V Indian textile Industry second largest in the world ± second only

to China.
Other competing countries are Korea and Tiwan
V Indian Textile constitutes 17% of the gross export earnings of
the trade.
V India earns around 27% of the foreign exchange from exports of
textiles.
V Further, India Textile Industry contributes about 14% of the
total industrial production of India.
V Furthermore, its contribution to the gross domestic product of
India is around 5% and the numbers are steadily increasing.
V India Textile Industry involves around 38 million workers
directly and it accounts for 21% of the total employment
generated in the economy.
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V istory of textiles 27,000 years old
V Industrialization phase
V Current scenario

 

V ½vidences from 5000 years ago (arappan Civilization are available)

V During 13th century Indian silk was used as barter for spices from the
western countries.
V Towards the end of the 17th century, the British ½ast India Company
had begun exports of Indian silks and several other cotton fabrics to
other economies
V Separate Policy statement for Textile
V 2000, National Textile Policy aiming a foreign exchange earning of
US $50 million

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V The textile and clothing trade is governed by the
Multi-Fiber Agreement (MFA) which came into
force on January 1, 1974 replacing short-term
and long-term arrangements of the 1960¶s which
protected US textile producers from booming
Japanese textiles exports. Later, it was extended
to other developing countries like India, Korea,
ong Kong, etc.

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V It has governed international trade in textiles and clothing
since 1974. The MFA enabled developed nations, mainly the
USA, ½uropean Union and Canada to restrict imports from
developing countries through a system of quotas.

2



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V ATC was a transitory regime between the MFA and the
integration of trading in textiles and clothing in the multilateral
trading system. The ATC provided for a stage-wise integration
process to be completed within a period of ten years (1995-
2004)
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V The ATC mandated that importing countries must
integrate a specified minimum portion of their textile
and garment exports based on total volume of trade in
1990, at the start of each phase of integration.

V In the first stage, each country was required to

integrate 16 %of the total volume of imports of 1990,
followed by a further 17 % at the end of first three year
and another 18 % at the end of third stage. The fourth
stage would see the final integration of the remaining
49 % of trade
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V India famously known as inward looking country
started opening up, post 1990¶s
V A positive growth rate of 13% was registered during
90¶s
V Top ten exporter in the world by 1998
V Developing countries looking forward for the post
quota period
V The entire textile industry along with the apparel one
has seen a jump in its export from US$ 0.9 billion to
US$ 13.5 billion during the period 1985-2003 which
accounts to 15 times increase from the base period.

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V Strong domestic presence across the entire value chain.
V Abundant availability of raw material both cotton and
manmade .
V Low cost labour.
V Growing domestic market

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V Fragmented Industry, led by Small players
V Technological Obsolescence
V Indian labour laws are relatively unfavorable to the
V igh dependence on ½U & US,
V lacks in trade pact memberships, which leads to restricted
access to the other major markets, and more import tariffs as
compared to Bangladesh, Vietnam, and Turkey.

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V igh dependence on cotton, while world is
dominated by manmade fiber.
V Lack of trained manpower.
V igh cost of labour as compared to Bangladesh,
Vietnam and Srilanka coupled with low
productivity.
V Power and power cost.
V Finance cost as compared to China
V igh transaction cost

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V Domestic market
V Increasing cost of production in China resulting in China
becoming non competitive.
V India with traditional designs and craftsmanship can
command a greater market share for niche products in
made-ups and garments
V Lifting of Quotas after 42 years, developed markets to
explore.
V Markets other than ½U & US

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V Competition in Domestic Market
V Tackle Chinese Aggression over the International Market
V ½cological & Social Awareness
Î Developed markets have seen extensive developments in the form of
increased consumer consciousness on issues such as polluting dyes,
child labour, unhealthy working conditions etc.,
Î Standard like SA8000 has now started being implemented extensively
in the industry
Î This has resulted in increased pressure on the companies to limit
sourcing from the countries/companies known to have such practices
V üTA¶S

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V Dith a view to raise India's share in the global textiles trade to
10 % by 2015 (from the current 3%), the Ministry of Textiles
proposes 50 new textile parks. Out of the 50, 30 have been
already sanctioned by the govt. (with a cost of US$ 710 mn).

V Setting up of Apparel Training and Design Centres (ATDCs)

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V Setting up Textile Industries oriented S½ s

V Starting up new courses like Textile Manufacturing and Textile Technology at

IIT and ½ngineering Institutes

V Liberalized labour laws, tax and other benefits of a Special ½conomic one
need to be implemented

V Access to high quality and cost-effective manpower

V ½xcellent connectivity by road, rail air and ports

V Single-window clearance

V Permit Contract Labour (Consider routing National üural ½mployment

Guarantee Programme, Nü½GA through T&C industry)

V ½xtend labour working hours from 48-60 hrs per week.

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V üeduce dependence on cotton
V Indian T&C trade faces comparative disadvantage on
account of free market access available to Bangladesh,
Sri Lanka and Turkey. Ministry of Commerce should
negotiate better trade terms with the global T&C markets
including Japan.
V Japan intends to reduce the share of Chinese textile and
clothing in its total T&C imports to around 50% from the
current 77%. This is likely to generate significant
business opportunity for the other Asian garment
exporters

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