While Georgia was well known for its high quality silk and wool blend fabrics under the Soviet Union, the textile industry faced a major crisis after 1991 and re-emerged in 2004. Attracted by its skilled and low-cost labour, cheap land, low energy costs and preferential access to the EU market, several European brands outsourced their production to Georgia and some Turkish companies established plants in the Adjara region, at the border with Turkey.
The textile sector now encompasses about 200 companies, 95% of which are micro-enterprises, while 5 large Turkish companies and 12 Georgian manufacturers employ respectively 3,000 and 2,000 people. The main export markets are: Turkey, CIS (including Russia) and the EU.
The transition from the GSP+ status to the DCFTA status with the EU is expected to further stimulate the development of the industry. In order to fully unleash the potential of the textile industry in terms of value creation, Georgia aims at developing the manufacturing of inputs as well as higher value products.
Strategic direction/ specific schemes and incentives
To facilitate textile production and export, the government offers the following investment incentives:
Accessible land: land offered to investors at a nominal price in various regions (mainly in Guria), provided they develop their business only on the proposed land for the next 7 years;
Onsite training: labour training costs reimbursed at the end of the first year on the lump sum bases (USD 18,000 if the factory employs 150-350 people, USD 36,000 for 350-500 people and USD 60,000 USD for more than 500 people);
JSC Partnership fund
: co-financing of up to 75% of the total project cost, of which 25% will be preferred equity and 50% subordinated loans;
Capital expenditure facility: assistance in negotiations with financial institutions for purchasing equipments via leasing and other financing schemes;
Full depreciation of capital expenditure in the year of purchase;
10-year loss carry forward is available.
Apparel: production through outsourcing to local manufacturers or through JVs (modernisation of the infrastructure and training of local staff);
Fashion: development of Georgian brands for domestic and export markets;
Inputs: production of buttons, thread, fabric, etc.
Technical textile: army uniforms, traditional uniforms for dance troops and other Government apparel.
Some success stories
Milteks (Turkey) started the restoration of an old tea factory in the Adjara region in 2008 and established Ajara Textile as a local subsidiary. The latter started production with 3 lines in December 2009 and rapidly increased the number of lines to 9. Producing apparel for international brands such as Puma, Ajara Textile employs 450 people from the neighbouring villages.
Major brands such as Tommy Hilfiger, Zara, Marks & Spencer, Koton, Puma, Mexx, Next, George, Etam, Lotto, Per Una, Autograph, Lebek, Hawes & Curtis, Roberto Cavalli now produce apparel in Georgia, thus promoting the “Made in Georgia” label.
A factory was launched in Lilo (USD 3 million Georgian investment) to produce its own brand for sale in Georgia as well as for export. The factory is employing Italian designers.
Useful links and contacts
Georgian Chamber of Commerce and Industry
Georgian National Investment Agency