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August 25, 2007

An Ethiopian red carpet for horticulture cos.

Business Today has an interesting article on Indian horticulture firms find it more attractive to grow in this African country.
For Dr Reddy, it was a journey from red tape to red carpet. He recalls: "Like most people, I had certain notions about the country (Ethiopia). To my pleasant surprise, when I landed there, not only did government officials receive me personally, they also got all the required permissions for us to operate within six days. Imagine, all the paper work was done in six days and no corruption."

... Sample the largesse: all floriculture activities in Ethiopia are granted a 5-8 year tax holiday depending on the quantum of investment and people employed. Under a European Union (EU) grant, the Ethiopian government provides up to 70 per cent of the project cost as a loan at a mere 7.5 per cent. lso, freight costs are half of that from India and the EU allows flowers from Ethiopia to be imported at zero duties under the Lome Convention of Preferential Exports, whereas Indian exports are taxed at 6-9 per cent.

Moreover, buyers pay a premium for the long stems and the big head flowers grown in Ethiopia, while labour is available for eight Ethiopian Birr (approximately Rs 38) a day compared to Rs 120-130 in India. Vinod Reddy of Holetta points out: "Though labour is slightly less productive than in India, this problem can be overcome with training."

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.