Industry banks on exports
FROM an era of an assured domestic market with a minimum amount of sweat, the Indian textile industry is, in the post-liberalisation era, facing a different situation. There is now an opportunity to operate in a global environment without the threat of being overwhelmed by overseas competition.
In the domestic sector, the organised sector is increasingly being replaced by the decentralised sector, which has a great advantage in terms of labour costs, duties and taxes.
In order to survive, the organised sector has shifted to exports. Help for the latter has come from the spinning sector, where there is no competitor.
Spinning mills provide the yarns for the decentralised sector, apart from exports.
The industry has adjusted well by pushing for exports, especially after the government made exports tax free.
Even the collapse of the Russian market has not affected Indian exports, with more goods being shipped to non-quota countries. The Cotton Textiles Export Promotion Council (Texprocil) has been in the happy position of finding actual exports consistently crossing the targeted figures.
'The conclusion of the new GATT (General Agreement on Trade and Tariffs) agreement paves the way for free international trade in textiles; and will see, over a period of 10 years, the phased end of the long tunnel of the quota regime which severely restricted the export performance of developing countries,' said V. Y. Tamhane, Secretary-General of the Mill Owners' Association.
In the closing weeks of last year, India signed bilateral agreements with the United States and the European Union that were expected to bring international competition to the very doorstep of the Indian textile industry.
The agreements were reported to have resulted in satisfaction on both sides of the fence, with American exporters benefitting, while Indian textile exports were expected to increase substantially this year.
Under a compromise formula, India is to get additional market access for its textile products.
In addition, greater flexibility will be available for utilisation of quotas through special provision of swings and shifts. In return, India has agreed to a tariff reduction and removal of import restrictions on textiles.