Arvind Limited, one of India's largest textile and apparel makers, is investing US$60m to set up a denim plant in Bangladesh to cater for rising demand from western fashion brands and retailers. 

The new facility will be operated as a joint venture with Bangladesh conglomerate Nitol Group, and will have a manufacturing capacity of 30m metres of denim fabric. The first phase of the project will produce 10m metres of material, and is due to be rolled out over the next 12 months with an investment of US$25m.

“We look at Bangladesh as strategic location in view of unique advantages it offers,” notes Arvind director and CFO, Mr Jayesh Shah.

“Bangladesh being a LDC [Least Developed Country], garments exported from Bangladesh do not attract any import duty if the fabric is manufactured in Bangladesh. The wage cost in Bangladesh is amongst the lowest in the world.

“We shall be manufacturing high quality denim fabric to cater to requirement of European countries. Since we are already exporting 36m metres of denim to Bangladesh annually, we have a ready market available and hence the proposed plant shall be profitable from day one.”

Ultimately, the investment will lift Arvind’s denim capacity to 140m metres.

With apparel exports worth US$12.496bn in the 12-months to June 2010, Bangladesh is among the world’s fastest growing garment exporters.

The country’s demand for denim fabrics currently stands at 280m metres, of which180m metres are made locally and 100m metres are imported.