The Hindu : Study predicts 8 p.c. growth in textile exports

Online edition of India's National Newspaper
Sunday, Mar 21, 2004

Business

Business

Study predicts 8 p.c. growth in textile exports

By Our Special Correspondent

NEW DELHI, MARCH 20. A study by the international consultancy firm, McKinsey, on the prospects for textile exports following the total removal of quota restrictions by the end of the year has shown that India could be the second biggest winner after China, even while Sri Lanka, Bangladesh and Vietnam may be able to just about maintain their current export levels and countries like Hong Kong, Korea, Indonesia and Thailand may even witness decline in their exports.

According to a report on the study released here recently, India could hope to record a growth rate of about 8 per cent, which could be more than doubled to even as much as 18 per cent provided the Government and the industry took some immediate corrective measures.

If key reforms were introduced in areas such as product market and labour market, India, it says, should be able to capture 5 per cent share of the world market for apparel exports by 2008 and yield an export value of between $25 billion and $30 billion by 2013, even if, for some reason, India cannot take any share from China and compete with free trade zone.

The study, which was conducted on behalf of the international cargo and courier agency, DHL, and which involved interviews with industry experts across the world, has recommended further reduction in import duties on fabrics and garments to Asian levels and extension of de-reservation to all elements of the knitwear segment, and reduction in import duties on apparel, textiles and machinery. "Although this will be of primary benefit to the domestic market, it will help improve the competitiveness of larger scale manufacturers," says the report.

On the issue of the labour market reform, the report has specifically called for more flexibility to facilitate retrenchment in case of units with more than 100 workers, stronger protection against labour unrest and exemption in the Shops and Establishment Act to allow women workers on night shift as had been done for software services and ITES segments.

As for other reforms, the report has recommended implementation of uniform VAT across States to encourage companies to set up large scale units instead of multiple small uneconomic units; rationalisation of excise duties between cotton and manmade fabrics; and signing of bilateral agreements with the U.S. and EU so as to be competitive against other low cost exporters like Sri Lanka and Bangladesh.

For the industry, the report has called for measures to reduce the high levels of absenteeism, rejection rates and delayed shipments, and to modernise the production technology. India, the study has pointed out, suffered from an absenteeism rate of 13 per cent, rejection levels of 3.3 per cent and delayed shipments of 19 per cent, as against 5 per cent, 1.8 per cent and 9 per cent respectively for the rest of Asia.

Printer friendly page
Send this article to Friends by E-Mail

Business

News Update

Stories in this Section

Study predicts 8 p.c. growth in textile exports

BoI to appeal against London HC order

Rated NBFCs in good shape — CRISIL

Increased Russian enquiries for Indian tea

IDFC top managers resign

Saudi JV for fibreglass pipes in Goa

Forex reserves up $464 m

Smart revival seen in refrigerators

Medical transcription industry staging a comeback