Data released by USA and EU indicate that their imports of both apparel and non apparel products from India have grown significantly faster during the first quarter of this year, compared to the same period of 2004. At least in the case of USA, which has released data in terms of quantity and price, unit value realization has also increased. Perhaps it is too early to come to any definitive conclusions on our post-quota export performance. But, it can safely be stated on the basis of the present trends that we are progressing on the expected lines of increased export growth, especially in products and markets where quotas applied earlier. There has also been some increase in imports. However, imports are mostly in raw material and intermediary products and these could substantially be for export production.

In the domestic industry, there are mixed sentiments at present. Cotton yarn seems to be doing better than in the recent past, and reasonable cotton prices are one of the factors that helped. In manmade segment, especially polyester, there is declining activity in spinning, because of increasing fibre prices. In weaving, there are increased activities, especially in the power loom clusters of Tamil Nadu and Maharashtra. Both in organised and decentralized sectors, there is a growing trend of modernisation by installing automatic and shuttleless looms.

With the announcement of a 10% capital subsidy in addition to TUFS assistance, there is a new hope and optimism in the processing sector. Some investments in the organised sector have already taken place in recent months and some more have been announced. There are reports of modernization and expansion being implemented and planned in the dcentralised processing sector also. A few additional world-class processing units can make a lot of difference to our entire textile and clothing sector and all indications show that these are on the way.

In garments, the focus continues to be on exports and there we have been achieving considerable success, especially after abolition of quotas. The fear of China, which had dominated the discussions on post-quota markets during the last couple of years, is slowly dying down, with trade figures showing that China is growing even faster than expected, but India’s exports continue to grow significantly faster than in the past. Presently, complaints of garment exporters are about the unpredictability in our export policies, especially relating to export incentives. And we have seen in recent months that Government is serious in streamlining the export incentive schemes and imparting some stability to them.

But the garment and home furnishing industries need to pay more attention to the growing domestic demand. We are apparently on the threshold of a retail boom and this is bound to provide substantial growth in domestic sales of both garments and home furnishings. With declining import duties and easier market access to neighbouring countries through PTAs and FTAs, these value added segments can face increased international competition in the domestic markets in the coming years.

Wool and silk sectors have not been figuring prominently in the discussions in the media and elsewhere in recent months. One understandable reason is that wool sector has not been much of a victim of quotas in the past and silk products have always been out of quotas (except for Chinese products in USA for a short while). Though our presence in these sectors is relatively small, in silk we happen to be the second largest in the world, though a poor second, compared to China. In wool, there is significant potential for growth in fabrics, carpets, home furnishings and garments, both in the domestic and export markets.

The progress being achieved by the textile and clothing industry is also being reflected in the performance of the textile machinery industry. A few years back, the major machinery units were complaining of low capacity utilisation, because of the stagnation in the textile sector. Currently, the complaints are from textile units, on the waiting period for getting machinery supplies. In fact in certain products like spindles, the waiting period is driving units to import from China, though they would prefer domestic machines in terms of price, quality and service.