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Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.

QUESTION– What are the
challenges of the Indian Textile Sector? Discuss ways and means to increase
domestic manufacturing and promotion of exports in the Textile Sector.

high quality
QUESTION

INTRODUCTION

INTRODUCTION

Indian textile industry is one of
the largest industries in India. It is the second largest industry in terms of
providing employment opportunities to more than 35 million people in the
country. Indian Textile industry contributes to 7 per cent of industrial output
in terms of value, 2 per cent of India’s GDP and to 15 per cent of country’s
export earnings.

BODY

BODY

Challenges
of the Indian Textile Sector

Challenges
of the Indian Textile Sector

  1. The Indian Textile Sector is losing
    to competition because of lack of  FTAs
    (Free Trade Agreements) with the EU and the USA
  2. The small scale of business is
    making it difficult for textile manufacturers to compete on cost with players
    from outside
  3. India is facing huge competition
    from other countries in Ready-made Garment (RMG) Exports, particularly cotton .And
    while the world of fashion is moving towards “Blends”,   India is not making many blended apparel
    items. So on the one side our traditional items are facing competition, and on
    the other side we are behind in Product Diversification
  4. Textile imports from Vietnam and
    Bangladesh are cheaper for buyers across the world
  • The Indian Textile Sector is losing
    to competition because of lack of  FTAs
    (Free Trade Agreements) with the EU and the USA
  • The small scale of business is
    making it difficult for textile manufacturers to compete on cost with players
    from outside
  • India is facing huge competition
    from other countries in Ready-made Garment (RMG) Exports, particularly cotton .And
    while the world of fashion is moving towards “Blends”,   India is not making many blended apparel
    items. So on the one side our traditional items are facing competition, and on
    the other side we are behind in Product Diversification
  • Textile imports from Vietnam and
    Bangladesh are cheaper for buyers across the world
  • Remedies to address the above Challenges

    Remedies to address the above Challenges

    1. Favorable FTAs (Free Trade Agreements) and
      Market Diversification Strategies will help, what is needed to grow our overall
      Textile Exports is bringing in a ‘Fibre Neutral Policy’. The tax rate on all
      textile raw materials should be same. If this change is brought about- textile
      companies will make and sell more blended textile items like cotton viscose,
      cotton polyster and our Export Competitiveness will also improve
    2. Centre has doubled the import duty
      on 300 plus textile products. It is a good move and will help domestic
      manufacturers
    3. MSP for cotton is increased-
      definitely more farmers will go for cotton. But the long term solution is to
      increase average yield. We need to catch up from 550kg/hectare levels since
      many countries have crossed 1000kg/hectare yield. Experts feel that India
      should announce a New Cotton Technology Mission to achieve this
    4. In Spinning, India is very
      competitive .We are able to export yarn to many countries including China,
      because we have the technology, size, quality, productivity and ability to
      manufacture at very low cost. We should work towards global benchmarks in terms
      of new techniques in manufacturing , particularly improving operational
      efficiency
    5. Industry side we
      are trying to introduce some best practices at farming and ginning stages
  • Favorable FTAs (Free Trade Agreements) and
    Market Diversification Strategies will help, what is needed to grow our overall
    Textile Exports is bringing in a ‘Fibre Neutral Policy’. The tax rate on all
    textile raw materials should be same. If this change is brought about- textile
    companies will make and sell more blended textile items like cotton viscose,
    cotton polyster and our Export Competitiveness will also improve
  • Centre has doubled the import duty
    on 300 plus textile products. It is a good move and will help domestic
    manufacturers
  • MSP for cotton is increased-
    definitely more farmers will go for cotton. But the long term solution is to
    increase average yield. We need to catch up from 550kg/hectare levels since
    many countries have crossed 1000kg/hectare yield. Experts feel that India
    should announce a New Cotton Technology Mission to achieve this
  • In Spinning, India is very
    competitive .We are able to export yarn to many countries including China,
    because we have the technology, size, quality, productivity and ability to
    manufacture at very low cost. We should work towards global benchmarks in terms
    of new techniques in manufacturing , particularly improving operational
    efficiency
  • Industry side we
    are trying to introduce some best practices at farming and ginning stages
  • CONCLUSION

    CONCLUSION

    Exports are critical, but textile manufacturers should focus
    on the opportunities in the domestic market too .With increase in disposable
    income and higher aspirations, India is going to be a faster growing clothing
    market in the world. Through Trade Agreements such as India- Mercosur PTA
    (Preferential Trade Agreement)  and  Eurasia- India FTA (Free Trade Agreement) we can bring more volumes to the Export
    Trade.

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