repeated audits by different departments of the Kerala government. “In June, the government started auditing our factories—there was no protocol. They would come in and do whatever they wanted, there were no audit reports. We’re OK with the law of the land, but we were being treated like smugglers or terrorists. After the 10th one I reacted and said this was harassment. We have consistently had a platinum rating from the Worldwide Responsible Accredited Production (WRAP) audits for the last 14 years which are recognized by many of our U.S. buyers, and we are very particular with all of our systems, so it was not for lack of systems.”

The announcement of his displeasure set the wheels in motion.

KT Rama Rao, Telengana minister for Industries, sent a private plane to pick up Jacob, and offered a quick helicopter visit to the textile park in Warangal. KT Rama Rao cited the high-quality cotton being produced in the state and the single window clearance system among the other advantages on offer.

“All my concerns were met with immediate problem solving,” Jacob said.

While wrapping up his trip, replete with site visits and meetings at different levels, Jacob announced an investment of 10 billion rupees or $133.26 million, subsequently increased to 24 billion rupees or $325 million.

Jacob is visibly excited by the future, and listed the reasons. “This will be a farm to finish manufacturing center, including accessories with zippers—from the spinning and weaving to even making the thread here. We will also work with the farmers for better agricultural practices and higher productivity. The cost of the land is 15 times cheaper than Kerala and the building cost is much lower. There is also plentiful available labor,” he added.

The cotton rich state has an advantage on proximity to raw material as well. It is the third largest producer of cotton in India, with the production of five million bales annually, which ranks it third in India. (Gujarat is first at 12.5 million bales, followed by Maharashtra at 8.5 million bales).

“The exciting part is what is happening in Warangal, because it is happening from scratch and things are happening very quickly. In the next 12 months, the face of the general area would have changed,” said Mihir Parekh, director of textiles and apparel for the government of Telengana. He noted that the Kakatiya textile park would be functional by early next year, and that separate industrial units were also under construction.

He said that labor had already been identified in the area with a working age population of about 200,000. “That entire area is a thriving ecosystem in its own right,” he said, speaking about the other textile parks that have been gaining traction, including Chandanvelly Park, where the Welspun group has invested, and Sircilla Apparel park, a major hub of power looms.

D.K Nair, former secretary general Confederation of Indian textile Industry (CITI), observed that this was not just a one-time activation based on anti-bureaucracy measures. “The state and the industry minister have to be really proactive to do something like this. This is an indication that the state will really take off,” he said, noting that the policies have been put into effect with thought and planning, with an eye on consolidated and streamlined growth.

Korean corporation Youngone is forging ahead with an initiative to start operations this year at Kakatiya Mega Textile Park (KMTP) in Telengana through its wholly Indian owned subsidiary Evertop Textile and Apparel Complex Private Limited, investing an initial $120 million in this location.

Kihak Sung, chairman of the Youngone, announced earlier this year that “Made in Telangana” textiles would be available globally. The company plans to make five factories functional in the coming months, and three more in the second phase.

Investments from other major companies include Sitaram Spinners Pvt. Ltd., Ganesha Ecosphere Ltd., Kundana Technotex Pvt. Ltd and Gokaldas Exports.

As Telengana looks for growth, the Tirupur model continues to be an inspiration—the small town in Tamil Nadu that has garnered more than a quarter of India’s apparel exports.

“From Assam to down South they want to replicate this formula,” Raja Shanmugham, president, Tirupur exporters Association observed. “They have been wanting to replicate it in Warangal (in Telengana) for the last few years, but this has not happened yet.” Tirupur, known as the knitwear capital of India, had exports of an approximate 25,000 crore or $3.38 billion in 2020, despite Months of lockdown due to Covid.

Shanmugham put this succinctly. “India’s share in apparel exports is less than 4 percent globally, compared to Bangladesh which is 14 percent. Vietnam and other countries are competing. Unfortunately, this is even though we have raw materials and manpower. I believe we can work to make our share 20 to 25 percent. It is a very huge cake,” he said.

Related Articles

More from our brands