Georgia’s natural advantage as a gateway between Europe and Asia provides many benefits to investors in the manufacturing sector. In particular, Georgia offers competitive labor and energy costs, low taxes, and a corruption-free environment for serving the region, as well as numerous preferential/free trade agreements. 

Manufacturing accounts for 11% of GDP and around 5% of employment. The food and non-metallic mineral products industries provide the largest industrial base for Georgia, while non-metallic mineral products, chemicals and food are the fastest growing industries.

With the establishment of the Free Industrial Zones in Georgia there are new incentives and opportunities to produce and export goods with a minimal tax burden - in the FIZs, businesses are exempted from all tax charges except Personal Income Tax. 

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Why Invest In Manufacturing

Free Trade Agreements with 900 million markets

Georgia has Free Trade Agreement (FTA) with Turkey and post-soviet countries. The country has singed Deep and Comprehensive Free Trade Agreement (DCFTA) with EU on June 27, 2014. Additionally Georgia has GSP agreement with US, Canada, Japan, Norway and Switzerland. 

Growing regional market

Companies operating in Georgia can benefit from the growing regional market and various import substitution opportunities, specifically in the following industries: food processing, chemicals, plastics, construction materials, packaging, household goods, ceramic and glass products, etc.

Competitive labor costs

The average monthly salary in manufacturing industry is 355 USD and given the high level of unemployment in Georgia, salary growth is expected to remain low. Additionally companies can benefits from Free Training Opportunities – there are over 100 Vocational Education Training Centers around Georgia, which provide professional courses in different types of practical subjects and most of the course’s fees are financed by the Government of Georgia.

Low utility costs

Currently, up to 80% of electricity is generated via hydropower plants, which gives Georgia possibility to have competitively priced energy – standard cost for 1 kWh is 6 USD cents for 30-110 kV high voltage electricity. However factories consuming more than 1 million kWh per year can be registered as direct consumers and purchase electricity directly from energy producers.

Investment Opportunities

Apparel and Textiles

Currently Georgia produces apparel for world famous brands, such as: Tommy Hilfiger, Zara, Moncler, Marks & Spencer, Koton, Puma, Mexx, Next, George, Miss Etam, Lotto, Per Una, Autograph, Lebek, Hawes & Curtis, Dainese, Primark etc.

Georgia has a rich history of apparel and textile production dating back to Soviet times. Georgia produced high quality apparel/clothes, silk and wool blend fabrics. After the collapse of the Soviet Union, Georgia’s textile and apparel sectors fell on difficult economic period.The sector emerged in 2000s after Turkish investors and Georgian entrepreneurs began refurbishing old factories and engaging in cut, make, trim (CMT) activities for the local and export markets.

Presently, there are more than 200 apparel manufacturing companies (both, Georgian and foreign investors) in Georgia, about 93% of which are micro-enterprises. Approximately 95% of apparel produced by investor companies is exported to Turkey and/or to the EU markets. During last years, several Georgian companies have also started production for export markets.

At present, Georgian apparel sector is characterized with a whole range of benefits and investment opportunities, such as extremely cheap workforce (around 265 USD per month), Free Trade Agreements and proximity to the large export markets including EU, Turkey, Russia, Ukraine, Belarus, Kazakhstan, etc.

Construction Materials

During last decade the substantial increase in construction activity boosted the construction materials industry, including sales of construction materials. During 2010-2015 years GDP grew by CAGR 5.6% and it is widely expected to maintain a growth trajectory. Furthermore all countries of South Caucasus region are developing with fast pace and demand for construction materials is growing yearly.

In Georgia, one of the fastest growing business sectors are real estate and infrastructure (new resorts, residential complexes, highway and other transport infrastructure), and additionally there are large hydropower projects in the pipeline.

The construction material mineral base in Georgia is very significant and diverse to feed the domestic demand and to be used for export markets as well. Georgia has construction materials and facing stones small and medium sized deposits, 312 and 107 respectively.

Trade deficit in South Caucasus countries and the availability of raw materials in Georgia create the production opportunity of ceramic tiles, refractory bricks, marble and glass wool insulation.


Transportation cost of plastics, especially packaging materials, is very high compared to total product price and for that reason these materials are not usually traded extensively between the countries. However in 2015  import of plastics amounted to USD 243 million in Georgia.

Domestic consumption of plastic products was approximately USD 396 million in 2014 from which only 32% was covered by domestic production.

Considering  the  growing  target market and high level of import not only in Georgia, but in other South Caucasus countries as well, there is a significant opportunity for  investment in local production. Raw materials can be easily obtained from Iran, Azerbaijan and other nearby countries.

Investment opportunities exist in manufacturing of plastic packaging materials to substitute 30% of import quantity . Optimal production capacity is 6 500  tons  of plastic packing goods or closures  stoppers,  lids, caps,  closures.

Growing import and availability of raw materials create production opportunity of High-Density Polyethylene Pipes (HDPE)  with  production capacity of 4 200 tons per year. The optimal initial investment amount is  USD 6 Million.


Georgia  produces different types of pharmaceuticals and exports (154 mln USD) some of them in regional countries: Uzbekistan, Azerbaijan, Armenia and etc.

Domestic consumption of pharmaceuticals was approximately USD 338 million in 2014 from which only 23% was covered by domestic production. Expenditures in pharmaceuticals is expected to increase along with rising incomes and projected GDP growth. 

Emerging markets widely considered to be focal point for growth in the global pharmaceutical market over the coming decade. Therefore, Georgia and the surrounding region have significant room for growth.

Investment opportunities exist in pharmaceuticals manufacturing, regional hub, R&D and clinical testing. Furthermore, historical knowledge and variety of unique herbal plants growing in the caucasus mountains identify competitively advantageous sub-sectors for investing: bacteriophages and natural/herbal medicine.

Paints, Varnishes and Other Coatings

Paint, varnish and other coating is one of the fastest growing industry globally, mainly due to the huge demand in the construction industry.

The forecasted average annual growth for paint and varnish industry is 5% rate up to 2018. Faster growth rates are forecasted for Turkey and other Eastern European countries.

In 2014, South Caucasus countries imported USD 107 Million of paint, varnish and other coatings.

Investment in the sector is attractive due to the significant size of regional consumption and import. The production levels in the close region and in Georgia are not high, which creates place for a new producer to enter the market.

Sector research and investment proposals done by KPMG are avaliable for: paint and varnish, pigments and other coloring matter and inks.

Nitrogen Fertilizers

Demand and import of nitrogen fertilizers are increasing in neighboring and EU countries - In 2014, total volume of import of nitrogen fertilizers in the EU countries, Turkey, Ukraine, Russia, Southern Caucasus and Central Asia was USD 9,564 million.

Among the target markets, except for the EU countries, Turkey has especially significant gap (USD 959 million in 2014) between the import and export. In 2014 trade deficit in South Caucasus accounted USD 58 million.

In 2014, Georgia exported nitrogenous fertilizers (USD 138 million) to Poland, Bulgaria, Armenia, India, USA, Greece, France etc. Georgia was the only exporter from South Caucasus.

There is a high level of consumption and import in the neighboring countries and wider region. Considering the South Caucasus Pipeline (SCP) and The North South Main Gas Pipeline (NSMGP), natural gas, important input for nitrogen fertilizer, can be easily obtained from neighboring countries Azerbaijan and Russia.

Furthermore, Investment proposal  prepared by KPMG shows that investment in nitrogen fertilizers production in Georgia is feasible with IRR rate 15.05%.

Washing and Cleaning Preparations

In 2014 import of washing and cleaning preparations around the world accounted 30.5 Billion USD. European Union imported 46% of the global import value. South Caucasus countries imported 158 million USD washing and cleaning preparations, while Azerbaijan was the biggest importer with 87 Million USD import value.

High level of import in Georgia and in close region creates import substitution opportunities for local production. The biggest opportunity arises from the manufacturing of textile washing products.

Main raw materials for washing and cleaning preparations are oleochemicals, crude oil and solvents, which can be easily obtained from neighboring countries.

Optimal capacity of the production is 20 000 - 25 000 tons per year and the investment in washing and cleaning preparations is feasible with IRR 21.79% . Financial calculations are based on KPMG sector research and investment proposal.

Perfume and Cosmetics

World import of perfumery and cosmetics grew by 3.7% in 2014 to reach 112 Billion USD. Trade of perfumery and cosmetics grew with CAGR of 6.8% from 2010 till 2014. Import in South Caucasus countries was 212 Million USD in 2014 and Georgia accounted 53% of it.

The production levels in the close region and in Georgia are not high, which together with high level of consumption and availability of raw materials create opportunities for new entrants.

Furthemore, Georgia has US$ 200 million national laboratory established in 2011, which is ready to cooperate with private sector in R&D and product testing.

KPMG calculated IRR for investment in this sector. Investment in the production of cosmetics in Georgia is feasible with IRR 26.65%, while investment in the production of hair preparations is feasible with IRR 20.42%.

Painters Fillings, Resin Cements and Similars

The global trade of the glaziers putty, grafting putty, resin cements and painters fillings reached 8.3 Billion USD and CIS countries imported 807 Million USD of these products in 2014.

The demand of these products exceeds supply in neighbor and Central Asian countries, and there is a big gap between the import and export in the regional countries. Furthermore, construction sector is growing rapidly. Thus, the construction materials demand is expected to increase during the foreseeable future. This creates opportunity to supply local market and export to the above-mentioned countries as well.

Since these kind of chemicals have quite significant transportation cost compared to total value of product and these products aren’t traded extensively between distant countries, Georgia has excellent location for regional import substitution.
The calculated optimal capacity of the production of glaziers putty, grafting putty, resin cements and painters fillings in Georgia is 40 000 – 45 000 tons per year and according to the Investment Proposal prepared by KPMG, the project is feasible with IRR 15.9%.

Steel & Aluminium

Georgia’s current advantages in terms of handling large trans-shipment flows, low cost of power generation, existing raw materials and intermediate products provide opportunities for large industrial projects such as production of iron, aluminum and steel products.

Georgia mines manganese and copper ores, and produces ferro alloys, largely for export (~195 mln USD). Additionally Georgia and neighboring countries export waste and scrap metals. However there are large imports of semi-finished and finished iron and steel products to Georgia (~290 mln USD) and neighboring countries.

Currently Georgia transships raw materials (alumina and bauxite) for aluminum production from west (USA, Brazil, Jamaica etc.) to Central Asia. After smelting process, ready aluminum goes through Georgia to Europe, Turkey, USA etc. By using these transshipment flows and low cost of electricity, Georgia can integrate into a global value chain of aluminum production in both directions: 

  • Upstream - production of aluminum form alumina 

  • Downstream - production of fabricated and finished aluminum products, such as cans and other packaging materials, construction materials, wires and cables etc.

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