labels: textiles
A bleak future for a beleaguered sector news
Praveen Chandran
22 January 2002

Mumbai: Indias textiles industry, a major source for the countrys foreign exchange, will face survival threats once the export quota regime will be removed, a possibility by the year 2004. The trouble will be further doubled with Chinas entry into the World Trade Organisation, feel industry analysts.

The abolition of the export quota system will open up immense opportunities to Indian textile exporters in the international market, but the improper marketing strategy and an outdated technology will be a severe threat to the Indian textile sector, they say.

Textiles constitute 35 per cent of Indias exports, valued at $10.5 billion in 1999-2000 (April-March). The country accounts for 21 per cent of the worlds spindles and 15 per cent of the worlds cotton production, but its share of the worlds textile exports is just 2.8 per cent. Twenty-five per cent of the textile exports go directly to the US and a large chunk of yarn, which is sold to other nations, get routed to the US in the form of garments.

Says Verticalnet CEO Sushil Tibrewal, the promoter of, a B2B portal for international marketing of textile and consulting services: "Once the quota policy comes to an end the quality at a fixed price will be the mainstay of the export industry. The present quota policy only helps a few major players, whereas smaller players, who produce better quality textiles, will face a threat because they are unorganised and have no international marketing strategy."

Post-2004, he says, the international market will be wide open to those who stand for quality products at a reasonable price. "The situation will demand more regrouping, rethinking and changes in the market strategy. The buzzword will then be more specialisation and more professionalism. Manufacturers in the subcontinent must also develop the trend of supplying their orders in time with utmost stress on the quality of goods."

Industry associations say Indias textile industry is faced with a barrage of problems, ranging from high interest rates, labour regulations, power costs and a lack of technology upgrades. Chinas entry into the WTO will sharpen competition in the textiles exports sector. Compared to India, China has lower interest rates and minimum labour problems. Its strategy is to develop low-cost units to produce large volumes. Pakistan, South Korea, Sri Lanka and Bangladesh, too, are emerging as strong competitors to India.

Says Cotton Textiles Export Promotion Council chairman T Kannan: "The growing competition from low-cost supplying countries like China, Pakistan and Indonesia and the recession in the world markets have contributed to the decline in Indian textile exports."


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A bleak future for a beleaguered sector