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Part - IV
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China |
India |
| Total Exports (US$ bn) |
50 |
6 |
| US Import Quota |
19% |
2% |
| EU Import Quota |
26% |
4% |
As in many other countries, India's textile sector is one of its oldest industries and tends to be more traditional in terms of organization and business practices. The traditional nature of the textile sector is likely going to be a significant barrier to India for stepping up its performance after the elimination of the quota system.
Recently, India has been very successful at supplying the global service economy, which has not required the robust build-up in physical activity that textile trade requires. Clothing and textiles, unfortunately, falls within the industrial category and even without the expiration of the ATC, its domestic producers undoubtedly face tough times ahead. The increased competition from countries like China is only going to make a poor situation appear more desperate.
However, the situation may also be viewed as an opportunity. The implications of quota removal could be tremendous. For India, the phase out of the quota regime by 2005 could boost the fortunes of the domestic textile industry. One big advantage for India, in fact the whole of Asia, would be from outsourcing. Post-2005, manufacturers in the US and EU will look at lowering costs by outsourcing garments from countries like India. Currently, Asia contributes to over 1/3rd of total US textile imports.
The Current Situation and Problems Facing the Industry
To understand India's position among other textile producing countries, it is necessary to look at its export rates in detail. Although the textile industry contributes 9% of GDP and 35% of foreign exchange earnings, India's share in global exports is only 3% compared to China's 13.75 % per cent. Expressed in U.S. Dollars, India's exports value $10 billion, in sharp contrast to China's $77 billion. And while India is still concerned with its "fine tuning" policy, China seems to have its sights on a more strategic dimension.
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* Contributed by -
Siddharth Mohan Patnaik, B.Tech. (Electronics),
Ravulpathi Janaki, B.Tech. (Mechanical),
II Year, IIM Lucknow.
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