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Size and Protection-Synthetic Fibres and Yarns Industry in India

protection on the synthetic fibres and yams industry in India and in particular the interaction between small plant sizes and high protective barriers. Recently this issue has come into greater focus due to the discovery of crude oil at Bombay High which is suited to the production of the major chemical intermediates required for synthetic fibres and yarns production, The government has as a result been putting more emphasis on the establishment of larger capacities in this industry group over the next decade. In the first section the level of protection has been, estimated and then compared with that in other industries. The second section looks at the effect of small plant sizes in increasing costs of production and thereby necessitating and perpetuating high levels of protection. In India this issue is of considerable importance as uneconomic industrial units are initially set up and then pressure is brought to bear on the government to set, up trade barriers to protect this new 'indigenous' import- competing industry.

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