The global textile trading regime is going to change drastically from the year 2005 with the phase-out of MFA. Its implication for competition will be significant. Countries that have already put competition policies in place and firms that have been improving their capabilities are the ones that are going to benefit the most. This paper discusses the nature of competition that Indian textile firms are going to face domestically and abroad in a few years from now. Some of the characteristics of competitive firms that will emerge in the ensuing period are indicated. The paper presents a summary of comparison of Indian primary textile firms with those of China and Canada (based on a primary plant level survey in the three countries). In addition, some processes that are helping the Chinese textile industry grow rapidly are discussed. It is argued that competitiveness of Indian firms would be contingent on developing long-term distinctive capabilities. Three key strategies, namely, Commitment, Co-ordination and Co-operation, for developing distinctive capabilities are presented and illustrations of initiatives at the firm level, industry level and the government level that would form part of the implementation package for each strategy are provided.
