Indian Textile Industry

The textile industry is the largest industry of modern India. It accounts for over 20 percent of industrial production and is closely linked with the agricultural and rural economy. It is the single largest employer in the industrial sector employing about38 million people. If employment in allied sectors like ginning, agriculture, pressing, cotton trade, jute, etc. are added then the total employment is estimated at 93 million. The net foreign exchange earnings in this sector are one of the highest and, together with carpet and handicrafts, account for over 37 percent of total export earnings at over US $ 10 billion. Textiles,1 alone, account for about 25 percent of Indias total forex earnings. Indias textile industry since its beginning continues to be predominantly cotton based with about 65 percent of fabric consumption in the country being accounted for by cotton. The industry is highly localised in Ahmedabad and Bombay in the western part of the country though other centres exist including Kanpur, Calcutta, Indore, Coimbatore, and Sholapur.

The structure of the textile industry is extremely complex with the modern, sophisticated and highly mechanised mill sector on the one hand and the handspinning and handweaving (handloom) sector on the other. Between the two falls the small-scale

Yarn, cloth, fabrics, and other products not made into garments.
1

powerloom sector. The latter two are together known as the decentralised sector. Over the years, the government has granted a whole range of concessions to the non-mill sector as a result of which the share of the decentralised sector has increased considerably in the total production. Of the two subsectors of the decentralised sector, the powerloom sector has shown the faster rate of growth. In the production of fabrics the decentralised sector accounts for roughly 94 percent while the mill sector has a share of only 6 percent.

Being an agro-based industry the production of raw material varies from year to year depending on weather and rainfall conditions. Accordingly the price fluctuates too.
Indias Trade in Textiles
(1998) India's Share in World Trade 22% 3.2% 2% 9% 2.8%

India's trade in textiles and its share in world trade can be categorized as follows:

Type
Yarn Fabrics Apparel Made-ups Over-all

Compound Annual Growth Rate (CAGR) of different segments

Type CAGR (1993-98)

Yarn Fabric Made-ups Garment

31.79% 9.04% 15.18% 6.795%

Global Scenario

The textile and clothing trade is governed by the Multi-Fibre Agreement (MFA) which came into force on January 1, 1974 replacing short-term and longterm arrangements of the 1960s which protected US textile producers from booming Japanese textiles exports. Later, it was extended to other developing countries like India, Korea, Hong Kong, etc. which had acquired a comparative advantage in textiles. Currently, India has bilateral arrangements under MFA with USA, Canada, Australia, countries of the European Commission, etc. Under MFA, foreign trade is subject to relatively high tariffs and export quotas restricting Indias penetration into these markets. India was interested in the early phasing out of these quotas in the Uruguay Round of Negotiations but this did not happen due to the reluctance of the developed countries like the US and EC to open up their textile markets to Third World imports because of high labour costs. With the removal of quotas, exports of textiles have now to cope with new challenges in the form of growing nontariff / non-trade barriers such as growing regionalisation of trade between blocks of nations, child labour, anti-dumping duties, etc. Nevertheless, it must be realised that the picture is not all rosy. It is now being admitted universally and even officially that the year2005 AD is likely to present more of a challenge than opportunity. If the industry does not pay attention to the very vital needs of modernisation, quality control, technology upgradation, etc. it is likely to be left behind. Already,

its comparative advantage of cheap labour is being nullified by the use of outmoded machinery.

With the dismantling of the MFA, it becomes imperative for the textile industry to take on competitors like China, Pakistan, etc., which enjoy lower labour costs. In fact the seriousness of the situation becomes even more apparent when it is realised that the non-quota exports have not really risen dramatically over the past few years. The continued dominance of yarn in exports of cotton, synthetics, and blends, is another cause for worry while exports of fabrics is not growing. The lack of value added products in textile exports do not augur well for India in a non-MFA world.
Textile exports alone earn almost 25 percent of foreign exchange for India yet its share in global trade is dismal, having declined from 10.9 percent in 1955 to 3.23 percent in 1996. More significantly, the share of China in world trade in textiles, in 1994, was 13.24 percent, up from 4.36 percent in 1980. Hong Kong, too, improved its share from 7.06 percent to 12.65 percent over the same period. Growth rate, in US$ terms, of exports of textiles, including apparel, was over 17 percent between 1993-94 to 1995-96. It declined to 10.5 percent in 1996-97 and to 5 percent in1997-98. Another disconcerting aspect that reflects the declining international competitiveness of Indian textile industry is the surge in imports in the last two years. Imports grew by 12 percent in dollar terms in 1997-98, against an average of 5.8 percent

for all imports into India. Imports from China went up by 50 percent while those from Hong Kong jumped by 23 percent.

Global factors influencing textile industry

The history of the textile and clothing industry has been replete with the use of various bilateral quotas, protectionist policies, discriminatory tariffs, etc. by the developed world against the developing countries. The result was a highly distorted structure, which imposed hidden costs on the export sectors of the Third World. Despite the fact that GATT was established way back in 1947, the textile industry, till 1994, remained largely out of its liberalisation agreements. In fact, trade in this sector, until the Uruguay Round, evolved in the opposite direction. Consequently, since 1974 global trade in the textiles and clothing sector had been governed by the Multifibre agreement, which was the sequel to an increasingly pervasive quota regime that began with the Short-term arrangement on cotton products in 1962 and followed by the Long-Term arrangement. After the successful conclusion of the Uruguay Round in 1994, the MFA was replaced by the Agreement on Textiles and Clothing(ATC), which had the same MFA framework in the context of an agreed, ten year phasing out of all quotas by the year 2005. The section that follows takes a brief look at the history of these protectionist regimes as also a more detailed look at the MFA and the ATC.Multi-Fibre Agreement (MFA)On January 1st, 1974, the

Arrangement Regarding the International Trade in Textiles, otherwise known as the MFA came into force. It superseded all existing arrangements that had been governing trade in cotton textiles since 1961. The MFA sought to achieve the expansion of trade, the reduction of barriers to trade and the progressive liberalisation of world trade in textile products, while at the same time ensuring the orderly and equitable development of this trade and avoidance of disruptive effects in individual markets and on individual lines of production in both importing and exporting countries. Though it was supposed to be a short-term arrangement to enable the adjustment of the industry to a free trade regime, the MFA was extended in 1974, 1982, 1986, 1991, and 1992. Because of the quotas allotted, the MFA resulted in a regular shift of production from quota restricted countries to less restricted ones as soon as the quotas began to cause problems for the traders in importing countries. The first three extensions of the MFA, instead of liberalising the trade in textiles and clothing, further intensified restrictions on imports, specifically affecting the developing country exporters of the textile and clothing products. Increased usage of several MFA measures tended to further erode the trust which developing countries had originally placed in the MFA.

The MFA set the terms and conditions for governing quantitative restrictions on textile and clothing exports of developing countries either through negotiations or bilateral agreements or on a unilateral basis.The bilateral agreements negotiated between importing and exporting countrys contained provisions relating to the products traded but they differed in the details. The restraints under the MFA were often negotiated, or unilaterally imposed at relatively short intervals, practically annually. The quotas could be either by function or fibre Under the MFA, product coverage was extended to include textiles and clothing made of wool and man-made fibres (MMF), as well as cotton and blends thereof. With regard to applications of safeguard measures, import restrictions could be imposed unilaterally in a situation of actual market disruption in the absence of a mutually agreed situation. However, in situations involving a real risk of market disruption only bilateral restraint agreements were possible. The Textile Surveillance Body (TSB) was set up to monitor disputes regarding actions taken in response to market disruptions.

The MFA permitted certain flexibility in quota restrictions for the exporters so that they could adjust to changing market conditions, export demands and their own capabilities. The MFA also provided for higher quotas and liberal growth for developing countries whose exports were already restrained. The MFA asked the participants to refrain from restraining the trade of small suppliers under normal circumstances. In general, developed countries, under MFA, chose not to impose restrictions on imports from other developed countries The TSB ensured compliance by all parties to the obligations of bilateral agreements or unilateral agreements. It called for notification of all restrictive measures. A Textiles Committeeestablished as a management body consisting of all member countries - was the final arbiter under the MFA and worked as a court of appeal for disputes that could not be resolved under TSB.

Unsatisfactory experience with several extension protocols of the MFA, retention clauses, such as good will, exceptional cases, and anti-surge and other trade related factors led the developing countries to press for the inclusion of the textile issue in the agenda of the GATT Ministerial meeting.
The eventual outcome of prolonged negotiations was the Agreement on Textiles and Clothing.

Agreement on Textiles and Clothing (ATC)

The ATC calls for a progressive phasing out of all the MFA restrictions and other discriminatory measures in a period of 10 years. In contrast to the MFA, the ATC is applicable to all members of the WTO.

Four Steps over 10 Year

Steps

Percentage of products to be brought under GATT (including removal of quotas)

How fast remaining quota should open up, if 1994 rate was 6%

Step 1
1st Jan 1995 - 31st Dec 1997

16 percent (minimum 6.96 percent annually taking 1990 imports as base)

Step 2
1st Jan 1998 - 31st Dec 2002

17 percent

8.70 percent annually

Step 3
1st Jan 2002 - 31st Dec 2004

18 percent

11.05

percent annually

Step 4
1st Jan 2005 Full integration into GATT and final elimination of quotas, ATC terminates

49 percent (maximum)

No quotas left

Top 10 Exporters (Textile)

Country 1990 Billion US$
Hong Kong 7.99

1997 Billion US$

14.6

% share
7.68

% share
9.42

China

7.10

6.82

13.83

8.92

South Korea

6.04

5.81

13.35

8.61

Germany

14.00

13.46

13.05

8.42

Italy

9.80

9.43

12.9

8.32

Taiwan

6.13

5.90

12.73

8.21

USA

5.03

4.83

9.19

5.93

France

7.21

4.65

5.86

5.64

BelgiumLuxembourg 6.54 6.29 7.01 4.52

Japan

5.88

5.65

6.75

4.35

Total (Top 10) World

74.36 104.00

71.5 100.00

110.62 155.00

71.37 100.00

Top 10 Exporters (Apparel)

Country 1990 Billion US$
China 9.41

1997 Billion US$

31.8

% share
9.14

% share
21.06

Hong Kong Italy USA

15.37 12.07 2.57

14.92 11.72 2.49

23.11 14.85 8.68

15.30 9.83 5.75

Germany Turkey

7.82 3.44

7.59 3.34

7.29 6.7

4.83 4.44

France
UK

4.65
3.08

4.51
2.99

5.34
5.28

3.54
3.50

South Korea Thailand

8.11 2.86

7.87 2.78

4.19 3.77

2.77 2.50

Total (top 10) World

69.38 103.00

67.36 100.00

111.01 151.00

73.52 100.00

EU Top Ten Suppliers of MFA Clothing: Rank Price (AGR 1994-96)

1995 Ranks and Average Price

1996 Ranks and Average Price

Rank Price CAGR 1994-96

Country

Rank in Value

Rank in Volume

Avg. Price, Ecu/Kg

Rank in Value

Rank in Volume

Avg. Price, Ecu/Kg

China Turkey Hong Kong Tunisia Morocco Poland

2 1 3 4 5 6

1 2 3 7 6 8

9 2 6 3 5 2

1 2 3 4 5 6

1 2 3 6 7 8

8 6 5 3 4 1

3 7 9 4 2 8

India
Bangladesh Romania

7
8 9

5
4 10

7
10 4

7
8 9

5
4 10

9
10 2

10
5 1

Indonesia

10

10

Post-MFA / ATC Scenario

It is generally believed that quota phase-out can only be beneficial for the industry. In 1993, a study of seven countries found that the price of cotton yarn per kilo, was cheapest in India at US$ 2.79, compared to US$ 3.30 in Brazil, US$ 4.19 in Japan, and US$ 3.10 in Thailand. This was because overall labour and raw material costs are cheaper in India.
However, it should be realised that the opposite can also happen. Removal of quotas may open new frontiers but will also close captive markets. The EU and the US will no longer be restrained in buying as much as they want from the cheapest possible sources. Some argue that the ending of quotas will result in cut-throat competition between developing countries. Coupled with this is erosion in the growth of markets in industrial countries. Apparent consumption of textile products, in real terms, remained stagnant during the decade1985-95. Purchases become discretionary and fashion-driven. As a result, fashion cycles got shorter and ordercycles compressed. Retailers order requirements on short-order cycle term and demand rapid responses to in-season ordering. Hence, they are compelled to secure their supplies of top-up orders from those in close vicinity.

There is, therefore, a propensity towards sourcing from low-cost countries in the neighbourhood as

also a growth of offshore processing by manufacturers in developed countries. Regional integration reinforces this. Further exporters in India fear that freer imports could lead to dumping of low-cost fabrics from China and other Southeast Asian countries. Thus, the industry needs restructuring on all fronts. Although the policy framework can be blamed partially for its ills, internal factors are equally important. Recent studies indicate that India is beginning to lose out to its rivals. In one survey of US textile and apparel imports, China and Hong Kong had higher market shares than India. In certain categories, other Asian low cost producers like Pakistan and Indonesia had higher market shares and had emerged as close competitors to India.Because many of these countries depend on imports, however, India can take advantage of home production. Further, formation of NAFTA means direct competition from the Latin American countries. The United States has farmed-out offshore processing work to enterprises in Mexico and the Caribbean Base Initiative countries. Similar relocation has taken place in Europe with manufacturers shifting base to Eastern Europe, which provides similar advantages of cheap labour and proximity.

According to projections by TECS, EU imports of ready-made fabrics will double between 1994 and

2004, as a result of the elimination of quotas. US imports are expected to treble over the same period.

According to another prediction, apparel output could more than double (i.e. expand by 241%) between 1995 and 2005, compared to an increase of only 114%, without the agreement on textiles and clothing. By increasing market access, the ATC will generate multiplier effects in the Indian economy, eventually feeding back into the textile industry itself. The rise in demand for exports could increase output and employment in the textile industry. This in turn will stimulate the agricultural sector to meet the rising demand for cotton. As profits rise, so will wages, which will act as further stimulus. The export boom in the textile and clothing industry will also generate considerable foreign exchange.
Given Indias high quota growth rates during the phase-out period, its competitive product niches and established links with retailers and importers in developed countries, it should experience vigorous growth in the future. The World Bank predicts a growth rate of 16% per annum in the coming decade. Ultimately, the extent that India will benefit from trade liberalisationdepends on its current cost competitiveness, its ability to increase productivity and upgrade quality.

Implications on Indian Exports Scenario) Yarn

(Optimistic

+ Garment exports of Bangladesh increase leading to increase in consumption of Indian fabric and yarn + Exports of Far-East & ASEAN increase further + Rationalization in duties of MMF leading to increase in processing of fibres in India Fabric/Made-ups + Garmenting dereserved leading to entry of large textile players ensuring efficient sourcing and increase in the margins + Increase in investment for processing + Improvement in SAPTA trade Garments + Garmenting and Knitting de-reserved to allow the units to grow bigger to be able to service large orders and large clients + Labor laws in India become industry friendly + Garment parks come up in key regions giving a boost to exports + Successful Quota Phase-out without exports getting restricted by QRs

Fig in US $ Mn

1994
Yarn 590

1998
1780

2002
2333

2005*
2701

2010*
3131

Made-ups
Fabric Garments Total

851
1214 3713 6368

1498
1716 4829 9823

2620
2512 6510 14035

4527
3530 10794 21552

11266
7100 21711 43208

* Projections

Implications on Indian Exports Scenario) Yarn

(Pessimistic

- Change works to the advantage for S. Korea/ASEAN/Far-East - Demand for packages increases - EEC other garment supply countries invest in backend processes Fabric/Made-ups - Environmental Clause impacts - Investment in processing does not happen - Blends and synthetic fabrics dominate reducing advantage of Indian cotton Garments - Social clause impact leading to ban on some categories, etc.

- SSA is a reality impacting exports of garments from India to USA and EU - FTA becomes a reality - Other projectionist measures come up As opposed to the optimistic scenario, the pessimistic scenario shows a shortfall of nearly US $4000 mn of exports in year 2005 and the exports are not likely to be much higher than the present figures. It would also lead to development of textile and clothing industry in the other nations and India would lose out as a significant player in the industry. This would also stifle the domestic textile industry which would be in a very weak position to compete with imports. (These are expected to become cheaper with import duty rationalization as per international treaties and cost competitiveness of overseas players). Some of the subsidies currently extended by the Indian government to promote exports which are sector specific(TUF, 80 HHC) or region specific (EPZS, EOUS) may also need to be withdrawn.
Fig in US $ Mn

1994
Yarn Made-ups Fabric Garments Total 590 851 1214 3713 6368

1998
1780 1498 1716 4829 9823

2002
2003 2038 1931 5435 1140 8

2005* 2010*
2126 2427 2050 5939 1254 2 2022 3098 2154 6885 1415 9

* Projections

Conclusions
To effectively tackle the situation India needs to invest in research and development to develop new products, reduce transaction costs, reduce per unit costs, and finally, improve its raw material base. India needs to move from the lower-end markets to middle level value-for-money markets and export high valueadded products of international standard. Thus the industry should diversify in design to ensure quality output and technological advancement. The weakest links in the entire chain are the powerlooms and the processing houses. The latter especially are very important because they are responsible for the highest value addition in the manufacturing line.A powerloom co-operative structure could be evolved for pooling of common services and functions such as quality testing, marketing, short-term financing, etc.Further, because of the geographical proximity enjoyed, a cluster approach can be adopted. The government also needs to make policy changes like dereserving the small-scale sector so that it can achieve economies of scale and adopt a synergistic approach. Handlooms by their very nature can adopt a strategy of "niche marketing. In this respect, export promotion, common credit and marketing facilities and

more significantly publicity are important areas for cooperation. Here too, a co-operative structure would be useful though government agencies should be involved because of their outreach. Newer and more innovative forms of involvement are required where decentralisation should be a key element. India has made little attempt to forge partnerships - in equity, technology and distribution in overseas markets. The newer nuances of global apparel trade demand joint control of brand positioning, distributing and quality assurance systems. The Indian textile industry has recognised the need for a cradle-to-grave approach when tackling environmental issues i.e. eco prescription should be applied right from the stage of cultivation to spinning to weaving to chemical processing to packaging. Here especially there is great scope for private -public partnerships. A great deal of work has been done by Indian trade and industry to comply with ecological and environmental regulations, and so Indian garments can adopt an appropriate label signifying a distinct quality. Efficiency and output of handloom and powerloom sectors also needs to be increased. The clothing sector needs the support of high quality and costeffective cloth processing facilities. Modernisation of mills is a must.

Human resource is another area of focus. The workforce must be trained and oriented towards high productivity. The business environment of the future will be intensely competitive. Countries will want their own interests to be safeguarded. As tariffs tumble, nontariff barriers will be adopted.New consumer demands and expectations coupled with new techniques in the market will add a new dimension. E-commerce will unleash new possibilities. This will demand a new mindset to eliminate wastes, delays, and avoidable transaction costs. Effective entrepreneur-friendly institutional support will need to be extended by the Government, business and umbrella organisations.

Areas where German development co-operation can help are enumerated below.
Input Areas Policy framework is complex with inputs from many ministries. The following chart is not meant to be exhaustive but only to indicate areas where German development co-operation can have an impact.

NATIONAL ECONOMIC POLICY Industrial Policy / Textile Policy

Planni ng
Competitive positioning

Financ Invest ing ment

Credits Promotion

Export

Manpo R&D wer

Education Quality control

Infrastr ucture
Ports

Bilateral agreements

Evaluating domestic and foreign needs

Aid through multi-lateral agencies

Information technology

Export promotion

Training

Productivity

Containers

Export strategy

Sector specific

Development of support industries

Skills and development

Standardisation

Airports

Export financing

Machinery spares

Welfare

ISO 9000

Roads

Synthetic raw materials

Literacy

Packaging

Rail

Language

R&D

Telecom

Entrepreneur development

Ecology standards

Power

Water

Gas

Possible Indo-German Co-operation in Textiles

Areas of Co-operation
Provision of co-operative structures for quality testing, marketing, brand-building Technological upgradation (egs. Effluent treatment plants, energy saving devices, and other machinery related directly to the production process like spreading, cutting, finishing, etc.) Adoption of environment-friendly technology to pre-empt the adverse impact of non-tariff barriers. This includes environmental monitoring/ testing equipment and services, combating air pollution (package scrubber, special air pollutant treatment for H2S, CS2), solid waste removal, wastewater disposal Development of textile-specific software for India, ComputerAided Textile Designing, aiding IT integration Working out alternative techniques / frame conditions such that sanitary and phyto-sanitary measures are not a problem Managerial training to encourage adoption of techniques like JIT, Quick Response Systems Usage of EPS (Electronic Point of Sale) software Promoting labels like RUGMARK (carpets) in textiles so that consumers are satisfied that child labour has not been employed, to counter negative publicity generated by the "Clean

Clothes" movement, etc. Promoting hand-made articles by improving quality of raw materials and introducing machinery where possible in the process so as to maintain standards of quality and design Development of new products Adoption and adaptation of state-of-the-art information technology in enterprise resource planning so as to pre-empt non-tariff barriers which curtail markets for the Indian textile industry Helping firms build close relationships with customers Training centres Short-term credit Improvement of synthetic fibre-base to reap economies of scale, use of genetic engineering, bio-technology, and cellular biology in both natural and synthetic fibre-base

ENVORONMENTAL ASPECTS IN THE TEXTILE TRADE

There is always an environmental impact the textile production.The impact starts with the use of pesticides during the cultivation of plants for the natural fibres, the erosion caused by the sheep farming or the emissions during the production of synthetic fibre. So there is the environmental effect in the process of production, where thousands of different chemicals are used to reach the final stage of textile products. Awareness of environmental problems has increased considerably during recent years and the environment has become a major issue in the international textile trade.This is due to the environmental and health legistation and the environmental policies that is being executed through market demands. The end users in developed countries are highly sensitive about the issues like azo dyes and child labour in the textile production. The action by the developed countries in this matter was put as Non-Tariff Barriers for the exports from the developing countries like India. ENVIRONMENTAL LEGIILLATION

Developed countries are reviewing the regulation of harmful substances in the textile products. The major issues are.
a) Ban on azo dyes b) Regulation of formaldehyde

c) Regulation of Pentachlorophenol (PCP) d) Limit values for residues of pesticides

e) Ban on allergic disperse dyes

f) Regulation of the content of chromium. Most of the operative legislation is applicable to the importer who places the product on the developed country markets. The importer requires mostly legally binding guarantees. The requirements are often included in the LC. The environmental developments in connection to the textile trade may be classified as: (i) Product oriented policy

(ii) Process oriented policy (iii) Waste management policy.

PRODUCT ORIENTED POLICY

Under this policy, the product is considered directly or indirectly responsible for any adverse environmental effects that occur in the entire industrial chain. So the product is thought to be the starting point for the reduction in the impact on environment. Under this, the Life Cycle Assessment (LCA) is the major criteria to evaluate the products impact on environment. In other ward, the environmental impact of a product is

based on the pollution caused by the extraction of its raw material, by itsprimary & secondary manufacturing, by its consumption and maintenance and in its waste. The product oriented policy focuses on there measures.

1) Regulating measures, which puts the legislation concerning the composition of products.
2) Facilitating measures, which by using the market mechanism reduces the environmental impact of a particular product. 3) Stimulating measures, which works through more awareness to the consumers. PROCESS ORIENTED POLICY This environmental policy aims at a particular industry (company). The policy has the sole purpose of reducing the environmental problems of production process in a specific company.

WASTE MANAGEMENT POLICY

The waste management policy aims at reducing the environmental problems caused by discarded products and packaging material, which have reached the waste phase.

Legislation on packaging has been implemented in Germany on the obligation for producers and importers to take back used packaging materials. In 1997, the European Directive concerning packaging and packaging waste has been implemented in the national legislation of its member states. OTHER ENVIRONMENTAL ISSUES

1) Ban on Azo dyes.

Now the developed countries are more concusses on the use of Azo dyes in the textiles production. Azo dyes are the colouring agents in the textile industry. In contact with the skin, Azo dyes may form carcinogenic substances(amines). Germany and Netherlands have banned all Azo dyes, which can split off any of the 22 listed carcinogenic amines. The Netherlands, Austria and Germany are the only Member states that have already adopted national legislation banning the use of carcinogenic azocolourants.

The Netherlands adopted a Regulation banning the

import and sale of products containing azo dyes, which entered into force in 1997. The ban covers

bed linen, clothing and shoes. The regulation forms part of the Dutch Commodity Act.

Germany banned the import and sale of textile

dyed/printed with certain azo dyes, effective from April 1,1996.

Austria adopted legislation banning the marketing and use of products containing azo dyes (trade and use of azo dyes as such is not prohibited in any EU country). The law entered into force in 1997. The

Austrian legislation relies on the same analytical

method to measure the content of azo dyes in products as the German and the Dutch provisions.

2. ECO Labels
Eco labels ensures a company that produces a product is eco- friendly and so it gets a friendly response from the importers. Eco labels for textiles are widely recognized and is gaining much importance in the developed countries like EU and USA. The following Eco labels are important in the textile products.
a) Health Eco Labels b) Environmental Eco-labels c) Organic Eco labels

d) Social labels The world wide recoginised Eco-label for textiles is

OKO-TEX 100, which guarantees the consumer that

the product will not harm the health during wearing.

OKO-TEX 100 requires unit values/concentrations on

PH, carcinogenic, azo dyes, formaldehyde,
chlorinated phenols, pesticides, heavy metals and allergic dyes.

3. Environmental Management System

The introduction of policies like environmental management system by the developed countries is important to the exporters in the developing countries like India. The ISO14001 standard is the only standard for the environmental management system accepted worldwide. This system involves. (i) A complete overview of the environmental impact of the company can be obtained. (ii) The environmental impact of the company can be controlled. (iii) Whenever possible, the environmental impact of the company can be diminished.

4. Waste water Management

The biggest enviromental problem associated with the textile industry is the water pollution caused by the discharge of untreated effluents. Waste water arising from the washing and dyeing sections of production contains a substantial amount of organic and suspended pollution, such as dyes and caustic soda, which have a negative impact on environment. The growing concern on this issue by the developed countries requires an immediate action to manage it properly. The trade of textile products is very much sensitive in respect of the environmental issues and so the importers may demand certain guarantees for product, for example some of the leading importers at EU market demand that all textile purchased have been tested according to OKO-TEX 100. So the growing concern regarding the environmental impact of the textile production should be taken care of much in advance, otherwise the exports of textile products to the traditional markets and developed countries will be hindered with more and more Non-Tariff barriers (NTBs).

GLOBAL TRADE IN TEXTILES AND CLOTHING

TEXTILE TRADITION OF INDIA

India has a diverse and rich textile tradition. The origin of Indian textiles can be traced to the Indus valley civilization. The people of this civilization used homespun cotton for weaving their garments. Excavations at Hardpan and Mohan - jo-Daro, have unearthed household items like needles made of bone and spindles made of wood, amply suggesting that homespun cotton was used to make garments. Fragments of woven cotton have also been found from these sites. The first literary information about textiles in India can be found in the Rigveda, which refers to weaving. The ancient Indian epics-Ramayana and Mahabharat, also speak of a variety of fabrics of those times. The Ramayana refers to the rich styles worn by the aristocracy on one hand and the simple clothes worn by the commoners. Ample evidence on the ancient textiles of India can also be obtained from the various sculptures belonging to Mauryan and Gupta age as well as from ancient Buddhist scripts and murals (Ajanta caves). Legend has it that when Amrapali, a courtesan from the kingdom of Vaishali met Gautam Buddha, she wore a richly woven semi transparent sari, which speaks volumes of the technical achievement of the ancient Indian weaver. India had numerous trade links with the outside world and Indian textiles were popular in the ancient world. Indian silk was popular in Rome in the early centuries of the

Christian era. Hoards of fragments of cotton material originating from Gujarat belonging to 5th century A.D. have been found in the Egyptian tombs at Fostat. Cotton textiles were also exported to China during the heydays of the silk route.

Silk fabrics from south India were exported to Indonesia during the 13th century. India also exported printed cotton fabrics or chintz, to European countries and the Far East before the coming of the Europeans to India. The British East India Company also traded in Indian cotton and silk fabrics, which included the famous Dacca muslins. Muslins from Bengal, Bihar and Orissa were also popular abroad. The past traditions of the textile and handlooms can still be seen amongst the motifs, patterns, designs, and the old techniques of weaving, still employed by the weavers.

THE INDIAN SIGNATURE COLLECTION

The Indian signature collection consists of exotic textiles such as Madras checks from Tamil Nadu, ikats from Andhra and Orissa, tie and dye from Gujarat and Rajasthan; brocades from Banaras, jacquards form Uttar Pradesh. Daccai from West Bengal, and phulkari from Punjab. Despite this regional distinction there has been a great deal of technical and stylistic exchange. The famed Coimbatore saris have developed while imitating the Chanderi pattern of Madhya Pradesh. Daccai saris are now woven in Bengal, not in Dhaka. The Surat tanchoi based on a technique of satin weaving with the extra weft floats that are absorbed in the fabric itself has been reproduced in Varanasi. The Baluchar technique of plain woven fabric brocaded with untwisted silk thread, which began in Murshidabad district

of West Bengal, has taken root in Varanasi. Their craftsmen have also borrowed the jamdani technique. Woolen weaves are no less subtle. The Kashmiri weaver is known the world over for his Pashmina and Shahtoosh shawls. The shawls are unbelievably light and warm.

The states of Kashmir and Karnataka are known for their mulberry silk. India is the only country in the world producing all four commercially known silks - mulberry, tasser (tussore), eri and muga. Tasser is found in the remote forests of Bihar, Madhya Pradesh, Orissa, West Bengal, Andhra Pradesh and Uttar Pradesh. Eri is soft, dull and has wool like finish. Assam is the home of eri and muga silk. Muga is durable and its natural tones of golden yellow and rare sheen become more lustrous with every wash. The designs used in Assam, Tripura and Manipur are mostly stylized symbols, cross borders and the galaxy of stars. In the ikat tie and dye process, the designs in various colors are formed on the fabric either by the warp threads or the weft threads or by both. The threads forming the design are tied and dyed separately to bring in the desired color and the simple interlacement of the threads produces the most intricate designs that appear only in the finished weaving. It is believed that ikat was an innovative technique, first created in India, which was later carried to Indonesia, the only other place in the world with a strong ikat tradition.

INDIGENOUS DYING AND PRINTING

The process of resist-dyeing, tie-dyeing and yarns tie-dyed to a pattern before weaving were the basic techniques of indigenous dyeing of village cloth. Shellac was used for reds, iron shavings and vinegar for blacks, turmeric for

yellow and pomegranate rinds for green. Before the artificial synthesis of indigo and alizarin as dye stuffs, blues and reds were traditionally extracted from the plants indigofera, anil and rubia tintorum (madder-root). These were the main sources for traditional Indian dyes. Even today, the Kalmkari cloth of Andhra Pradesh is printed with local vegetable dyes. The colors being shades of ochre, deep blue and a soft rose derived from local earths, indigo and madder roots. Andhra Pradesh has made a significant contribution to the history of hand-printed textiles in India. Printing is native to the land, its pigments being obtained from the flowers, leaves and barks of local trees and chemicals obtained from clay, dung and river sands. A new technique has been developed in the northern sectors where warp threads are lined, measured and tied to the loom and then printed. The warp-printed material is a specialty of Haryana and Uttar Pradesh. The ideal seasons for block printing are the dry months. Excellence is achieved only if the block is freshly and perfectly chiseled. The designs are produced by artists and the designing is kept within the discipline imposed, the type of yarn, the dyes used and the weaving techniques, by the nakshabandhas (graph-paper designers). Given the wide and exciting range of handloom it is not surprising that the rich and beautiful products of the weavers of India have been called exquisite poetry in colorful fabrics. GLOBAL TEXTILE AND CLOTHING TRADE

As per the international trade statistics for 2000, brought out by the World Trade Organization [WTO], global exports of textiles and clothing amounted to US $ 356.44 billion in which clothing accounted for 55.8% (USD 198.94 billion) and textile accounted for 44.2% (USD 157.5 billion). Indias share in global textile and clothing trade has been 2.87% valued at US$ 10.24 billion during the year 2000.

TEXTILE & APPAREL INDUSTRY AT A GLANCE

The Textile and Clothing industry in India accounts for 14 % of the manufacturing sector output, about 35.5 % of export earnings and employs about 26 million people. Its net foreign exchange earning is also one of the highest, 75% of the exports. The Indian Textile and Apparel industry represents a mosaic of widely diversified sectors with the organized and integrated mill sector, medium and small scale Powerloom sector, handloom sector, hosiery sector, apparel manufacturers in SSI and Spinning mill sector spread all over India. The exports in this sector comprise yarn, fabrics, made-ups, garments, handicrafts, jute and coir.

APPAREL/CLOTHING SECTOR
The share of Ready-made garment (RMG) in Textile and Apparel exports is 40-45%. It accounts for over 1.6% share in GDP and 7% of the industrial production in India. Indias apparel exports basket

consists of T-shirts, Ladies blouses, Gents shirts, Skirts, Shorts, Trousers, Nightshirts and Nightwear chiefly made from cotton fabrics. The major markets for RMG are European Union, USA, Australia and Canada. The apparel sector basically consists of knitted and the woven garment segments. By and large, the industry has doubled its production levels over the last 8 years, which means it has grown at an average growth rate of 12% overall. However, this growth has not been uniform for both the segments. The knitted segment has grown faster than its woven sibling, having grown almost three times; whereas the woven segment grew slowly at the rate of 1.5 times.

TEXTILE SECTOR
The textile industry occupies a unique position in the Indian economy. Its predominant presence in the Indian economy is manifested in terms of its significant contribution to the industrial production, employment generation and foreign exchange earnings. It has immense potential for employment generation, particularly in the rural and remote areas of the country on account of its close linkage with agriculture. Indian textile industry has a significant presence in the world textile economy by virtue of its production of textile fibres/yarns. It accounts for about 21 per cent (35 million spindles) of the world spindleage of 166.36

million spindles, the second largest after China and three per cent of the world rotorage of 7.81 million. With almost 5.7 million looms (including handlooms), the industry has the highest loomage about 64 per cent of the world loomage of 8.9 millions. It is the largest producer of jute and the second largest producer of silk and the third largest producer of cotton, cotton yarn and cellulosic fibre/yarn in the world. It is also the fifth largest global producer of synthetic fibre/yarn. The Indian textile industry is predominantly cotton based which accounts for65 percent of fibre consumption. Taking a cue from global consumption pattern, it is obvious that India needs to produce more synthetic fibre based products to meet the international demand.

MMF Textile Sector

Man-made fibres today account for more than 60% of the world production in textiles and its share is growing at a steady pace. In keeping with the world trend the MMF industry in India also grew rapidly during the 90's. Exports of Indian MMF textiles have increased significantly in tune with the world trade during last 10 years. MMF exports, which were USD 303 million in 1990-91, have grown by 316% to reach USD 1260 million in 2000-2001. The exports are directed to163 countries. The highly sophisticated and quality conscious EU is the largest importer followed by the Middle East, Gulf and the Asian

region. UAE continues to be the leading market for Indian synthetic textiles, followed by the United Kingdom. The other main markets are Italy, Spain, Turkey, USA, Germany, Belgium, Saudi Arabia and France.

Cotton Textile Sector

Exports of cotton textiles (yarn/fabrics/madeups) increased to US$ 3643.23 million during the financial 1999-2000, as against US$ 3423.28 million in the year 1998-99, marking a growth of around 6.42%. Exports of cotton yarn have shown a phenomenal growth in recent years, rising from US$ 403 million in 1992-93 to US$ 1.54 billion in 1999-2000, marking an increase of about 282% during this period. India has a share of27% in the world trade in cotton yarn. Exports of cotton fabrics have also shown a steady growth during the last five years from US$ 613.33 million in1992-93 to US$ 1.1 billion in 1999-2000. Exports of cotton made-ups have also shown a steady growth over the years, rising from US$305.67 million in1992-93 to US$ 1005.3 million in 19992000, representing an increase of 229% during this period.

Wool And Woollen Sector

Indias production of wool and woollen textiles, though a tiny percentage of the world production, has some inherent strengths with a capacity to give the consumers exclusive/niche products based on

traditional designs and colours. Indian shawls, especially, hand-embroidered ones and Pashmina shawls are finding a very good market in the world. Indian woollen knitwear is valued for the handwork done on it. New blends like wool/lycra, Australian sports wool and optim fibre are the major thrust blends which will find emerging goods markets for knitwears and shawls.

Silk Sector
India has the distinction of being the only country in the world to produce all the commercially known varieties of silk - Mulberry, Tasar, Eri and Muga. The production of Mulberry raw silk during 2001 has been 14000 tons. The main items being produced in India are mixed/blended silk fabrics, dress material, saris, scarves, stoles, cushion covers, bedspreads, carpets and silk garments. The total export of silk items is USD 400 million. The USA and the EU import about two-thirds of the silk textiles exported from India. The other markets are the Middle East(for traditional sarees), Singapore, Hong Kong, Japan, Australia and South Africa.

TEXTILES TRADE STRENGHTS

Contrary to the global trends towards integration and economies of scale, the Indian textile Industry is a unique case of disintegration. There are 2290 players in the organized spinning sector; only 278 composite mills and thousands of weaving units,14500

independent processing units and innumerable garment manufacturers and countless retailers. India has the largest cotton acreage in the world, and cotton is the dominant fibre in the Indian industry. Almost all cotton used in India is grown locally.

1.

Large Production Base

India is a producer and exporter of quality textiles and apparels. India has a large production base with integrated mill sector, State of the art Apparel manufacturers, Powerlooms, Handlooms, Knitters and spinners.

2.

Wide Product Range

India produces almost all types of fibers and yarns and has achieved near self sufficiency in some sectors such as those producing polyester fiber and filament yarn. India offers a trendiest range of apparels, alluring range of made-ups and exotic range of fabrics to discerning international buyers.

3.

Modern Technology

The textile and apparel industry in India employs modern technology in production. This is especially visible in the case of the raw material, i.e. yarn and fiber, producing sectors, which in turn is reflected in

the high quality of products comparable to reputed international brands.

4.

Competitiveness

The industry enjoys cost advantages due to creation of huge production capacities. Indian items are competing with products of such textile giants like Japan, Korea and Taiwan and have come out on top. The secret of India's success lies in the unmistakable quality of its textiles, competitive prices and reliable supply.

5.

Unique Advantages to Importers

Textiles and Apparel Industry in India has certain unique advantages which are beneficial to overseas buyers. a) With centuries old tradition, industry has perfected the art and science to produce exquisite goods. b) Industry is self sufficient and vertically integrated. c) Diversified small lot production system which can cope better with the changes in fashion demands, short response time and smaller lots offered. d) Also capable of catering to volume orders. e) Wide range of production including sophisticated high qualities as well as those required for middle and low end consumers.

6.

Made-up Articles - specialty items

Exports of made-ups have been increasing at a steady pace. India offers an alluring range of made-up items like scarves/stoles/pupates and ordains in exotic shades, intricate patterns and magical finishes. Dyed, printed and embroidered dupattas/odhanies in metallic stripes, sequins and pearl/bead works which are in great demand in the Arab world is a specialty of India.

QUOTAS & QUOTA RELATED PROBLEMS

Nearly 80% of Indian clothing exports go to the US and EU where they face quota restrictions. A lesser percentage of total textile exports are subject to quotas. During the course of the first two Multifiber Arrangements in the 1970s, Indian exporting firms enjoyed a relatively unrestricted growth, since their export quantities had not reached the limits set by the quotas. However, during the third phase, some quotas started to bite. By 1987, apparel exports were curtailed by quota ceilings for most categories. The Uruguay round of multilateral negotiations brought the Multi-fiber Arrangement to an end and the WTO members agreed to enter into reciprocal and mutually advantageous arrangements directed to the substantial reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international trade relations.

Although the integration schedule and quota phaseout under ATC was originally intended to be a gradual affair, it has actually been followed in letter only and not in spirit. The developed countries have not integrated items of commercial significance into the world trading system even after 70% of the period of integration schedule is over. Consequently, the most intensive items like shirts and womens outerwear, in which India has an advantage, will not have their quotas removed until 2005 leading to a problem of uncompetitive prices, pushed higher by the cost of paying for quotas. The two largest restraining Members USA and EU have not taken any specific measures to facilitate increased competition in their markets. On the contrary, at the very beginning of integration process, the US administration announced its policy to postpone integration of the large bulk of restrained products until the end of the transitional period of the ATC. The EU, on its part, has insisted on additional reciprocal market opening commitments by developing countries before it could consider any meaningful liberalization of its restrictions. India signed bilateral agreements with the EU and US to secure reciprocal market access for textiles and opened its markets to foreign goods by removing import restrictions on textiles such as fibers, yarns and industrial fabrics, as well as reducing its tariffs.

IMPACT OF FREE TRADE, PREFERENTIAL TRADE AGREEMENTS & RULES OF ORIGIN

The agreements under the World Trade Organization will have their deepest impact on the Indian textile and clothing industry. The reason is obvious: It is one of the biggest sectors of the economy. It is the only industry that is self-reliant and complete in the value chain - from raw material to the highest value added products. Consequently, the growth of this industry has a significant bearing on the overall development of the economy. The impact of liberalization through WTO on Indian Textile market is yet to be experienced in a big way since most of the liberalization under ATC is back loaded and will take place in the last year i.e. 1.1.2005. As it stands out India has already lowered duties substantially below committed levels and opened its market while the EU and US has so far integrated insignificant products and the most important products would be integrated in the year2005. Textile companies are already complaining of the Chinese onslaught in this sector.
A major offshoot of the free trade regime is the frequent use of the anti dumping and anti subsidy action by the developed countries. The European Commission (EC) has been particularly active in this regard. In the last decade, the EC has initiated proceedings on PTY, PSF, Polyester Spun Yarn and Polyester Staple fiber fabrics originating from developing countries including India.

The repeated recourse to such investigations and back to back investigation has resulted in losses for business and caused considerable damage to trade and competition. In fact anti-dumping levies are far more lethal than quota restraints especially as they have the potential to restrict sales and erode competitive edge in view of the direct impact on the price of the product. There has been sharp decline in imports from countries whose companies had been targeted for alleged dumping. Besides, an antidumping/anti-subsidy investigation entails significant financial burden on the targeted companies.

PREFERENTIAL TRADE AGREEMENTS

The General System of Preferences (GSP) is an agreed exception to the MFN principle under which the Donor Country grants preferential duty on goods originating in beneficiary country which is lower than the normal MFN duty. Each donor country is free to decide the level of concessions, the choice of goods and the rules of origin in respect of GSP. Consequently, most GSP schemes are different from each other in terms of the goods covered, the level of duty concession, the procedure to be used and the rules of origin that apply. The EU GSP scheme extends duty benefit to the developing countries and provides special incentives to promote core labor and environmental standards. The textile sector in India is not eligible for EU GSP benefits while the same benefits are extended to China, Indonesia, Malaysia, Sri Lanka and Thailand.

However, the apparel sector in India benefits from EU GSP scheme. But the concessions of duty free access granted to Pakistan recently on account of drug policy would increase the unhealthy competition and push the prices down in apparel sector. The expansion of regional trade arrangements like NAFTA, growing preferential arrangements with targeted regions and countries under Arrangements like Trade Development Act 2000 of the USA, EU's enlargement programme to include Central & Eastern Europe & Mediterranean rim countries etc., would act as insurmountable barriers to global free trade resulting in adverse effect on Indian exports. In fact data relating to imports of textiles and clothing into USA shows that the share of imports from countries covered by preferential trade arrangements have increased from 19.5% in 1994 to 31.7% in the year 2000.

RULES OF ORIGIN
Rules of Origin are unilaterally altered by the developed countries to the detriment of developing exporting countries. Unilateral changes in Rules of Origin by USA have affected the trade of textiles and clothing badly. As part of its legislation implementing the results of Uruguay Round, the US substantially altered its rules for determining the origin of textiles and clothing products. The modified rules, put into

effect from July 1996, resulted in major changes disadvantageous to developing countries. Since the process of harmonization of Rules of Origin of various countries is being undertaken in the Committee on Rules of Origin, no member country should be allowed to make any further changes in their Rules of Origin till the harmonization process is completed.

FUTURE PERSPECTIVES
In the midst of liberalization under WTO framework, the future perspective of Indian Textile & Apparel Industry in post GATT era can be summarized as under: Exports of textile and apparel products will be quota-free and will only be based on market considerations namely product attributes, pricing, promotion such as advertising, brand building and other sales promotion techniques, physical distribution - its cost and logistics decisions. The quota restriction removal will increase both national and international competition; this being at a possible higher level than the demand may mean lower volumes and values. The complete elimination of the Multi-Fiber Arrangement (MFA) quota regime with effect from January 1, 2005, as per the ATC, may create a `shock-wave' which could end up disrupting the entire world textile and garment trade. Since the quota phase-out schedule, as drawn up by

industrialized countries, is heavily back-loaded with most sensitive textile items not being freed from quantitative restrictions (QRs) till the very end of the transition period, there would be a sudden release of`pent-up supply pressure' which could lead to intensified price competition and declining global prices. A taste of things to come has already been experienced in the wake of the 1997 Asian financial crisis, as devaluation greatly enhanced competitiveness and prices crashed across Asia, as producers in the region over-supplied the world. It may be unlikely that the developed countries will completely open their trade doors after the MFA phase out. The restrictions on import into those countries may come in the form of non-tariff barriers / measures such as based on environmental issues, child labor, and health and so on. While the importing countries continue to set high standards, Indian exporters are making the necessary adjustments to meet these new standards. The challenges that the Indian exporters face is not only from trade barriers in developed countries. The removal of quotas which have been restricting imports from specific sources means freer competition among exporters. The EU and US will buy from the lowest cost suppliers, and India may often, but not always, be among them. However, the industry has made considerable adjustments in order to maintain its international competitiveness.

 The GATT is aimed to reduce the levels of subsidies. The present export incentives and subsidies will be reduced, resulting in an escalation of the cost of production. The impact would be felt across different sectors, especially textiles and clothing. Export of handloom fabrics may suffer a setback due to lower or no subsidies and hence its competitive advantage will lie in its unique design capabilities. Due to the reduction in import duties of synthetics, the power loom sector can strengthen its competence on the cost front. The organized mill sector will have to restructure and emerge, interalias, as a major supplier of fabrics to the garment industry.

Foreign Involvement
1) Foreign investment in production and export exist but in a very limited way.
Government is relaxing rules for FDI (Foreign Direct Investment) and making it more conducive and liberal. Our present policies are also in favor of FDI and encoring by making the policies less cumbersome. At present Foreign investment are there in finish fabrics and garment sectors and also in textile machinery sector. The EOU (Export Oriented Units) are giving benefit to attract foreign investment.

2)

3)

4)

5)

History during the industrial revolution Textile manufacture during the Industrial Revolution The key British industry at the beginning of the 18th century was the production of textiles made with wool from the large sheep-farming areas in the Midlands and across the country (created as a result of land-clearance and enclosure). Handlooms and spinning wheels were the tools of the trade of the weavers in their cottages, and this was a labour-intensive activity providing employment throughout Britain, with major centers being the West Country; Norwich and environs; and the West Riding of Yorkshire. The export trade in woolen goods accounted for more than a quarter of British exports during most of the 18th century, doubling between 1701 and 1770 [1]. Exports of the cotton industry - centered in Lancashire - had grown tenfold during this time, but still accounted for only a tenth of the value of the woolen trade. The textile industry grew out of the industrial revolution in the 18th Century as mass production of clothing became a mainstream industry. Starting with the flying shuttle in 1733 inventions were made to speed up the textile manufacturing process. In 1738 Lewis Paul and John Wyatt patented the Roller Spinning machine and the flyer-and-bobbin

system. Lewis Paul invented a carding machine in 1748, and by 1764 the spinning jenny had also been invented. In 1771, Richard Arkwright used waterwheels to power looms for the production of cotton cloth, his invention becoming known as the water frame. In 1784, Edmund Cartwright invented the power loom. With the spinning and weaving process now mechanized, cotton mills cropped up all over the North West of England, most notably in Manchester and its surrounding towns of Ashton-Under-Lyne, Stalybridge and Dukinfield.
Textile mills originally got their power from water wheels, and thus had to be situated along a river. With the invention of the steam engine, in the 1760s to 1800s, mills no longer needed to be along rivers. Post industrial revolution

Many of the cotton mills, like the one in Lowell MA, in the US originally started with the intention of hiring local farm girls for a few years. The mill job was designed to give them a bit more money before they went back to the farm life. With the inflow of cheap labor from Ireland during the potato famine, the setup changed, as the girls became easily replaceable. Cotton mills were full of the loud clanking of the looms, as well as lint and

cotton fiber. When the mills were first built, a worker would work anywhere from one to four looms. As the design for the loom improved so that it stopped itself whenever a thread broke, and automatically refilled the shuttle, the number of machines a worker could work increased to up to 50.
Originally, power looms were shuttle-operated but in the early part of the 20th century the faster and more efficient shuttle less loom came into use. Today, advances in technology have produced a variety of looms designed to maximize production for specific types of material. The most common of these are airjet looms and water-jet looms. Industrial looms can weave at speeds of six rows per second and faster. By the later 20th Century, the industry in the developed world had developed a bad reputation, often involving immigrants in illegal "sweat shops" full of people working on textile manufacturing and sewing machines being paid less than minimum wages. This trend has resulted due to attempts to protect existing industries which are being challenged by developing countries in South East Asia, the Indian subcontinent and more recently, Central America. Whilst globalization has seen the manufacturing outsourced to overseas labor

markets, there has been a trend for the areas historically associated with the trade to shift focus to the more white collar associated industries of fashion design, fashion modeling and retail.
Areas historically involved heavily in the "rag trade" include London and Milan in Europe, So district in New York City, the Flinders Lane and Richmond.

Example of textile industries in India. Indogulf Company

NIRMA STAINLESS STEEL Balaji Overseas Keshavlal Mangubhai & Co(Woodking24-india) EURO BRIDGE HYDRODRIVE SYSTEMS AND CONTROLS PVT LTD

Manhar specialties
Linden Exports

Faizan international One By One Cotton Linden Exports Charbhuja Derivatives

DANUBE FASHIONS LTD Deep Incorporation CSM EXPORTS Spot Globo Amco Industries Ltd.

Distribution of textile sectors in Indian market:

Problems faced by Indian textile industries according to TIMES OF INDIA REPORT on July 05, 2007:

THE TIMES OF INDIA

July 05, 2007

a employees
Sidhartha I tnn New Delhi: It isn't just IT engineers who are in short supply. Sample this: garment units in Thirupurr,Tamil Nadu, are short of 30,000 hands. Deather units near Chennai are esti mated to be short of 10,000-15,000 trained work ers. In Ludhiana, the story is not much dif ferent with close to 50,000 skilled employees needed by the hosiery sector. **r The numbers which local industry associ ations shared with the National Manufactur ing Competitiveness Council (NMCC) tasked with finding long-term solutions to step up in dustrial activity for job creation are just in dicative of the problem that is now facing al most all sectors.
There is a skill scarcity at every level from a farmer moving to basic industrial sec tor to students graduating from ITIs and poly technics to engineering colleges and then to even managers and leaders. Even the numbers are not in sync with glob-al norms. In India, the annual intake in ITIs and polytechnics is estimated at around 700,000 which is roughly the same as the number of students who join engineering colleges. "The number of diploma holders and the en gineering graduates (every year) is roughly the same while the global norm is 1:20," says NMCC chairman V Krishnamurfhy No doubt, you find plumbers and electricians to fix the pipes and the wiring at home but have you ever wondered how many are trained in a classroom setting. "We need to step up the pace since main"t^ining 12-14% manufacturing growth is not just

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GARMENT UNITS FACING CRUNCH about setting up factories. It takes much longer to build human capital," said Krishnamurfhy Taking a cue from NMCC, Planning Com mission has swung into action with the intent of announcing the National Skill Development Mission next month. But unlike most gov: ernment initiatives, the plan panel has asked industry to chip in with inputs to train 10 mil lion people, who join the work force annually Industry has been asked to assess the num ber of skilled employees who would be need ed in nearly a dozen sectors which range from not just the sunrise areas like pharmaceuti cals and retailing but also include the job cre ating segments of industry like leather. The industry has been asked to come up with spe cific skill sets that are required.

Textile Composition In World Market:

 Productivity indices for textile industries in India:

CONCLUSION
The textile and apparel industry is one of the leading segments of the Indian economy and the largest source of foreign exchange earnings for India. This industry accounts for 4 % of the gross domestic product (GDP), 20 % of industrial output, and slightly more than 30 % of export earnings. The textile and apparel industry employs about 38 million people, making it the largest source of industrial employment in India India has the second-largest yarn-spinning capacity in the world (after China),accounting for roughly 20 percent of the worlds spindle capacity. Indias spinning segment is fairly modernized; approximately 35 to 40 percent of Indias spindles are less than 10 years old. During 1989-98, India was the leading buyer of spinning machinery, accounting for 28 percent of world shipments. Indias production of spun yarn is accounted for almost entirely by the organized mill sector, which includes 285 large vertically-integrated composite mills and nearly 2,500 spinning mills. India has the largest number of looms in place toweave fabrics, accounting for 64 percent of the worlds installed looms. However, 98 percent of the looms are accounted for by Indias powerloom and handloom sectors, which use mostly outdated equipment and produce mostly low-value unfinished fabrics. Composite mills account for 2 percent of Indias installed looms and 4 percent of Indias fabric output. The handloomand powerloom sectorswere established with government support, mainly to provide rural employment. These sectors benefit from various tax exemptions and other favorable government policies, which ensure that fabrics produced in these sectors are price competitive against those of composite mills.

The fabric processing (dyeing and finishing) sector, the weakest link in Indias textile supply chain, consists of a large number of small units located in and around the powerloom and handloom centers. The proliferation of small processing units is due to Indias fiscal policies, which favor small independent hand- and powerprocessing units over composite mills with modern processing facilities.

The production of apparel in Indiawas, until recently, reserved for the small-scale industry (SSI) sector, which was defined as a unit having an investment in plant and machinery equivalent to less than $230,000. Apparel units with larger investments were allowed to operate only as export-oriented units (EOUs). As a result, Indias apparel sector is highly fragmented and is characterized by low levels of technology use.