Textile firms fail to weave free quota fortunes

47% companies say they haven't benefited in the first free-trade year

Although textile exports to the US and European markets increased by a creditable 25 per cent in the first year of the quota-free regime, the feel-good factor is missing in almost half of the industry. Of the domestic textile companies 47 per cent say they have not benefited from free trade.

A survey on business confidence of Indian textile companies by YarnsandFibres states that 37 per cent of the firms said had not experienced any change in their businesses during the year. Another 10 per cent said they, in fact, had "worse experience" during the first quota-free year.

While a few companies have been unable to take advantage of the opportunities, others have had "bad experience" as they have had no direct relation with global trade. The unhappy textile companies also accused inadequate infrastructure of impeding them in making use of the opportunities.

The survey by YarnsandFibres, which provides market intelligence on the textile industry, was done for the January-March quarter and was the fourth within a year.

On the brighter side, the March 2006 confidence index at 87.5 (the maximum is 100) is the highest of the four surveys. The earlier highest was 81.6 of the December quarter.

Almost 55 per cent of the responding companies have had a "good experience" and saw their orders increasing in the year. "The orders were more than in the quota regime and gains from Europe were more pronounced in the first year," says the survey.

Again, the outlook is positive with 75 per cent of the Indian textile companies saying their performance would be better in the January-March 2006 quarter.

The remaining 25 per cent "believe that their performance would remain unchanged compared to the preceding quarter. Significantly, none of the respondents sees its performance turning worse in the coming quarter," the survey states.

Post-WTO, China has retained its numero uno position in the first year of quota-free textile trade.

India is clearly distant second and faces intense competition from countries such as Pakistan, Bangladesh and Sri Lanka.