India needs to focus on assessing ongoing trends in the industry and developing capabilities necessary for leveraging opportunities created by global trends. The industry also needs to improve competitiveness by working on company-level performance, says boutique consulting firm Technopak.


Clothing is among the most basic human needs, so it is a pre-gone conclusion that textiles and apparel is one of the oldest industries. As its chunk in the popularity pie of international trade grew, so did restrictions to limit the business. No other industry has witnessed quantitative restrictions to greater and wider clientele.


Such quantitative restrictions, implemented through the Short-term Arrangement Regarding International Trade in Cotton Textiles (STA) and the Long-term Arrangement Regarding International Trade in Textiles (LTA), violated the original word and spirit of some of the basic principles contained in the General Agreement on Tariffs and Trade - GATT (1948). Since both STA and LTA covered only cotton-based textiles, the growing trade in man-made fibres remained largely unaffected. Several negotiations and conferences contributed to the establishment of the Multi Fibre Agreement (MFA) in 1974.


MFA marked a clear shift from GATT, which professed non-discrimination, by allowing trading partners to enter into bilateral agreements. Consequently, the largest markets viz. the United States of America and Europe signed several bilateral agreements imposing restrictions that differed from MFA principles. These departures from the original text became very common and eventually spurred quota-restricted countries into responding in a more coordinated manner. Finally, the Agreement on Textile and Clothing (ATC), which set out a definitive plan for the structured removal of quantitative restrictions by 1 January 2005, was implemented on 1 January 1995. After the quotas lapsed, the industry gravitated towards globally competitive producers. As a result, India also benefited although the gains were not to the fullest extent possible.


India in the global T&A industry today

India is the second largest exporter of textiles and apparel after China, which has a 35 per cent share of the segment in global trade, dominating internationally ever since it gained non-discriminatory access to global markets. Indias growth has been comparatively slow, but steady. In 2013, India exported textiles and apparel worth US$40 billion, of which 39 per cent of approximately US$ 16 billion contributions came from apparel and 61 per cent or US$ 24 billion from textiles including fibre, yarn, fabric and made-ups.


Technopak estimates that by 2023, Indias apparel exports will grow at a CAGR of 10 per cent to reach US$ 40 billion while textile exports will reach US$ 55 billion. The growth of apparel exports is estimated to outpace that of textiles exports as India is expected to convert more of its raw material and intermediate products within the country rather than exporting them.