Our Bureau

Mumbai, March 17

THE Indian textile industry has the potential to breach the $70-billion mark in exports by 2014, according to the Exim Bank's latest study titled `Textile exports: Post-MFA scenario Opportunities and challenges'.

Following the phasing out of quotas this year, the clothing sector would offer higher gains than the textile sector, said the report.

China, India, Pakistan, Taiwan, Hong Kong, Brazil, Indonesia, Turkey and Egypt would emerge as "winners". However, in the long-term sustaining market shares would depend on cost, quality, and timely delivery by market players.

In the short term (one-two years), the apparel market in the US and the European Union would provide opportunities to developing nations. The labour intensiveness of garment manufacturing would enhance potential gains for developing countries such as India.

In the long term (by 2014), the textile sector would offer opportunities as many high cost countries would lose their competitive position in the open trading environment. Besides, the study observed, in the long term, the intra-EU trade would be reduced, providing additional opportunities for developing countries such as India.

The study estimated that India could increase its share in the textiles markets of the US and the EU from 8.4 per cent ($1.5 billion) and 3.2 per cent ($1.9 billion) currently to a share of 13.5 per cent ($5 billion) and 8 per cent ($8 billion) respectively by 2014.

Similarly, India could increase its share in the garments market of the US and the EU from the present level of 3.2 per cent ($2.3 billion) and 3 per cent ($3 billion), respectively to a share of 8 per cent each ($13 billion and $16 billion, respectively) by 2014.

These two markets would account for a total market of $42 billion for Indian textiles and garments by 2014, according to the study.

And, despite the low cost of labour, high interest costs and power tariffs, and highly fragmented supply chains could slow down growth in this sector.

The study concluded that the ability of the textile industry to take advantage of the quota phase-out would depend upon its ability to enhance overall competitiveness through exploitation of economies of scale in manufacturing and supply chain management.

(This article was published in the Business Line print edition dated March 18, 2005)
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