Apparels – Facts

The Indian apparels sector is export–oriented and

contributes substantially to the country’s export
earnings. Its a labour intensive industry that is
also quite unorganised. In January 2001, the sector
was taken off from the list of industries reserved
for the small scale sector and 100 per cent foreign
direct investment was allowed. This has attracted
global manufacturers to enter into arrangements
such as joint ventures and strategic alliances with
domestic companies.
Industry Structure
Since the industry was protected under the SSI
reservation from the beginning, a large number of
small units came into existence, working as contract
manufacturers or job workers for the large
size exporting units. This placed constraints on
modernisation and limited industry’s size and
competitiveness.
The garment sector is characterised by both well–
known national brands as well as unbranded varieties
of apparels. Women’s wear forms the largest
segment of the market, followed by the men’s
wear segment. The third largest segment is the
kids wear category.
Cotton–based apparels dominate Indian exports.
Delhi, Mumbai, Tirupur and Ludhiana are themajor
manufacturing centres for garments. While
Tirupur is famous for its cotton–based hosiery
products, Ludhiana is known for its woollen knitted
garments.
USA and European Union are the largest markets
for Indian garment exports. Indian manufacturers
supply garments to a variety of international fashion
houses. Indian brands by themselves do not
have an international market. Though India has a
cost advantage in the area of labour costs, it is perceived
as being inefficient in terms of productivity.
Exports andWTO Implications
Until 1995, textile tradewas regulated by theMulti
Fibre Agreement which enabled importing countries
to impose quota restrictions on exports of
individual countries. With the formation of the
World Trade Organisation in January 1995, the
MFA was replaced by the Agreement on Textiles
and Clothing which was to be phased out over a
10–year period from 1995. Starting January 2005,
the quota restrictions stand abolished. The Indian
textile industry now has the opportunity to realise
its full potential.
Indian Industry: A Monthly Review, Centre for Monitoring Indian Economy Facts