For the first time, after disman- tling quota restrictions in textile exports, the Indian textile industry is facing fierce competition from Asian countries.
Though, in 2005, China and India recorded an impressive growth in textile exports, the growth momentum slowed down considerably in 2006. Other Asian countries such as Indonesia, Pakistan, Bangladesh and Vietnam recorded high growth rates posting a dramatic surge in their exports to the US markets. The import curb on certain categories by the US in January 2006 under a special WTO dispensation was the major reason behind the slackening textile exports from China; whereas, in India's case, it is the lack of competitiveness in the synthetics segment. Growth rate of Indian textile exports to the US apparel market has declined during January-September 2006 to 10.75%, compared to a growth of 30.56% in April-October 2005. Moreover, there has been a substantial dip in unit value realization too.
Currently, India has a share of 5% in both the US and EU textile and garment markets3-4% in synthetics and over 10% in cotton textiles. Despite indirect tax structure in the textile industry for the past three years, a host of other factors are hampering India's international competitiveness. High cost of synthetic raw materials attributable to an effective 15% import tariff, and power and inflexibility in labor management are the principal reasons for India losing out on the competition in western markets. |
