Calcutta, Dec. 8: Credit rating agency Crisil has suggested that the textile industry should give more emphasis on readymade garments for future growth.
The agency feels that as the artificial barriers impeding the free flow of textile goods will cease to exist from January 1, 2005 as per the WTO agreement, there would be no quota restrictions and no restrictions on account of country of origin. Accordingly, the textile products will be made in that part of the world where they can be competitively produced and exported to the rest of the world.
The countries that are likely to gain as a result of this are India, China, Indonesia and Pakistan, feels the textile industry.
On account of quota and country of origin restrictions, a very limited quantity of finished products, like apparel and fabric, were hitherto being directly exported from India. In many cases, the Indian fabric was going to the neighbouring countries like Nepal, Bangladesh and Sri Lanka, where it was converted into garments and exported further.
Alternatively, Indian exporters were buying quota from the present quota holders and exporting the finished products. But, in the process, the production cost escalated due to the quota premium.
From January, 2005, there would be no need for Indian exporters to purchase quotas, which will enable them to price their products competitively.
“Further, as the garments can be easily manufactured in India, there would be no incentive to export fabric to the neighbouring countries, where it gets converted into garments today,” said Manish Kumar, managing director of Ritspin Synthetics.
It is, therefore, natural for India to move up the value-chain and instead of exporting raw material and intermediary products, it should produce and export “value-added” finished goods.