Weaknesses

• Much of India 's infrastructure is in need of improvement, including ports, airports, roads, and power.
• The garment export industry has a relatively narrow product base: four products account for over half of exports.
• High technology in India is limited to only a few factories.
• Too much of the decentralized garment sector is still based on traditional tailoring.
• There are too many small garment units.
• India is distant from its two main markets, the United States and the European Union.
• The industry suffers from low productivity and inconsistent quality.
• The industry tends to be inward-looking and resistant to change, especially in the case of small units.
• In a survey by the International Textile Manufacturers Federation (ITMF), India 's power costs were found to be the second highest of seven countries.
• Human resources development in the industry has been neglected.
• Textile plants tend to be small in size and low-tech; in particular, there are insufficient numbers of shuttle-less looms.
• The cotton yield in India is low and contamination, high.
• Foreign direct investment is discouraged by low labour productivity, restrictive labour laws, rising costs of imports, and power and infrastructure bottlenecks.
• Labour laws are often weighted towards employees.

Opportunities

• India has great potential to vastly increase its exports now that quotas have been eliminated.
• With its low labour costs, India is well-placed to capitalize on the shift of production to Asia .
• The imposition of safeguard quotas against China will provide India with more scope to expand its share in restricted (and unrestricted) categories.
• The Indian domestic market provides opportunities for economies of scale.
• World fibre consumption continues to increase.
• India has the capabilities and infrastructure needed to capture a slice of the global expansion in technical textiles.
• According to the ITMF, the Indian industry has a competitive advantage in raw material and labour cost in yarn and fabric manufacture.
  

Threats

• India is at risk of being squeezed out of major markets by Chinese export growth.
• Following the end of quotas, the major importing countries are likely to step up the use of non-tariff barriers by, for example, insisting that factories comply with environmental and labour standards.
• An increase in anti-dumping and anti-subsidy measures is likely.
• India could face growing competition from regional trade blocks and preferential trade deals which are designed to benefit other countries.
• The dispute with Pakistan over Kashmir will limit the opportunities for intra-regional trade between the two countries and hence opportunities for production synergies.
• Chinese government support to exporters makes India 's exports less competitive.
• Falling prices in the quota-free era could hit margins.

INVESTMENT IN TEXTILE MACHINERY

Shuttleless looms

In the case of shuttleless weaving machinery—the more advanced technology than shuttle looms— India fares badly. With only 9,210 looms installed at the beginning of 2004, India was dwarfed by China 's 211,900 looms, Thailand 's 53,500 looms, Indonesia 's 29,000 looms and Turkey 's 18,000 looms.

On the other hand, India acquired 8,586 looms during the ten years to 2004, which was almost as many as the number installed at the beginning of 2004. This demonstrates that almost all of its installed capacity is less than ten years old.

Growth record in the EU market

Figure 23 shows how India has been struggling to maintain growth in the face of competition from China , Turkey and Bangladesh .

COMPETITIVE POSITION OF PAKISTAN

Pakistan has a competitive industry with very low costs, a plentiful labour supply, and a plentiful raw material supply—including an indigenous supply of cotton and a vertically integrated industry. It has established good positions in developed country markets, and has benefited from government subsidies. In addition, it has received other government support and is favoured politically by the USA for its cooperation in the war on terrorism. However, in common with other countries in South Asia, it suffers from the problems which arise from being relatively distant from EU markets in comparison with countries in Eastern Europe and the Mediterranean Rim.

COMPETITIVE POSITION OF BANGLADESH AND SRI LANKA

Bangladesh and Sri Lanka developed as a result of their very low costs and quota-free and duty-free access to the EU market. Bangladesh also has an indigenous supply of raw cotton. Both have achieved a strong market position and Sri Lankan exporters have built up particularly good relationships with European and US buyers. But neither has special locational advantages and both suffer from a lack of backward linkages. As a result, lead times and costs are higher than those achieved by many of their competitors. And since the abolition of quotas, quota-free access has ceased to be a benefit.

Extract from a conference paper presented at an Emap event on “Sourcing and Selling Fashion in India ”, in London

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