Ethiopia’s huge potential for raw cotton, the availability of labor, power and water, fast economic growth and access to the international market has helped Shri Vallabh Pittie (SVP) Group, an Indian company decide on setting up largest cotton mill at the industrial zone in Kombolcha in Ethiopia. SVP chose Kombolcha because of its proximity to the cotton growing regions of Metema and Humera.

The cotton mill will produce cotton yarn exclusively for export purpose. The construction of the project has already started from 2nd of May and should be fully operational by next year.

The project will involve an investment to the tune of US$ 500 million of which the Development Bank of Ethiopia (DBE) will cover 52 percent of the investment and the rest will be covered through equity financing. The DBE will provide US$ 23 Million and SVP will bring US$ 22 million for the first phase of the project.

SVP had requested for a 100 hectares of land in the Amhara State, Kombolcha town. According to the Mayor of Kombolcha, Abere Abera, only 50 hectares have been approved by Amhara State for the first phase. SVP will get the other 50 hectares in its second phase operation

According to SVP’s chairman Vinod Kumar Pittie, the new spinning mill will have a capacity to produce about 280 tons of cotton yarn per day and would create jobs for about 13,000 Ethiopians directly and 10,000 Ethiopians indirectly. The manufactured yarn will be produced mainly for the export market, especially the US, Germany, Italy, Sweden and Turkey. After its third year operation, SVP expects to earn US$ 400 Million from export of its products.

According to Tadesse Haile, Minister of State for Industry, there is the need for the completion of the project as soon as possible. The project is a boost for the underperforming textile and garment industry.