The publication, India's Textile and Apparel Industry: Growth Potential and Trade and Investment Opportunities, examines India's textile and apparel industry in terms of the structural anomalies and other key factors that inhibit its growth and competitiveness, government programs designed to help improve its competitiveness, and product sectors that offer opportunities for increased U.S. trade and investment.

ITC staff research studies are generated by ITC staff and do not reflect the views of the U.S. International Trade Commission or of any individual Commissioner. Highlights of the study follow:

• The textile and apparel industry is very important to the Indian economy as it accounts for 4 percent of India's gross domestic product, 20 percent of industrial output,and the largest source of foreign exchange earnings at slightly more than 30 percent of India's export earnings.

• India has the second-largest spinning capacity in the world (after China). India's spinning segment is fairly modernized; approximately 35 to 40 percent of India's spindles are less than 10 years old.

• India has the largest number of looms in place to weave fabrics. However, 98 percent of the looms are accounted for by India's handloom and powerloom sectors, which use mostly outdated equipment and produce low-value unfinished fabrics. The fabric processing (dyeing and finishing) segment, the weakest link in India's textile supply chain, consists of a large number of small hand- and power-processing units. The proliferation of small independent units in the weaving and processing segments is due to the Indian government's fiscal policies, which favor small independent units over composite mills with modern weaving and processing facilities.

• The production of apparel in India was, until recently, reserved for the small-scale industry sector, which limited investment in the apparel sector and resulted in a highly fragmented industry characterized by low levels of technology use. Only export-oriented units were allowed to operate in this sector with larger investment.

• As India steps into a quota free regime by January 1, 2005, and removes market access barriers at home under its WTO commitments, the Indian government has taken measures to enhance the competitiveness of the Indian textile and apparel industry. These measures include establishing a $6 billion Technology Upgradation Fund to upgrade the technology at subsidized interest rates, allowing foreign investment of up to 51 percent in the textile industry, and creating a $16 million "cotton technology mission" to increase research on improving cotton productivity and quality.

• The Indian government's recently unveiled National Textile Policy 2000 (NTP 2000) opens the country's apparel sector to large firms and allows up to 100 percent foreign investment in the sector without any export obligation.

• The goal of the NTP 2000 is to improve the global competitiveness of the Indian textile and apparel industry and enable the industry to quadruple its exports to $50 billion by 2010. The NTP 2000 also aims to liberalize remaining controls and regulations, eliminate targeted tax and fiscal benefits for small firms, and encourage strategic alliances with international textile firms to set up large integrated mills and processing facilities. The NTP 2000 also provides for additional fiscal incentives for investors in technical textiles.

• India's huge domestic market, with a middle class estimated at 200 million people, offers the prospect of significant growth opportunities in domestic textiles and apparel consumption. The study identifies technical textiles, home textiles, specialty yarns and fabrics, and apparel as having the greatest growth potential where opportunities exist for greater foreign investment and trade.

India's Textile and Apparel Industry: Growth Potential and Trade and Investment Opportunities (SRS-27, USITC Publication 3401, March 2001) will be posted in the Publications area of the ITC Internet site at www.usitc.gov. A printed copy may be requested by calling 202-205-1809 or by writing the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Requests may also be made by fax to 202-205-2104.