Abstract

The Multi Fibre Arrangement (MFA) that came to an end on January 1, 2005 has opened up a plethora of opportunities for the Indian textile industry. With textiles accounting for almost 20 percent of Indian exports, and the industry and allied areas providing employment to around 80 million people in India, the Indian government is turning its attention to removing the bottlenecks that hinder its growth. The Indian textile industry has the advantages of high operational efficiencies in spinning and weaving, low-cost skilled labour, availability of raw materials and design capabilities. Yet, infrastructural bottlenecks like the transaction time at ports, inland transportation time, lack of initiative by textile manufacturers to go in for technological upgradation, fragmentation of the Indian textile industry etc., have been limiting the growth of the industry. Analysts have a few recommendations to make on ways to increase the competitiveness of the Indian textile industry. The government should encourage the closure of non-competitive mills, and exporters should move up the value chain by focusing on apparel exports rather than fibre exports. Also, Indian companies should acquire companies abroad to gain direct entry into markets for value-added products in the European, Japanese, and US markets.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• The evolution of the Indian textile industry
• The different factors that determine the structure of the industry
• The opportunities and challenges for the Indian textile industry under the new global textile regime.

Keywords

Indian textile industry, Multi Fibre Arrangement (MFA), Apparel exports, Cotton textile exports, Import quota restriction, Confederation of Indian Industry (CII), Value chain, KSA Technopak, Technology Upgradation Fund Scheme (TUFS), Vision 2010, Reliance Industries, Indorama Synthetics India, NAFTA (North American Free Trade Agreement), WTO (World Trade Organisation), Arvind Mills