GHCL also acquired control of the manufacturing units that the US firm operated in China and Pakistan and known for their economies of scale.
GHCL chairman Sanjay Dalmia said, "We plan to outsource most of the production to units in India, Pakistan and China, and shut down several Dan River units in the US."
So, while most of the textile units in the West are looking to relocate in Asia, the domestic companies are looking out for units in countries that will improve their margins and give them access or increased access to international markets.
Players like Eskay K'nit and Sabare International have also firmed up plans to start operations in China. "We have identified locations and will zero in before March. We will tie up with a local company," said Navin Kumar Tayal, chairman, Eskay.
As part of its Rs 300 crore (Rs 3 billion) expansion plan, the Chinese unit will start a two-way traffic of its products.
While it is the economies of scale and locational advantage that drove Eskay to China, Sabare is looking to expand its role as a total retail solutions provider.
It already has a showroom in Shanghai and warehousing facilities in Atlanta, the US. It has plans to pump in at least Rs 40 crore (Rs 400 million) in its Chinese operations alone.
Ambattur Clothing set up a trouser-making facility in Bahrain and is said to be close to acquiring another unit in Egypt.
"Setting up units in the Gulf makes sense, as many of the countries there are negotiating with the US for zero-duty access," said D K Nair, general secretary, Confederation of Indian Textile Manufacturers. Indian exports have to pay duties ranging from 9 to 32 per cent in the US and European markets.
The Mumbai-based JBF Industries sources its raw material needs for the Rs 405 crore (Rs 4.05 billion) plant in the UAE, which produces polyester polyethylene terepthalene resin, from the local government's petrochemical facilities.
Its Indian units producing partially oriented yarn also use the same raw materials - 2.5 lakh tonne of purified terepthalic acid and 1.5 lakh tonne of acid monoetheplene glycol, annually. The Gulf-sourced raw materials come cheaper vis-à-vis Indian rates.
The Phagwara-based JCT set up a unit in Senegal, as the African Growth and Opportunity Act provides concession for exports to the US and EU. JCT also has a yarn manufacturing unit in Malaysia.
Raymond and export firm TNCS have units in Bangladesh and Zodiac in the Gulf. And according to industry observers, the numbers will only increase with Bombay Rayon expected to soon join the club of Indian textile units abroad.
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