Textile Industry

CONTENT

DefinitionProcess included in textilehistoryHistory of Indian textile industryGrowth of textile industryTHE PRESENT SATAUS OF TEXTILE INDUSTRY

Some of the very recent developments in Indian Textile Industry

Definiton

The textile industry or apparel industry is primarily concerned with the production of yarn, and cloth and the subsequent design or manufacture of clothing and their distribution. The raw material may be natural, or synthetic using products of the chemical industry.

Process included in textile

Yarn making

In prehistoric eras, animal hair, plants and seeds were used to make fibres. Silk was introduced in China

around 2600 BC, and in the middle of the 18th century AD, the first synthetic fibres were created. While

synthetic fibres made from cellulose or petrochemicals, either alone or in varied combinations with other

synthetic and/or natural fibres, have seen increasingly widening use, they have not been able to totally

eclipse fabrics made of natural fibres such as wool, cotton, flax and silk.

Silk is the only natural fibre formed in filaments which can be twisted together to make yarn. The other

natural fibres must first be straightened, made parallel by combing and then drawn into a continuous yarn

by spinning. The spindle is the earliest spinning tool; it was first mechanized in Europe around 1400 AD

by the invention of the spinning wheel. The late 17th century saw the invention of the spinning

jenny, which could operate a number of spindles simultaneously. Then, thanks to Richard Arkwright’s

invention of the spinning frame in 1769 and Samuel Crompton’s introduction of the mule, which allowed

one worker to operate 1,000 spindles at one time, yarn-making moved from being a cottage industry into

the mills.

Making of fabric

The making of fabric had a similar history. Ever since its origins in antiquity, the hand loom has been the

basic weaving machine. Mechanical improvements began in ancient times with the development of

the heddle, to which alternate warp threads are tied; in the 13th century AD, the foot treadle, which could

operate several sets of heddles, was introduced. With the addition of the frame-mounted batten, which

beats the weft or filling yarns into place, the “mechanized” loom became the predominant weaving

instrument in Europe and, except for traditional cultures where the original hand looms persisted, around

the world.

John Kay’s invention of the flying shuttle in 1733, which allowed the weaver to send the shuttle across the

width of the loom automatically, was the first step in mechanization of weaving. Edmund Cartwright

developed the steam-powered loom and in 1788, with James Watt, built the first steam-driven textile mill

in England. This freed the mills from their dependence on water-driven machinery and allowed them to be

constructed anywhere. Another significant development was the punch-card system, developed in France

in 1801 by Joseph Marie Jacquard; this allowed automated weaving of patterns. The earlier power looms

made of wood were gradually replaced by looms made of steel and other metals. Since then,

technological changes have focused on making them larger, faster and more highly automated.

Dyeing and printing

Natural dyes were originally used to impart colour to yarns and fabrics, but with the 19th-century

discovery of coal-tar dyes and the 20th-century development of synthetic fibres, dyeing processes have

become more complicated. Block printing was originally used to colour fabrics (silk-screen printing of

fabrics was developed in the mid-1800s), but it soon was replaced by roller printing. Engraved copper

rollers were first used in England in 1785, followed by rapid improvements that allowed roller printing in

six colours all in perfect register. Modern roller printing can produce over 180 m of fabric printed in 16 or

more colours in 1 minute.

Finishing

Early on, fabrics were finished by brushing or shearing the nap of the fabric, filling or sizing the cloth, or

passing it through calender rolls to produce a glazed effect. Today, fabrics are pre-

shrunk, mercerized (cotton yarns and fabrics are treated with caustic solutions to improve their strength

and lustre) and treated by a variety of finishing processes that, for example, increase crease resistance,

crease holding and resistance to water, flame and mildew.

Special treatments produce high-performance fibres, so called because of their extraordinary strength

and extremely high temperature resistance. Thus, Aramid, a fibre similar to nylon, is stronger than steel,

and Kevlar, a fibre made from Aramid, is used to make bullet-proof fabrics and clothing that is resistant

both to heat and chemicals. Other synthetic fibres combined with carbon, boron, silicon, aluminium and

other materials are used to produce the lightweight, superstrong structural materials used in airplanes,

spacecraft, chemical resistant filters and membranes, and protective sports gear.

History

The archaeological surveys and studies have found that the people of Harrapan

Civilization[3] knew weaving and the spinning of cotton four thousand years ago. Reference

to weaving and spinning materials is found in the Vedic Literature also.

There was textile trade in India during the early centuries.A block printed and resist-dyed

fabrics, whose origin is from Gujarat is found in tombs of Fostat, Egypt.[3] This proves that

Indian export of cotton textiles to the Egypt or the Nile Civilization in medieval times were to

a large extent.Large quantity of north Indian silk were traded through the silk route in

China[4] to the western countries. The Indian silk were often exchanged with the western

countries for their spices in the barter system. During the late 17th and 18th century there

were large export of the Indian cotton to the western countries to meet the need of the

European industries during industrial revolution. Consequently there was development of

nationalist movement like the famous Swadeshi movement which was headed by the

Aurobindo Ghosh.

There was also export of Indian silk, Muslin cloth of Bengal, Bihar and Orissa to other

countries by the East Indian company. Bhilwara is known as textile city.

HISTORY AND ORIGIN OF INDIAN TEXTILE INDUSTRYThe history of textiles in India dates back to nearly five thousand years to the days of the Harappan civilization. Evidences that India has been trading silk in return for spices from the 2nd century have been found. This shows that textiles are an industry which has existed for centuries in our country. Recently there has been a sizeable increase in the demand for Indian textiles in the market. India is fast emerging as a competitor to China in textile exports. The Government of India has also realized this fact and lowered the customs duty and reduced the restrictions on the imported textile machinery. The intention of the government’s move is to enable the Indian producers to compete in the world market with high quality products. The results of the government’s move can be visible as Indian companies like Arvind Mills, Mafatlal, Grasim; Reliance Industries have become prominent players in the world. The Indian textile industry is the second largest in the world-second only to China. The other competing countries are Korea and Taiwan. Indian Textile constitutes 35% of the total exports of our country.The history of apparel and textiles in India dates back to the use of mordant dyes and printing blocks around 3000 BC. The foundations of the India's textile trade with other countries started as early as the second century BC. A hoard of block printed and resistdyed fabrics, primarily of Gujarati origin, discovered in the tombs of Fostat, Egypt, are the proof of large scale Indian export of cotton textiles to the Egypt in medieval periods.During the 13th century, Indian silk was used as barter for spices from the western countries. Towards the end of the 17th century, the British East India Company had begun exports of Indian silks and several other cotton fabrics to other economies. These included the famous fine Muslin cloth of Bengal, Orissa and Bihar. Painted and printed cottons or chintz was widely practiced between India, Java, China and the Philippines, long before the arrival of the Europeans.

India Textile Industry is one of the largest textile industries in the world. Today, Indian economy is largely dependent on textile manufacturing and exports.

Reference: http://seminarprojects.com/Thread-textile-industry-full-report#ixzz3AjV2eI50

Growth of Textile Industry 

The textile policy of 1985 and the economic policy of 1991 accelerated the economic growth during 1990s. Textile sector growth has been led by the spinning and the manmade fibre industry. The number of cotton/ manmade fibre textile mills rose from 1035 in 87-88 to 1741 by December 1997. The number of spinning mills number rose to 1461 in December 1997 from 752 in 87-88. Liberalisation led to the installation of open-end rotors and setting up of Export Oriented Units (EOU)2. 

Currently India has the second highest spindleage in the world after China. Aggregate production of cloth during 1996-97 was 34,265 million sq. metres, an increase of nine percent over 1995-96. India's contribution in world production of cotton textiles was about 12 per cent a decade back, while currently it contributes to about 15 per cent of world cotton textiles 

India has the second-largest yarn-spinning capacity in the world (after China), accounting for roughly 20 percent of the world’s spindle capacity. India’s spinning segment is fairly modernized; approximately 35 to 40 percent of India’s spindles are less than 10 years old. During 1989-98, India was the leading buyer of spinning machinery, accounting for 28 per cent of world shipments. India’s production of spun yarn is accounted for almost entirely by the “organized mill sector,” which includes 285 large. Man-made fibers, wool and silk segment grew by modest 4.5 per cent per annum during the 5-year period 2000-01 to 2005-06.During the first year of quota-free global trade, production increased leaps and bounds. Textiles production increased 10 per cent over 2004. The growth was fuelled by a 22 per cent rise in production of other textiles (including apparels). Cotton textile also posted an increase of nine per cent.

Multi Fiber Agreement was introduced in the year 1974 as a short term measure directed

towards providing a limited time period to the developed countries for adjusting their textile

industries in accordance with that of the developing countries. The textile industries are

characterized by their labor intensive nature of commodity production. Availability of surplus

labor is abundant in the developing countries. These countries have comparative advantage

in the production of textile related products and hence are able to supply goods at a very

low price. The basic idea behind this policy was to eradicate all sorts of quota system from

the apparel and textile industry all over the world so that a level playing field could be

established. This whole process of dismantlement of quota system was completed on

01.01.2005.

THE PRESENT SATAUS OF TEXTILE INDUSTRY

Schemes to strengthen investment in textile during the tenth plan cover

Rearranging spinning capacity at present nearly 38 million spindles are already existed.

About 10 million old spindles required to be scrapped, and another 15 million spindles to

be modernized. Adding on, about 3 million new spindles have to be set up during the tenth

plan period.

Percentage Vision of India 2010 for Textiles

Textile economy to grow to $85billion by 2010

Creation of 12 million new jobs in textile sector.

To increase India’s share in world trade to six per cent by 2010.

Achieve export value of $40 billion by 2010.

Modernisation and consolidation for creating a globally competitive industry.

Some of the very recent developments in Indian Textile Industry On a year-on-year basis, cotton textile industry has posted a growth of around 14.8 % followed by the products produced by textile industry with a growth rate of above 11%. The textile sub-sector involved in the production of silk, wool and man-made fibers has also seen a steep increase in its growth amounting to 8.2% on a yearly basis.

Year 2006-2007 has also seen a phenomenal rise in the production in spun yarn sector by an amount of 10.3%.

Production of cloth by the Indian textile Industry has evidenced an increase in its growth at a rate of 8.7% during 2006-2007. Among this sector, the highest rate of growth has been seen in the Hosiery sub-sector followed by power loom sub-sector amounting to 10.1% and 8.8% respectively.

The overall export scenario of Indian Textile Industry is quite significant with an increase of 10.53% during the 2006-2007 financial year. Some of the rate of growths in the export of the products produced in the textile sub-sectors during Apr'-Feb' 2006-2007 on a y-o-y basis are given below :-

Export growth rate of cotton textiles recorded a growth rate of 21.47%.

Export growth rate of man-made textiles recorded a growth rate of 19.03%.Hence it can be concluded that the growth in the textile sector was quite significant after the disintegration of the MFA regime. The main reason behind it being the competitive edge enjoyed by the Indian textile industry in the whole world. But real concern has cropped up for this industry as the export earnings by this industry has fallen significantly with the falling US Dollar price in respect to the Indian Rupees. Textile Industry in India has evidenced a steep decline in the amount of export between April and May of 2007 due to the rising Rupees. Thus, the experts are a bit apprehensive about the projected growth of the Indian Textile Industry for the financial year 2006-2007

. TECHNOLOGY UPGRADATION

The Indian Textiles Industry has suffered from severe technology obsolescence and lack of economies of scale, which, in turn, had diluted its productivity, quality and cost effectiveness, despite distinctive advantages in raw material, knowledge base and skilled human resources. While the relatively high cost of state-of-the-art technology and structural anomalies in the industry have been major contributory factors, perhaps the single most important factor inhibiting technology up gradation has been the high cost of capital, especially for an industry that is squeezed for margins. Given the significance of this industry to the overall health of the Indian economy, its employment potential and the huge backlog of technology up gradation, it has been felt that in order to sustain and improve its competitiveness and overall long term viability, it is essential that the textiles industry has access to timely and adequate capital, at internationally comparable rates of interest in order to upgrade the level of its technology. 

The Technology Up gradation Fund Scheme (TUFS), the flagship scheme of Ministry of Textiles was launched on 01.04.1999. Initially proposed for a period of five years, the scheme has now been extended till 31.03.2007, and is designed to ensure the availability of bank finance at rates comparable to global rates. Under this, the Government reimburses 5% of the interest charged by Banks and Financial Institutions, thereby ensuring credit availability for the up gradation of technology to industry at global rates.

The Government has strengthened and augmented the Technology Up gradation Fund Scheme (TUFS). The allocation for the subsidy component of TUFS was enhanced from Rs.249.00 crores in 2004-05 to Rs. 485.00 crores in 2005-06, registering an increase of 95%. This has been further increased to Rs.835 crores in 2006-07, an increase of 91% over 2005-06. Till 31.10.2006, the Scheme has attracted 6142 applications, involving an investment of Rs 53,003.00 crores. Out of this 5882 applications with a project cost of Rs. 47,580 crore have been sanctioned. As such, this Scheme has created such a great momentum that has resulted into an investment of around Rs. 50,000 crore from the textile industry only under this Scheme. Owing to TUFS only the textile sector is still in an upbeat mood to modernize itself so that it may take on the global competition with confidence.

Global Scenario

The textile and clothing trade is governed by the Multi-Fibre 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, Hong Kong, etc. which had acquired a comparative advantage in textiles. Currently, India has bilateral arrangements under MFA with USA, Canada, Australia, countries of the

European Commission, etc. Under MFA, foreign trade is subject to relatively high tariffs and export quotas restricting India’s penetration into these markets. India was interested in the early phasing out of these quotas in the Uruguay Round of Negotiations but this did not happen due to the reluctance of the developed countries like the US and EC to open up their textile markets to Third World imports because of high labour costs. With the removal of quotas, exports of textiles have now to cope with new challenges in the form of growing non-tariff / non-trade barriers such as growing regionalisation of trade between blocks of nations, child labour, anti-dumping duties, etc.

Nevertheless, it must be realised that the picture is not all rosy. It is now being admitted universally and even officially that the year 2005 AD is likely to present more of a challenge than opportunity. If the industry does not pay attention to the very vital needs of modernisation, quality control, technology upgradation, etc. it is likely to be left behind. Already, its comparative advantage of cheap labour is being nullified by the use of outmoded machinery.

With the dismantling of the MFA, it becomes imperative for the textile industry to take on competitors like China, Pakistan, etc., which enjoy lower labour costs. In fact the seriousness of the situation becomes even more apparent when it is realised that the non-quota exports have not really risen dramatically over the past few years. The continued dominance of yarn in exports of cotton, synthetics, and blends, is another cause for worry while exports of fabrics is not growing. The lack of value added products in textile exports do not augur well for India in a non-MFA world.

Textile exports alone earn almost 25 percent of foreign exchange for India yet its share in global trade is dismal, having declined from 10.9 percent in 1955 to 3.23 percent in 1996. More significantly, the share of China in world trade in textiles, in 1994, was 13.24 percent, up from 4.36 percent in 1980. Hong Kong, too, improved its share from 7.06 percent to 12.65 percent over the same period. Growth rate, in US$ terms, of exports of textiles, including apparel, was over 17 percent between 1993-94 to 1995-96. It declined to 10.5 percent in 1996-97 and to 5 percent in 1997-98. Another disconcerting aspect that reflects the declining international competitiveness of Indian textile industry is the surge in imports in the last two years. Imports grew by 12 percent in dollar terms in 1997-98, against an average of 5.8 percent for all imports into India. Imports from China went up by 50 percent while those from Hong Kong jumped by 23 percent.

Today textile sector accounts for nearly 14% of the total industrial output. Indian fabric is in demand with its ethnic, earthly colored and many textures. The textile sector accounts about 30% in the total export. This conveys that it holds potential if one is ready to innovate. 

The textile industry is the largest industry in terms of employment economy, expected to generate 12 million new jobs by 2010. It generates massive potential for employment in the sectors from agricultural to industrial. Employment opportunities are created when cotton is cultivated. It does not

need any exclusive Government support even at present to go further. Only thing needed is to give some directions to organize people to get enough share of the profit to spearhead development.

Government initiatives

The government has taken various initiatives to increase the investments in the sector and to develop the textile industry on an overall basis. The initiatives range from providing financial support to companies to promoting exports and investments. Some initiatives are mentioned below:

Technology Upgradation Fund Scheme (TUFS)

The government launched TUFS in 1999 for 5 years and extended it by 5 years till 2007. However, the scheme was further modified to support the entire textile value chain and extended till 2012:

As on March 31, 2008, the government sanctioned Rs 725.2 bn and disbursed Rs 609.5 bn under the TUFS. Of the total amount sanctioned, around 25% was sanctioned during 2008-09, whereas of the total amount disbursed, around 27% was disbursed during 2008-09.

In June 2009, the government released an additional subsidy of Rs 25.5 bn in the textile sector under the TUFS.

Scheme for Integrated Textile Parks (SITP)

Under the SITP, the government has approved the establishment of 40 textile park projects in India, which would be spread across 4,611 acres at a projected investment of Rs 217 bn.

Construction of two textile parks projects, namely Gujarat Eco-Textile Park, Surat and Brandix Apparel City, Vishakhapatnam are to be completed during 2009.

Initiatives under National Textile Policy (NTP) 2000

The government has provided a credit-linked capital subsidy at 10% under the TUFS in addition to the existing 5% interest reimbursement.

The rate of depreciation for investment in high-tech processing machines has been increased from 25% to 50%.

The import duty on specified hi-tech processing machines has been brought down to 5%. Import of hi-tech processing machines has been permitted under zero duty Export Promotion

Capital Goods Scheme.

Technology Mission on Cotton (TMC)

Under the Mini Mission III, the development of 250 market yards has been sanctioned, and out of these 250 yeards, 161 were completed by March 31, 2008. The total cost of the project is Rs 4.9 bn and the TMC shared Rs 2.5 bn of this cost.

Under the Mini Mission IV, modernisation of 993 ginning and pressing factories have been sanctioned, of which, 829 were completed up to March 31, 2008. The total cost of the sanctioned projects is Rs 14.5 bn and the share of TMC in the total cost is Rs 2.3 bn.

The total funds allocated to TMC (Mini Mission III & IV) during 2008-09 were Rs 500 mn.

Other Government Initiatives

a scheme was reintroduced for reimbursement of one-time rebate of 10% given on sale of handloom products by the handloom agencies during 2006-07, 2007-08 and 2008-09.

Under the Focus Market Scheme (FMS), exports of all textile products to 83 foreign markets covered under the scheme are eligible for duty credit scrip at 2.5% of FOB value of exports.

Under the Focus Product Scheme (FPS), silk yarn was given an incentive of 1.25% of exports; hand-made carpets and other textiles floor coverings are included under the scheme with incentive of 5% on exports since February 2009.

Under the Market Linked Focus Product Scheme, exports of garments to Australia, Japan and Brazil are given incentive of 2.5% w.e.f. January 1, 2009. In addition, garments exported to EU-27 and USA are eligible for incentive of 2% of exports on FOB value from April 2009 to September 2009.

During 2009, the customs duty payable under the Export Promotion Capital Goods (EPCG) scheme was reduced from 5% to 3%.

The income tax benefits provided to 100% export oriented units under Section 10B of Income Tax Act was extended for one more year beyond March 31, 2009.

Refund allowed on service tax on foreign agent commissions up to 10% of FOB value of exports as well as on service tax on output service while availing benefits under the Duty Drawback Scheme.

Guarantee cover under credit guarantee scheme doubled to Rs 10 mn with a cover of 50%. The government has enhanced back-up guarantee to ECGC to cover exports to difficult

markets or products. The scheme for interest subvention of 2% subject to a minimum of 7% per annum interest on

pre and post-shipment export credit was extended till September 20, 2009. The Duty Entitlement Pass Book Scheme (DEPB) was extended till December 31, 2009.

Proposals for the textile sector in the Budget for FY11-12

The ‘Zero excise duty route’ as it existed prior to Budget FY12, is being re-established with

respect to branded readymade garments and made-ups.

In the case of cotton, there will be zero duty at the fiber stage also and in the case of spun yarn,

there will be a duty of 12% at the fiber stage. The ‘zero excise duty route’ will be in addition to the

CENVAT route now available.

Technology Upgradation Fund Scheme (TUFS) to continue in 12th Plan with an investment target

of Rs.1,51,000 Crore.

Allocation of 50 Crore to Ministry of Textile to incentivize setting up Apparel Parks within the

SITPs to house apparel manufacturing units.

A new scheme called the Integrated Processing Development Scheme will be implemented in the

12th Plan to address the environmental concerns of the textile industry.

Working capital and term loans at a concessional interest of 6 per cent to handloom sector.

Scheme of Fund for Regeneration of Traditional Industries (SFURTI) extended to 800 clusters

during the 12th Plan.

Full exemption is provided from excise duty on handmade carpets and textile floor coverings of

coir or jute whether or not handmade.

In order to give a measure of protection to domestic sericulture, the rate of customs duty is

increased on raw silk (not thrown) of all grades from existing 5% to 15%.

Reduction of basic customs duty on textile machinery & parts from 7.5% to 5%.

Leverage aid from Multilateral Development Banks to extend the ‘Scheme of Fund for

Regeneration of Traditional Industries’ (SFURTI) in the 12th Five Year Plan covering 800 clusters

including khadi, village and coir industry.

Analysis and Impact___________________________________________________________

The restoration of ‘zero excise duty route’ in addition to the present CENVAT route is one of the

significant announcements for the textiles and readymade garments industry. The move is

expected to revive demand in the garment sector and improve the industry’s performance in

terms of higher revenue and improve profits.

Another major incentive to the readymade garments industry is to house apparel manufacturing

units in SITP.

The home furnishing and décor segment of the textile industry is also likely to benefit from excise

duty

Exemption of handmade carpets and textile floor coverings of coir or jute.

The proposed interest subvention scheme in the handloom sector is likely to benefit 150,000

individual weavers and 1,800 primary cooperative societies in FY14.

Focus on developing markets key for growth

From the second half of 2008, the textile sector has been adversely affected by the cut in exports as a result of the financial crisis in the economies across the globe. Despite several government initiatives to boost the performance of the sector, exports registered a yearly decline of over 5% in dollar terms during FY09 primarily due to the appreciation of the rupee against the US dollar and decrease in demand for imported textile products in foreign markets.

During 2008-09, exports to the US and other major markets declined; however, the demand for Indian textiles shifted from these markets to the markets in the EU and UAE. The exports of textiles in UAE, which had a share of over 7% of the total textiles exported, registered a yearly growth of around 20% whereas the exports to EU, which had a major share of over 34% of the total textile exports registered a growth of over 5%. This indicates the growing demand for Indian textile products in the EU and UAE.

Though the western markets are recovering from the crisis, their recovery is slow; therefore, companies should move towards the Asian markets and adopt the “look east policy”. The South East Asian and Japanese markets are largely untapped and provide enormous opportunities for the

industry to grow. According to the Ministry of Textiles, Japan is one of the biggest consumers of textiles and clothing, but India has 1.1% share only in the Japanese import market. Thus there is tremendous growth potential for the industry in these markets.

Besides, the Indian textile industry must also focus on production of technical textiles and on the domestic demand for textile products.

According to the Ministry of Textiles, the global market size of the technical textile industry was USD 107 bn in 2005 and is expected to be USD 127 bn by 2010. India primarily imports technical textiles unlike the other textile products that are mainly export-oriented. India annually imports technical textiles worth Rs 40 bn from countries such as China, Malaysia, Hong Kong, Thailand, Germany and Italy.

The demand for quality Indian textile products is also increasing in the domestic market. According to the Ministry of Textiles, during 2008-09 (P), the textile industry was valued at over USD 52 bn and 64% of its production serviced the domestic demand. The domestic ready-made garments market, which was valued at USD 14 bn in 2004-05, is expected to grow by more than 70% to USD 24 bn during 2009-10. The factors that will aid this growth are: rise in working population, which is young and earning high incomes, the increase of population in urban areas, rise in the number of working women, more disposable income with customers, growth in consumer expenditure for purchasing luxury items and branded products, etc. Thus the growth prospects are good for the domestic industry.

 

CurrentScenario

Textile exports are targeted to reach $50 billion by 2010, $25 billion of which will go to the US. Other markets include UAE, UK, Germany, France, Italy, Russia, Canada, Bangladesh and Japan. The name of these countries with their background can give thousands of insights to a thinking mind. The slant cut that will be producing a readymade garment will sell at a price of 600 Indian rupees, making the value addition to be profitable by 300 %.

Currently, because of the lifting up of the import restrictions of the multi-fibre arrangement (MFA) since 1st January, 2005 under the World Trade Organization (WTO) Agreement on Textiles and Clothing, the market has become competitive; on closer look however, it sounds an opportunity because better material will be possible with the traditional inputs so far available with the Indian market. 

At present, the textile industry is undergoing a substantial re-orientation towards other then clothing

segments of textile sector, which is commonly called as technical textiles. It is moving vertically with an average growing rate of nearly two times of textiles for clothing applications and now account for more than half of the total textile output. The processes in making technical textiles require costly machinery and skilled workers.

Today, Indian industry is extremely fragmented. India will gain market shares in the European Union, the United States and Canada to a significant extent, but the expected surge in market share may be less than anticipated, as proximity to major markets assumes increasing economic significance and tariffs are increasingly restraining trade due to the fact that products cross borders several times. Furthermore, other developing countries are catching up with China in terms of unit labour costs in the textile and clothing sector and China has of yet not shown competitive strength in the design and fashion segments of the markets.

To effectively tackle the situation India needs to invest in research and development to develop new products, reduce transaction costs, reduce per unit costs, and finally, improve its raw material base. India needs to move from the lower-end markets to middle level value-for-money markets and export high value-added products of international standard. Thus the industry should diversify in design to ensure quality output and technological advancement.

The weakest links in the entire chain are the powerlooms and the processing houses. The latter especially are very important because they are responsible for the highest value addition in the manufacturing line. A powerloom co-operative structure could be evolved for pooling of common services and functions such as quality testing, marketing, short-term financing, etc. Further, because of the geographical proximity enjoyed, a cluster approach can be adopted.

The government also needs to make policy changes like dereserving the small-scale sector so that it can achieve economies of scale and adopt a synergistic approach.

Handlooms by their very nature can adopt a strategy of "niche” marketing. In this respect, export promotion, common credit and marketing facilities and more significantly publicity are important areas for co-operation. Here too, a co-operative structure would be useful though government agencies should be involved because of their outreach. Newer and more innovative forms of involvement are required where decentralisation should be a key element.

India has made little attempt to forge partnerships – in equity, technology and distribution in overseas markets. The newer nuances of global apparel trade demand joint control of brand positioning, distributing and quality assurance systems.