The study notes that the clothing sector would offer higher gains than textiles in the post MFA regime. Further, the study also observes that China, India, Pakistan, Taiwan, Hong Kong, Brazil, Indonesia, Turkey and Egypt would emerge as winners in the post quota regime. The determinants of increase or decrease in market share in the long term, however, would depend upon the cost, quality and timely delivery of these players.

The study estimates that in the short term ie between one and two years it would be the apparel market in the US and EU, which would provide opportunities to developing countries like India, while the labour intensive garments manufacturing would enhance potential gains for developing countries like India. In the long term, (by 2014), even the textile sector would offer opportunities, as many high cost countries would lose their competitive position in the open trading environment. Besides, the study also observes that in the long term, the intra-EU trade would be reduced providing additional opportunities for developing countries like India.

The study estimates that India could increase its share in the textiles market of the US and EU of 8.4 per cent ($1.5 billion) and 3.2 per cent ($1.9 billion), respectively at present to 13.5 per cent ($5 billion) and 8 per cent ($8 billion), respectively, by 2014.

Similarly, India could increase its share in garments market of the US and EU from 3.2 per cent ($2.3 billion) and 3 per cent ($3 billion), respectively currently, to 8 per cent each ($13 billion and $16 billion, respectively), by 2014. Thus, the US and EU alone would offer a market of $42 billion, for Indian textiles and garments by 2014, the study states.

The study also noted that the productivity of cotton as measured by yield, capacity and technology infusion in the spinning and weaving sector is relatively low. Though there is prevalence of low cost labour, the cost of production is increased due to relatively high interest cost and power tariff. Besides, the supply chain in this industry is not only highly fragmented but is beset with bottlenecks that could very well slow down the growth of this sector.

The study recommends that India should sharpen its competitive edge by lowering the cost of operations through efficient use of production inputs. There is also need for integration of manufacturing process to achieve operating leverage and demonstrating high bargaining power. This would call for turning towards high technology mode; foreign investments coupled with foreign technology transfer would help the industry to turn into high-tech mode, the study perceived. The study further recommended improvement and efficiency in logistics and supply chain management of Indian textile firms. Besides, Indian exporters should also improve their soft skills, viz., design capabilities, textile technology and management and negotiation skills.

The study concludes that the ability of Indian textile industry to take advantage of quota phase-out would depend upon its ability to enhance overall competitiveness through economies of scale in manufacturing and supply chain. The need of the hour therefore is to evolve a well chalked out strategy, aimed at improvement the levels of productivity and efficiency, quality control, faster product innovation, quick response to changes in consumer preferences and the ability to move up in the value chain by building brand names.