to experts, the Indian textile manufacturers have the choice
of strategies. They can continue to be volume suppliers to
the large domestic market with a low-level demand on quality,
creativity and flexibility.
success in global markets, however, the Indian firm needs
to decide in which part of the value chain should they compete.
Most of Asias successful textile industries have followed
a development strategy centred around the apparel industry
where their competitive advantages are bigger. Unfortunately
for the textile industry, the Indian garment industry has
yet to become globally competitive and make a significant
presence in world trade.
the settlement of duty anomalies, one way would be to introduce
a system of value-added-taxation (VAT), in which each link
of the value chain is taxed progressively. This will increase
tax revenues without imposing disproportionate burden on any
one activity. Ultimately, however, the industry needs a booster
dose of new technology, industrial restructuring and a complete
policy reversal to help it tap the potential of the free-trade
regime. Apart from de-reservation of garments and knitting
and a workable VRS (Voluntary Retirement Scheme), the government
will have to remove certain regulatory lacunae like the relocation
policy for mills in Mumbai.
Government of Indias only concrete policy response has
been the setting up of a Technology Upgradation Fund (TUF)
in April 1999, under which grants are given to looms and mills
for modernisation. The scheme is not yet a success because
rampant excess capacity has deterred any fresh investments
in the industry, and mills arent getting any money from
banks and financial institutions. The industry badly requires
a new textile policy conducive to operating in the free-trade