latest study on textiles exports titled, Textile Exports: Post MFA Scenario
Opportunities and Challenges, states that the Indian textile sector
has the potential to reach an export value of $70 billion by 2014 as the abolishing
of the MFA quotas would provide opportunities and challenges for the rapid
growth of the Indian textile and clothing industry.
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.
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.
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.
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.
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.
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.
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.