Industry & Economy
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Textiles
Textile sector will gain from abolition of MFA, says RBI
Our Bureau
Mumbai
,
Aug. 30
INDIA has the potential to be a major beneficiary of the phasing out of the multi-fibre agreement (MFA) but the textile industry needs to develop skills and upgrade technology to take advantage of the opportunities, the Reserve Bank of India said in its annual report of 2003-2004.
"The dismantling of MFA import quotas in 2005 offers the textile sector significant opportunities to capitalise on the expansion of overseas markets. However, competitive pressures will intensify and continuous improvement in product quality will become imperative to defend existing market shares,'' the RBI said.
Gains from abolition of the MFA are estimated at about $2 billion every year for the South Asian region.
"Freedom from quantitative restrictions of the MFA would translate into significant gains for India's textile sector, which accounts for nearly a quarter of the country's merchandise exports,'' it said.
However, freer international trade in textiles could also expose vulnerabilities in the industry's "excessively fragmented'' structure, inferior technology with low mechanisation, protection of the handloom industry and reservation of some textile segments for small sector industries.
According to RBI, several initiatives have been taken to improve India's position in world textile trade in a quota-free environment.
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