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India's Textile Exports Surge After Global Quotas End


India's textile exports to Western countries have surged following the abolition of global quotas earlier this year.

In the southern city of Bangalore, sewing machines hum as workers stitch cotton trousers at 43 garment factories owned by one of India's apparel suppliers, Gokaldas Exports.

Four of these 43 units came on line just in recent weeks, to fill extra orders flowing in from Western manufacturers.

A company official, Vivek Hinduja, says they have ventured into new clothing lines as their largest customer, the U.S. clothing chain The Gap, increased its purchases from India.

"We were constrained [because of the quotas] with several categories which we could not export from India, like trousers and shirts and so on. Now we are totally free. We are doing a million and above on the bottoms [trousers] and so on which we could never do before," he said.

Like Gokaldas, scores of garment and home textile exporters are investing in new factories or upgrading existing ones to take advantage of opportunities offered by the quota-free regime.

The old quotas limited the amount of textiles any country could export to another. That meant importers from such markets as the United States and Europe had to buy from many countries, including small ones such as Bangladesh and Mauritius. The quotas were ended at the start of this year, and now the small countries find it hard to compete with China and India, which produce their own cotton or wool and have established textile industries.

The trend is already apparent. India's textile and garment exports to Europe between January and May rose by 11 percent compared with the same period last year, and to the United States by more than 20 percent.

However, India has only a four percent share in the global textile and garment market - far behind China.

M.P. Gajaria, an adviser to India's Cotton Textile Export Promotion Council, says that share is set to grow substantially.

"The capacity expansion has not taken place to the extent required. Almost every progressive garment and textile unit are in the expansion mode, and by 2006 I am sure you will get a very good jump, maybe over 20 percent in both these items [textiles and garments]," he said.

Indian exporters say some Western retailers have begun increasing purchases from India partially to offset any future appreciation of the Chinese yuan, which Beijing allowed to rise by two percent recently.

But exporters such as Mr. Hinduja warn that the Indian industry must introduce economies of scale and better technology to remain competitive.

"At the moment, we are bringing in systems to get higher productivity. If we have higher productivity with a little bit extra automation, that would improve the bottom lines [the profits]," added Mr. Hinduja.

Officials estimate that India's exports will rise nearly four times, to $50 billion by 2010, up from $13.5 billion last year.

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