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Part - VI

Indian textile companies have tried to focus on niche markets within the wide area of fashion clothing such as low volume production and manufacturing of a high variety of outputs and colors. The flexibility in the Indian production system is suited to meet this type of demand and therefore, demand and the characteristics of the production system are mutually reinforcing. The disadvantage of depending on fabricators is that there are wide variations for different lots of output. This could hinder India's success in becoming an important participant in the mass market for clothing. China's clear advantage is its ability to provide consistent quality over huge volumes of a single item of clothing. For example, Chinese companies can easily produce uniforms but Indian companies are faced with major difficulties.

Furthermore, the average quality in India is still below the middle price range although it has already improved over the last years. China engages in dumping practices that India is simply not able to compete with. This is mainly due to the low labor costs in China. It is interesting to note that all countries with successful garment exports have a much lower level of subcontracting than in India. Apparel firms in India subcontracted 74% of their output, compared with only 11% for Hong Kong, 18% for China, 20% for Thailand, 28% for South Korea and 36% for Taiwan. As a result, these countries have a wider base of exports and, not surprisingly, they have done very well in the market for large volumes of uniform products.

Some Indian companies are well aware of this problem. They try to invest in modern machinery but they often face a contradictory situation. These companies lack the money for long-term investments because the cost of labor is comparatively high in India. Finally, as trade barriers start to fall in India and elsewhere, the industries will also face substantially increased competition in their home markets, which lends a sense of urgency to domestic policy reform.

The textile industry in India is one of the few industries, which has the potential to emerge as a truly global player. The government has partly embarked on a role as an industry-friendly and proactive "facilitator". It recognizes the fact that industry needs a concerted strategy and time-bound action plan to convert its core competencies in availability of all major raw materials, skilled manpower, managerial competence and entrepreneurial skill.

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* Contributed by -
Siddharth Mohan Patnaik, B.Tech. (Electronics),
Ravulpathi Janaki, B.Tech. (Mechanical),
II Year, IIM Lucknow.