The Indian textile industry will need to introspect and look into areas where there is scope for scaling up and upgrading the fabric sector. The industry’s long term prospects look bright. The textile industry in China is slowing down and Pakistan’s growth, constrained by power and other problems, is expected to reach a saturation point sooner than later. Diversion of garment orders to India has already begun. There is a need for enhancing yarn consuming capacities within the country.

The most important policy intervention required at present is making the Technology Upgradation Fund effective. The scheme has no funds available for new investments and the Budget allocation is not enough even to cover the backlog of the last fiscal in full. While India’s cotton production exceeds consumption, the country continues to import cotton because of deficit in certain slots, especially the extra long staple cotton. There is also a short supply of short staple cotton.

Though external issues such as a slowdown in the EU and policy jolts from China could have an adverse impact, there are more crucial issues that need attention such as infrastructural infirmities, transaction costs, inordinate delays in getting duty refunds, high cost of export credit and so on.