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Given the opportunities arising out of the removal of quotas for expansion of trade, India with advantages of a large fibre base, spinning and weaving capacity, low cost skilled/semi skilled workforce, pool of technical and management manpower is ideally placed to reap the advantages of free trade. While the extent of growth in textile/clothing exports likely to be achieved can be debated endlessly, it is important to note that many textile companies are at present bullish and markets have also reacted positively to this sentiment as reflected in the rising value of the textile stocks. Irrespective of the possible trajectories that the sector may assume, the immediate impact of quota removal on labour is likely to be negative.
It is generally recognized that the removal of quota restrictions would lead to an expansion of export markets for Indian garment producers. On the other hand, the lower labour productivity of Indian labour, as compared to some of its competing nations like China, Indonesia and Bangladesh, may threaten India’s competitiveness and hence lead to a decline in exports. Since India seemingly has an edge in the semi-fashion segment where economies of scope rather than scale matter, it is possible that they may continue to retain or expand their shares in such markets.However, respondents from the industry and other secondary sources do indicate an anticipated threat from China even in this segment.
One require a spread to the mass market, through improved productivity, ensuring of scale economies by movement to large-scale production, installation of productivity enhancing techniques, etc. Given the presence of a domestic base in cotton, a movement to the large-scale sector would definitely (Except for the knitwear sector, which continues to operate in small-scale sector) benefit producers to compete in this segment. India has a greater comparative advantage vis-à-vis some of its main competing economies in specific product categories. Targeting these specific niches and seeking to build competitiveness in these segments and to move up the value chain may therefore be a better competitive strategy.
The strategy involves higher marketing and selling efforts apart from considerations of quality and timeliness of delivery. This would involve creation of new institutions by the state that would enable producers to compete ‘actively’ as opposed to ‘passive’ competition based on lowering of wage costs. Improvements in process and manufacturing techniques require installation of new machinery that warrants access to institutional credit, which is at present difficult to access for most firms in the apparel sector given their confinement to the ‘unorganized’ sector, in the global commodity chain, given the lack of access to high-fashion markets, producers may continue to face disadvantages.
However, as borne out by the experience of East Asian economies like Hong Kong, Korea and Taiwan, movement along the value chain and backward integration is feasible to an extent. A closer understanding of the experiences of these economies may offer valuable lessons for South Asian garment exporters. Diversification of output markets into new geographical regions would be another key component of strategy. Another complementary strategy to overcome this hurdle to enable the labour to retain or improve their incomes would involve expansion of the domestic market and competition in the domestic market through design and fashion. Expertise built in the domestic market may serve to built competitiveness in the global premium segments.
Expectations are high, prospects are bright, but capitalizing on the new emerging opportunities will be a challenge for textile companies. Some prerequisites to be included in the globally competing textile industry are:
  • Imbibing global best practices
  • Adopting rapidly changing technologies and efficient processes
  • Innovation
  • Networking and better supply chain management
  • Ability to link up to global value chains.
Now the Mill is getting continuous Export Order and already supplied around One Lakh Kilograms of Yarn. This will surely be benefitted to the Mills.
 
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  • ~Thursday 02 September 2021.
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