Textiles : Preparing for 2005

What will be the fate of India’s textile industry when the Multi-Fibre Agreement expires with effect from the beginning of 2005? Will Indian textiles, released from the swaddle of country- and item-wise quotas, take wing in the export markets, as a butterfly does after coming out of its cocoon? While Indian textiles can match any butterfly when it comes to colour or pattern, the comparison must stop there. The state of the rot in the industry is such that it would find that the quotas were a blessing that assured a certain market share, rather than the constraint that they have been made out to be. Any effort to change this state of affairs must start now. The government could use the forthcoming budget to start the process of rejuvenating India’s textile industry by rationalising the duty structure, which currently is riddled with all kinds of exemptions, concessions and special provisions that together work against efficiency, economies of scale and brand building.

The textile industry contributes 4 per cent of GDP and 33 per cent of foreign exchange earnings and is the largest employer, utilising the labour of 30-35 million workers. The industry’s turnover is estimated at Rs 1,30,000 crore. Quite clearly, this industry is important for the country. India’s share in global textile exports is 3 per cent, compared to China’s 13.75 per cent. Most of India’s exports comprise low value items.