Impact of Liberalisation on Textile Industry

Assessing the Impact of Liberalisation on the Indian Textile and Clothing Industry

Abstract

Textile Clothing is the only other industry to have a multilaterally negotiated agreement under the auspices of the WTO. When you consider how important textiles and clothing are to many nations' international trade baskets, especially developing ones, this comes as no surpriseAbout 4 of India's GDP is generated by the textile and clothing sector, while 14 of industrial production and 20 of manufacturing value are added by this industry. It also generates 35 of India's foreign money and directly and indirectly employs over 35 million people. After agriculture, it's India's most significant industry. Everything from fibre to clothing, the greatest value-added completed product, is produced by this business alone, making it unique. As a result, the expansion and profitability of this sector affects the whole Indian economy.Textile and clothing trade has seen a substantial transformation since the Multifibre Arrangement (MFA) period ended and the quota-free trading era began. Every country is now occupied with developing its own national plan for competitiveness in the new global trade system after years of backing was abruptly removed.The Agreement in Textiles and clothing (ATC) remains the principal driver of such a mammoth economic earthquake in this sector. According to the ATC, all Textiles and Clothing items previously subject to MFA-quotas will be absorbed into the WTO during a ten-year period commencing on January 1, 1995. When the quota system is abolished, there will be both an opportunity and a threat. Because the market will no longer be controlled, this presents both an opportunity and a threat. As a result of this impending reality, it's critical to know how competitive Indian textile and clothing manufacturers are in order to predict where the industry will be in 2005 and beyond.