The Hindu Business Line : Watershed for textile industry

THE year 2005 proved to be a watershed for the country's textile industry, with global trade in textiles opening up from January 1 and Indian exporters managing to score over competitors from most countries to make significant inroads in the US and the European Union markets.

After China, which was off to a flying start to capture the chunk of the Western markets for textile products, the Indian textile sector was the next best performer on the global scene following the quota phase-out, with the country increasing its share of textile and garment deliveries to the US and the EU by a quarter in the first nine months of 2005.

Going by its performance in 2005, the textiles and apparel sector — which contributes around 19 per cent of India's total annual export earnings — is billed to achieve a potential size of $85 billion by 2010, with a domestic market size of $45 billion and nearly 60 per cent of the exports comprising garments, according to Crisil.

In the light of the natural competitive advantage that India has in terms of a strong and large multi-fibre base, abundant cheap skilled labour and presence across the entire value chain,from spinning, weaving, and made-ups to manufacture of garments, foreign retailers including Wal-Mart, Levis, Gap, JC Penny, Marks & Spencer and NEXT have been increasing their sourcing of garments and fabrics from India this year.

On expansion mode: In response to this demand, the year marked major capacity-building initiatives by textile majors. Also, over 25 medium and large textile and apparel firms got listed on the bourses to raise capital for their expansion plans, while foreign institutional investors such as Citigroup and Temasek picked up stakes in Indian textile firms during the the year.

The Government also announced a number of steps to make the sector more competitive.

Besides the setting up of the Technology Upgradation Fund Scheme, new schemes of Apparel Parks for Exports, and Textile Centres Infrastructure Development Scheme, de-reservation of the garments sector and an increase in investment ceilings were announced by the Government.

The introduction of a Technology Mission on Cotton to improve the productivity and quality was also announced and the basic customs duty on designated textile machinery and spare-parts was slashed in view of the shortage of domestic machinery.