$70bn exports by 2014 possible, says Exim Bank

DOMESTIC MARKET REVIEW/ TEXTILES & GARMENTS

Exim Bank's latest study title 'Textile Exports: Post-MFA scenario - Opportunities & Challenges' has observed that the Indian textile sector has potential to reach an export value of $70 billion by 2014.

However, there were problems. The study said the Indian textiles and garments industry suffered from low productivity of cotton as measured by yield, as well as low levels of capacity and technology infusion in the spinning and weaving sector.

High interest costs and expensive power also hampered competitiveness. Exim Bank felt India exporters should aim for lowering their cost of operation through better use of production inputs and integration of manufacturing proceses.

This would require adoption of new technology, perhaps from overseas. The logistics and supply chain management of Indian textile firms also required improvement.

Besides, Indian producers would have to upgrade design and negotiation skills.

The success of exporters in the global marketplace would however be determined by the cost, quality and timely delivery of products. The study estimated that in the next two year window, the apparel market in USA and EU would appear to be the most attractive to developing countries like India.

Labour-intense activities like garment manufacturing would suit Indian exporters.

However, by 2014, the textile sector would become more attractive as many high cost countries would lose their competitive position in the open trading environment.

Besides, in the lost term, the intra-EU trade would be reduced providing additional opportunities for developing countries like India.

The study predicts India could increase its share in US and EU textiles market from the present level of 8.4 per cent worth $1.5 billion and 3.2 per cent or $1.9 billion, respectively, to a share of 13.5 per cent or $5 billion and 8 per cent or $8 billion, respectively, by 2014.

Similarly, India's share in the garments market of USA and EU could rise from the present 3.2 per cent or $2.3 billion, and 3 per cent or $3 billion, respectively, to 8 per cent share worth $13 billion and $16 billion, respectively, by 2014.

Thus and EU alone would offer a total market of $42 billion for Indian textiles and garments by 2014, the study predicted.

The multi-fibre arrangement (MFA) restricted trade in textiles and clothing through a system of quotas.

The end of the quota regime would permit the Indian textile and clothing industry to export freely.

The study noted that the clothing sector would offer higher gains that the textiles sector, in the post MFA regime.

Exim Bank predicted that China, India, Pakistan, Taiwan, Hong Kong, Brazil, Indonesia, Turkey and Egypt would emerge as winners in the post quota global trade regime.