EXPORT COMPETITIVENESS AND THE MARKET FOR TEXTILES:

key issues, evidence from firm interviews, and policy suggestions

Vijaya Ramachandran
(assisted by Melissa Himes)
Center for International Development
Harvard University
Revised July 2001

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Abstract

This paper reviews the literature on the production and exports of textiles and garments in
India and reports the results of a firm survey undertaken in September and October 2000.
Textile production is a very significant part of the Indian economy but has not grown
very much in the past decade. This paper identifies weak links in the production chain,
key obstacles to productivity and to exports, and policy changes that must be made for
the growth of production and exports in the textiles and garments sector.

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Section I: Textile Production in India

This paper looks at the dynamics of textile production and export in India. It summarizes
available research as well as data from firm interviews, and discusses policy options for
the sector in an era of intense competition.

This section outlines the major structural features of production in the textile sector in
India.1 Garments and textile production constitutes the second largest source of
employment in India after agriculture. India’s garment exports have grown in the past
couple of decades but there is great scope for further expansion. India’s share of world
exports of clothing was 2.6 percent in 1994, up from 1.5 percent in 1980. However,
India's share of world clothing exports has not improved since 1994 and declined
marginally to 2.3 percent in 1997. The value of garment exports was $3.8 billion in
1997-98 with a growth rate of 0.6 percent. Tables 1-5 present the relevant data on textile
production in India.

The garment sector’s exports has grown substantially in the last five years. India’s share
of exports in 1994 was 2.6 percent, up from 1.5 percent in 1980. However, India's share
of exports has not improved since 1994 and has declined marginally to 2.3 percent in
1997. The value of garment exports was $3.75 billion in 1996-97 and $3.78 billion in
1997-98, registering a small growth rate of 0.6 percent.

India’s garments exports largely consist of cotton garments (about 70 percent of garment
exports). Synthetic garments make up the rest; this mix has not changed significantly in
the past decade. A few items dominate the list of exports. Women's outerwear is about 40
percent of the total, while men's shirts has about a 20 percent share. These two items
make up the majority of exports. The United States and the European Union are India's
dominant export markets, constituting around 70 percent of demand. For atleat the last
decade, India has fully utilized its quota levels. India has a greater than 50 percent share
for women’s outerwear in the American market and exports more than a billion-dollars
worth of women’s outerwear; more than half of it was to the United States. While
several countries compete in export markets, China and Hong Kong have emerged as
dominant players. Together, they are the top supplier in 8 of 17 categories of textile
exports. This dominance is probably a result of two factors--a higher level of production
capability and a greater ability to compete in export markets. Section 3 returns to this
subject.

1 This section summarizes the work of T.Roy (1998) and other researchers, as well as
press reports.

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Quality and specialization drives prices for garment exports in the global market. Prices
received by Hong Kong are probably the highest, followed by China and Indonesia. Price
differences indicate specialization, design, and quality. India is somewhere in the middle
of the price spectrum, reflecting its position on the quality-design spectrum. Overall,
there has been an improvement in the quality of Indian garmet exports; prices have risen
over the past decade for almost all the products that India exports overseas. There is also
some product differentiation; India has emerged as a dominant supplier of some garments
(such as men’s casual shirts) but lags behind in others.

The following paragraphs describe some of the key characteristcis and constraints that
drive productivity levels in Indian manufacturing. The manufacturing sector in India is
largely recognized to be divided into two sectors--registered and unregistered. The
registered sector is made up of firms registered under the Factories Act 1948 and includes
factories with electricity employing 10 or more workers, or those without electricity
employing 20 or more workers. Firms which do not fall into these categories make up
the unregistered sector.

The production structure of the Indian apparel industry is fairly segmented, leading to
significant differences in productivity levels. First, there are relatively unorganized
suppliers who sell to exporters. Then there are organized manufacturers with factory
operations who export their products overseas. But the majority of apparel production
occurs in very small firms with manually operated sewing machines. The unregistered
sector is by far the most significant production sector, contributing more than 90 per cent
of value added. Due to a recently abolished “reservation policy,” garment production
was largely reserved for small scale firms. This is partly the reason for the distribution of
firms described above.

There are some advantages to the small size of Indian firms. They have greater flexibility
and can cope with a wide range of production, including very small orders. But the
most flexible (and arguably the most productive) firms in the garment industry are the
powerloom factories. Powerlooms have the very significant advantage of short lead-
time, which is very important for manufacturers who are supplying to niche markets.
But in general, Indian firms have had a problem with the procurement of standardized
fabrics for the production of standardized garments. This is one of the weakest links in
the production chain. In particular, the procurement of heavy cotton fabrics as well as
fabrics in certain types of thread counts and widths has hampered production. Producers
have encountered obstacles in importing these fabrics, largely caused by quantitative
restrictions and high tariffs. Nominal tariff rates (well over 100 percent in the 1980s)
have been reduced somewhat are are at present about 50 per cent on cotton fabrics. The
situation is further complicated by the presence of special licenses, required for the
import of duty-free textile fabrics, components, and accessories for export production.
Also, the value of goods that can be imported duty free is determined either on the basis
of FOB value of exports of the exporter (the value-based license) or the physical quantity

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of inputs required for a given output (the quantity-based license). Both systems have
hampered production. In particular, they have resulted in time delays, which can be
disastrous for an industry that is driven by fashion-based as well as seasonal trends.

Another problem in the production process is the lack of availability of good quality
trimmings such as lace, buttons, zip fasteners, thread interlinings and packaging
materials. This problem may be alleviated by the abolition of the reservation policy, as
these products were previously reserved only for small scale production. In the past,
exporters have been allowed to import trimmings by paying a duty of 40 percent and
obtaining a speical license. The license requirement was abolished in 1996 but obstacles
to the timely importation of trimmings remain. The availability of trimmings is crucial
to the success of exporters. Major exporters of garments are almost always significant
importers of trimmings and other specialty accessories.

There is a trend in the consumption of garments that must be taken into account with
regard to developing a production strategy. Within India, there has been a steady decline
in the consumption of cotton cloth between 1970 and 1991. Sample surveys show a
pattern of decline as well. Total consumption of cloth was more or less unchanged at 14-
15 metres per capita between 1970 and 1990, suggesting that cotton is being replaced by
manmade fabrics such as polyester and blends. But this trend has been reversed recently;
cotton and manmade fabric consumption has increased in the 1990s.

There are four types of textile firms in India-- handloom, powerloom, composite mills, and
processing houses. Composite mills are equipped to handle the entire production of textiles
from cotton spinning to design, weaving, and processing. Handlooms include those in
factories or households. Powerlooms can be described as weaving factories. They weave a
higher share of manmade cloth than of cotton. They have no “organizational homogeneity.”
Many powerloom manufacturers survive on low wages and obsolete looms, and are
unregistered as factories. But a fair number have plants with 100-200 looms, and cloth-
finishing processes. Both the composite mill and powerloom sector have suffered under a
government policy of being prohibited to import powerlooms more than 10 years old. The
cost of looms under 10 years old, but operating on the same technology as slightly older
looms, is prohibitively high and prevents firms from upgrading to comply with international
standards of technology and quality. Some composite mills reported that until recently they
were using looms as old as 80 years!

The share of mills in cloth production is steadily declining. Mills consist mainly of
bankrupt and obsolete factories. They do produce and export a certain quantity of yarn,
though the main supply of yarn comes from specialized spinning mills of relatively recent
origin. Integrated mills make generic cloth, which have no demand either at home or
abroad, and they make them at far higher cost than powerlooms. Most composite mills
produce a certain amount of “greys” or unprocessed fabrics, although many now produce

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more specialized products such as made-ups, industrial fabrics, and high-quality cotton
fabrics for both export and domestic consumption. The reason why the mills continue at
all is the dominance of the public sector-owned National Textile Corporation. Almost all
textile exports from mills are accounted for by 10-12 private composite mills, which
account for about 10 per cent of capacity but well over half of production. In general,
policies have been very discriminatory towards the composite mills, with taxes levied at
every segment of production, in addition to extremely high income taxes. The current
labour policy makes it infeasible for mills to move to areas with lower infrastructure costs
and has greatly increased the burden of paying utility costs as well as supporting an
excess of labor.

Interestingly enough, recent expansion in demand has been met largely by relatively
unorganized producers i.e. by powerlooms and knitting factories. Exports of knitted
garmets have grown recently. Powerlooms have increased their share of exports as well.
The standard argument explaining powerloom growth is that the wage-differential
between formal and informal sectors is advantageous to powerlooms. It is also alleged
that the informal sector routinely evades taxes, which gives them the edge in terms of
profitability. Neither of these hypotheses is confirmed by the available empirical
evidence. Rather it appears that powerlooms have a competitive edge, particularly with
respect to manmades, and are more productive than handlooms and mills. The evidence
indicates also that smaller-scale, labor-intensive firms are the most productive in the
textile sector. However, there are complicating factors which deserve further study.
Anti-composite-mill policies may have resulted in making powerlooms more
competitive. While they can be more flexible and produce at a much cheaper price, some
manufacturers argue that their quality is rarely up to international standards; hence the
majority of garment manufacturers import their man-made raw materials. In particular,
powerlooms have not been successful with respect to blended yarns, high-quality finishes
and rigorous standardization.

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 It is worth noting that the textile machinery industry is in desperate need of investment.
The lack of availabilty of up-to-date machinery is another weak link in the production chain.
Access to the world markets has led to a collapse of demand for domestic machinery but
also to an increase in the demand for textile machinery.

The supply of textile machinery is dominated by about five firms. One in particular, the
Laxmi Group, is the dominant player. These firms make up about two-thirds of the
market for textile machinery sourced in the domestic market. All the key players have
foreign collaborators and are focused on the export market. However, there are another
100 or so firms that make machines and/or components. These firms are showing very
mixed results; some are actively moving away from textile machinery and diversifying
into other products. Finally, there are about 500 component manufacturers, who are
mainly small-scale producers of machine parts. While the largest firms have been
steadily successful, the smaller firms have largely been unable to cope with increased
competition. Imports of textile machinery and components have skyrocketed while
exports of components and machinery have fallen during the past decade. It is important
to note that some policy changes have been implemented which could turn this industry
around. Duties and licenses have been reduced or abolished on imports, and age-
restrictions on imports have been lifted. The market for secondhand machinery is
growing, and will probably need some policy intervention to enable a larger share of
imports. While some researchers argue that this may be counter to the process of
modernization, it is widely recognized that the overall liberalization of the machinery
market can only be helpful to increasing productivity in the garment industry in the long
run.

Small Scale Sector

Government policy has played a fundamental role in shaping the growth, structure and
technological evolution of the textile sector in India. There is a distinct trend towards
decentralized, small-scale manufacture in the unorganized or informal sector, accounting
for nearly four-fifths of the total cloth output. Most of the small scale firms in India are in
the spinning sector or in fabric weaving and processing and operate with handlooms or
powerloom. The handloom sector would typically consist of units with 2 to 6 manually
operated looms.2 Their production could be as low as 5 meters/day. They buy yarn and
sell grey fabric to local buyers. The decentralized sector accounts for the bulk of India’s
fabric production. There are also several small scale industries built around processing,
that is dyeing and finishing. However, units in the informal sector may or may not be
registered and reliable statistics of employment and output are generally not available.
Concessions given to the small-scale sector led to the proliferation of powerlooms. Some
of the negative consequences of this policy were dubious entrepreneurial practices such
as dispersion of manufacturing over several units in order to avail of the protections
reserved for the small-scale sector, and growing numbers of workers in this sector with

2 In 1998, the handloom sector accounted for 23% of total

volume production and the powerloom for 71%, with mills
accounting for 6%.

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wages far below those of the organized sector of the textile industry. At the same time,
low technology hand processing and standalone process houses have zero or negligible
excise duty resulting in poor quality and lower revenues for government.

The powerloom sector weavers typically use powered shuttle looms and some even
shuttle-less looms. They do not have as stringent labor regulations as the factories and
this gives them more flexibility. Most are located in industrial areas and benefit from
lower tariff. Most powerloom units operate on a small-scale basis, typically using three to
four looms per unit, which places them outside the ambit not only of the Industries
(Development and Regulation) Act (which applies to all units which employ fifty or more
workers and use power), but also Factory Act (which is applicable to all units which
employ ten or more workers and use power) and are therefore not subject to their
provisions. (There are essentially two forms of organization prevalent-the master-weaver
syatem and the owner-entrepreneur system. The former is a kind of a “putting out”
system with the master-weaver providing the raw-materials to the loom owners who in
turn are paid conversion charges according to the quantity of cloth produced. In the
second system, the owner-entrepreneur undertakes all the investment and consequently
bears the entire risk.) The looms may be operated by family or hired labor, or a
combination of both. In contrast with the organized mill sector, almost the entire
requirement of working capital and fixed capital of powerlooms is met from non-bank
sources.

While the organized and unorganized sectors compete with each other in the production
of cloth, the latter is almost wholly dependent on the former for the supply of the basic
raw material (yarn). Similarly, a substantial part of the processing of cloth produced in
the decentralized sector is done in the organized sector, emphasizing the intimate
linkages that exist between the two.

It is interesting to note that upgrading of facilities and technology by small and medium
enterprises in Japan (classified by government as enterprises with less than 300
employees and capital of less than Yen 100 million), and renovation of their operations to
control increased costs in labor and materials, following the oil crises, has given the
exports of these enterprises a competitiveness in international markets. In the Indian
context, rather than induction of costly technologies, what is required is more intensive
machinery utilization, renovation of existing equipment, introduction of work norms, and
rationalization of surplus labor.

While in most other countries, small industry (SSI) is defined by employment size, in
India it is defined in terms of capital employed in plant and machinery. Over the years the
SSI has enjoyed numerous tax and other benefits which have encouraged entrepreneurs to
remain in the “small” category. Instead of graduating from small to middle and large,
there is a vested interest in continuing to be classified as small. The definition of small
scale in India has prevented vertical growth of small enterprises into competitive-sized
units and resulted in horizontal proliferation and fragmentation of production capacities.
Therefore, small scale industry is more of a fiscal artifact than a marketing and
technological reality. Greater sub-contracting by large firms will stimulate the growth of

8
small enterprises. Since small industry is clustered in certain locations, area-specific
programs will have great utility.

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Section II: India’s Export Potential

The value of world apparel exports was estimated to be $166 billion in 1996 (WTO,
1998). Until the end of the 1980s, the top four garment exporters were Hong Kong, Italy,
South Korea, and Taiwan. China emerged as a leading exporter in the second -half of the
1980's and today occupies the number one position in the world. Tables 6-8 present the
relevant data on exports.

According to Ramaswamy and Gereffi (1999), globalization of production means that a

garment could be designed in New York, with fabric made in South Korea, cut in Hong
Kong, and assembled in China for distribution in Europe or North America.3 The main
factors determining this pattern of production are the labor-intensiveness of apparel
production, the loss of comparative advantage of developed countries, the dramatic
decline in transport and communication costs, the search for production sites with lower
labor costs, and the shift in apparel exports to countries less restricted by quotas. It is
reported that about half of the total production capacity in the apparel industry has shifted
from developed countries to less developed countries over the past three decades. The
fundamental factor driving the location of production is the difference in wage-levels
between countries.

Textiles and garments make up the second fastest-growing product category of global
exports, second only to office and telecommunications equipment; both sectors are
central to the process of global integration (GATT, 1994). China has emerged as a major
player in the textile sector and now occupies the number one position in the world. In
1995, China and Hong Kong together had a share of 21.2 percent of the world; both
countries will continue to dominate the textile industry for a long time to come.

On the demand side, the United States and the EU together imported over 70 percent of
world's clothing imports in the 1990s. It is interesting to note that the composition of
their suppliers has changed substantially. The share of largest three suppliers to the
United States--Taiwan, Hong Kong and South Korea--declined from 59 percent in 1983
to 38 percent in 1990 to 18 percent in 1996. Mexico and some Central American
countries have increased their combined share from 6 percent in 1983 to more than 24
percent in 1996. According to US trade data, Mexico actually moved ahead of China to
occupy the top position in apparel exports to the US (USITC, 1998). The situation has
changed elsewhere as well. China and Turkey replaced Hong Kong and South Korea as
the largest suppliers to the European Union in the mid-1990s.

3 This section summarizes a paper by K.V. Ramaswamy and Gary Gereffi (1999) entitled “ India’s

Apparel Exports: The Challenge of Global Markets,” as well as press reports.

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The majority of trade in textiles and clothing is regulated by the Multi Fibre Arrangement
(MFA), which was established in 1974. Under the MFA, developed countries negotiate
bilateral agreements with their trading partners, in order to restrict the quantity of exports
from each partner. The intention is to protect domestic producers in the developed
countries from external competition. These annual quotas cannot be increased by more
than 6 percent every year. The MFA contains certain types of provisions in quota
administration like the 'swing provision' ( which enables a switching of quotas among
product categories), as well as carryover and carry-forward provisions. Most researchers
agree that the MFA has been highly discriminatory and that it has become more
restrictive over time.

The MFA is to be phased out under the Uruguay Round Agreement in four different
stages by the end of 2005. The ATC (Agreement on Textiles and Clothing) specifies the
phase-out program of activities, during which trade in textiles and clothing will be
gradually integrated into the WTO. At the start of each phase of integration, importing
countries must integrate a specified share of their textile and garment imports into the
new framework. This would be based on total trade volume in 1990, for the items listed
in the annex to the agreement, and provide for progressive relaxation of quotas for
products remaining under a quota system. While the most sensitive products will see a
full relaxation of quotas only towards the end of the ten year period (2005), the growth of
quotas by 6-7 percent a year for Indian production has helped tremendously.

American companies are increasingly relying on imports to remain competitive in

consumer markets. Americans now purchase more than 50 percent of their garments
from overseas producers. American retailers used apparel wholesale-importers to buy
imported garments in the past; most of them now have buyers in many parts of the world.
Branded manufacturers like Liz Claibore, the Gap, Banana Republic and Express rely
largely on local producers in exporting countries. Contracts between such companies and
local producers are made via local buyers or company offices in the exporting country.

According to Ramaswamy and Gereffi (1999), certain trends in retail behavior are worth
noting in terms of maintaining competitiveness in export markets. Retailers appear to
have increasing leverage over suppliers in terms of determining prices and product lines.
This also increases pressure on suppliers to adopt new technology such as electronic data
interchanges, that enable suppliers to fill orders rapidly, efficiently and flexibly.
Suppliers are penalized for incorrect orders and suffer harsh consequences if orders are
delayed. Third, retailers are offering greater variety of apparel products in order to
increase their market share. This drive on the part of retailers has led to greater demand
uncertainty. As a result the demand uncertainty previously associated with fashion
products has spread across product categories affecting basic products like men's shirts.
Retailers are therefore abandoning the practice of ordering large quantities in advance of
any given season. Instead, they prefer to order in small quantities and refill their orders as
the season goes on. This has led to shorter lead times for the suppliers and has forced
suppliers to develop capabilities to respond sudden changes in demand. This is

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compounded by the increasing market share of a few, large retailers; there are only a
handful of dominant players in each of the major European countries.

Another trend worth noting is the rise of triangle manufacturing. This is a process
whereby buyers place their orders with manufacturers, who in turn source some or all of
the order from affiliated offshore factories in low-wage countries like China, Indonesia or
Bangladesh. The triangle is completed when the finished goods are shipped directly to
overseas buyers by the low-wage country, using its allocated quota. Triangle
manufacturing has become popular in some Asian countries which have faced very
restrictive quotas under the MFA. It will probably continue to dominate production
patterns for some time.

There are other important trends as well. In order to remain competitive in the textile
sector as wage levels rise, countries such as Hong Kong and South Korea have upgraded
the quality of their apparel and moved to higher value-added production. Like the
semiconductor and hardware industries, they are in the process of making the transition
from OEM to OBM (original brand name manufacturing) to produce goods for export
and sale under their own labels. Many producers in Hong Kong now sell under their own
label in Asia, North America and Europe. Combined with mainland China’s production
capacity, these firms are poised for even greater success in the global market.

Finally, it is worth noting the effects of US and EU tariff provisions with respect to
offshore assembly processing (OAP). The most significant effect of OAP is that the
market shares of textile and apparel exports have shifted favorably towards Mexico,
Canada and the Caribbean Basin countries. Under OAP Tariff Provision 9802, the US
exempts duties for American-made components returned to the US as clothing or other
products assembled outside the country. This has led to the rapid growth of production
sharing arrangements, whereby cloth manufactured and even cut in the US is sent abroad
to countries with lower wages for assembly and imported back to the US for sale in local
markets.

Apart from changes in the international arena, key policy changes in India will have a
significant effect on Indian exporters. In Nov 1999, the textile ministry announced that
there will only be two systems of allocation of garment export quotas—first come first
served basis (FCFS) and past performance quota (PPQ). Two other systems were
abolished as well, making is easier to do export deals. Also, in September 1999, textile
exports to the EU became easier as India has agreed to bind its textile tariffs via the
WTO. Finally, in November 2000, the “reservation policy” which favored small-scale
producers for a long period of time, was abolished all together. In a bold move, the
government decided to completely de-reserve the garments sector. The cap on foreign
investment has also been changed, from the current 24 percent to 100 percent. The idea
behind the new textile policy is to increase India’s export potential five-fold in the next

12
ten years from $11 billion today to $50 billion. Half of this target is to be met by garment
exports. This is perhaps the single most important step that the government has take
towards improving resource allocation, firm productivity and export growth in the long
term.

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Section III: Exports and Competition from China

A number of changes are taking place in the Indian textile sector. As described earlier,
the Indian government has abolished the reservation system, which favored small-scale
producers over others. The abolition of this system means that firms are now in a much
more competitive environment. However, there is a general fear that market share will be
lost in the post-MFA world. Attempts are being made to modernize the industry through
a Technology Upgradation Fund, but producers believe that this Fund may not adequately
address the concerns of large firms. While the TUF is a scheme introduced to meet the
needs of a sick industry, in reality it is only accessible to firms with healthy bank
balances and production levels. To meet its target of 5 percent of world trade, India will
have to increase its exports to $25 billion annually (trade is at 2 percent of world totals
now). Large investments needs to be made in order to improve the productivity of
weaving and processing. This is yet another weak link in the production chain, one that
occurs further downstream. In particular, investments must be made in the acquisition of
technology that will make the weaving and processing of textiles more efficient, less
prone to error and more oriented towards the production of high quality textiles.

There are many questions about India’s export potential in the long run. The lack of
well-defined policies on agricultural exports, a fairly limited range of exports, and the
inability to penetrate new markets are all problems that need to be addressed. North
America, Western Europe and Japan remain the largest importers; not much progress has
been made in exploring new markets in Latin America or elsewhere. Also, India must
begin to explore new markets outside of North America, particularly in light of the North
American Free Trade Agrement (NAFTA) which shifts advantages to producers within
the region covered by the agreement. While some exporters have business in Central
America, there are other regions which have serious potential, including the Middle East
and East Asia. These are issues that must be addressed, particularly because the threat of
competition from China looms large.

China is emerging as a very powerful competitor, ready to compete in the post-MFA

world. The Chinese government has picked the textile industry to make breakthroughs in
reversing the losses of state-owned enterprises. It has achieved some of its goals a year
ahead of schedule. From January to November 1999, the industry as a whole turned out
net profits of 116m yuan, according to press reports. The value-added of Chinese
industry in total reached 3,485 billion yuan, up 8.8 percent over the previous year.
Chinese exports are expected to grow by 6 percent in the coming year to 195 billion US
dollars. Government investment remains a major force in China. the Chinese
government has issued 160 billion yuan worth of treasury bonds to finance infrastructure
construction and technological upgrading. Total investment in 1999 was 2,200 bn yuan,
up 7.8 percent from 1998.

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China’s entry into the WTO will also help to raise textile exports. Although the Chinese
government downplays this, analysts believe that WTO entry will lead to a massive boost
for the sector’s exports (over 60 percent between now and 2005). China is the world’s
biggest producer and exporter of both textiles and garments, with overseas shipments
from the two sectors totally 43.2 billion dollars in 1997 (almost a quarter of the country’s
total exports). The WTO entry would increase jobs by 5.4 million by 2005, and textile
production would increase by 23 percent while garment production would go up by a
whopping 74 percent. However, there is not total agreement on this. Some experts
believe that China will face competitive pressures that could dampen these numbers quite
significantly.

Still, China should not be taken lightly. Zhejiang, the third largest textile giant in China,
produces 35 percent of the country’s garment exports and increased its revenues by 8.5
percent in 1999. One ministry official says that textile exports will increase by 50 million
dollars annually between now and 2005. The EU is also lifting some of its quotas on
Chinese textiles.

On Dec 23, 1999, the Exim Bank of China signed a major loan agreement with a leading
textile firm to finance a large cotton factory in Mexico. The US $78 million deal will let
the China WorldBest Group Co Ltd activate a giant 100,000 spindle cotton textile plant
in Mexico. The loan will be used to buy garment-making equipment, some of the cotton
and other production facilities before production starts in Mexico at the end of next year.
This is very welcome to Chinese facilities, which are stretched to capacity. The Mexico
plant will be the largest ever to be operated by a Chinese company overseas.

The China Daily reported on Dec 24, 1999 that Shanghai will get investments worth
more than 5 billion yuan (US $600 million) that will be dispersed over 57 new projects.
This money will be used for the manufacture of high-grade apparel fabrics to bolster
industry-wide restructuring. The Shanghai Textile Holding Group Corporation plans to
increase textile exports to Europe and Africa instead of focusing on Southeast Asia.
However, the head of the corporation was also worried about increased competition from
Southeast Asia in the post-MFA environment.

It is widely believed that China will continue to dominate the low-end, mass production
market for atleast the near future. In order for India to remain competitive, it must
continue to expand in niche-markets, as well as in higher-end, better quality production.

15
Section IV: Data from Firm-level Interviews

Avariety of firms were interviewed in October and November 2000 as part of this project.
A broad range of manufacturers were covered, from garment manufacturers of small,
medium, and large sizes to large, organized mills. The following discussion contains
comments from selected firms. We have summarized these comments below.

Firm #1, Chennai

This company is unique in that it is the only wholly foreign-owned garment

manufacturing company in India. This firm can be considered a benchmark manufacturer
in both management style and labor conditions.

The firm manufactures exclusively for Victoria's Secret (USA) and Triumph (EU). This
is a large scale operation, turning out approximately 8000 pieces per day, and has a
turnover of around $30 million. Because they are a niche manufacturer, they are not very
concerned about competition from China, which typically does not manufacture similar
garments (we believe this could change in the coming years).

Because of their size and the extremely high quality of infrastructure, the firm does not
consider itself to have insurmountable barriers, with exception of excessive regulation
involved in obtaining quotas. All power is generated onsite, and the company has its own
water treatment plant. Workers have extremely good working conditions, which is
evidenced by the low turnover (2 percent) and low absenteeism (4.5 percent). Workers
are provided with full training, receive transport to and from work, are paid slightly
higher than average wages, have full health benefits, are provided with educational
opportunities for their families as well as subsidized meals in the cafeteria, and work in a
plant that is completely air-conditioned.

The firm ships all their goods by air, which enables them to circumvent the antiquated
port system in Chennai. They say that airport infrastructure is excellent and that this type
of shipping has caused few problems. However, the firm would like to see the Indian
government actively promote Indian garments on the international market. Currently the
AEPC does this to some extent with its trade shows, but it seems that there is much room
for expansion. The primary role of AEPC as of now is to deal with quotas; there is much
room for growth in terms of the AEPC actually becoming a true promotion council.
Intimate would like to know more about what kinds of promotion policies the Indian
government is currently considering.

The firm’s biggest concern as a manufacturer is keeping its customer base, so what
happens in the American market is of prime importance. They inquired about the
performance of Victoria’s Secret in the US; perhaps information re: customers could be
provided to a greater extent and in a more timely manner.

16
On the whole the firm is optimistic about the lifting of quotas. The manager believes that
being in a niche market, the quota release should only increase export opportunities.
They recognize that manufacturers who cater to the lower end of the market and have to
contend with China may have much more to worry about.

Firm #2, Chennai

This firm is another large manufacturer, and is entirely Indian-owned. The company is
11 years old and was financed through the State Bank of India. The owners did not have
a problem financing this company because it was done via a larger company. The firm
said its interest rate was low (12%) because it is a completely export-based company.
Additional credit to finance orders is also easy to obtain, because their banks provide
financing based on your total order amount.

The total number of employees is around 3500, and they do all levels of production with
the exception of fabric production. They produce exclusively for branded apparel in the
USA, EU, and Mexico, for companies such as Gap, Columbia, Casual Men and
Timberland. Their main production items are men's/boy's shirts and men's/women's
trousers. They deal directly with importing firms, in addition to using brokers.

In terms of dealing with importers, the firm finds that there is no centralized system
within the importing firms. Instead they have to go through many different departments,
and they lose valuable time as a result. In addition, they find most international
companies to be inflexible, because they effectively dictate terms of manufacturing
(factory conditions etc.). There is often a clause in the contracts whereby if goods arrive
later than the scheduled date, the company does not have to purchase the goods.
Therefore, shipping delays can lead to very high losses.

In terms of infrastructure, the port was the biggest complaint. Firm managers feel that
the berthing facilities are inadequate and that this is the main cause for mother vessels not
docking in Chennai. In addition, they find the wharf charges to be overly high. The fact
that mother vessels do not dock in Chennai delays their delivery.

General infrastructure was found to be adequate with the exception of electricity which
the firm generates on-site. However, the roads are considered adequate as are
telecommunications (particularly because Chennai is currently installing fibre optic
cable). The firm feels that the growth of the IT industry in the area has led to an overall
improvement of infrastructure.

Firm managers do not find labor to be a problem; the reason for this is that the firm has a
strong incentive system, is very team oriented, and hires primarily women. Firm
managers believe strongly in training and feel that this is the key to success. They also
help with family issues and other sorts of welfare problems. They feel there are few
obstacles to expanding their business, and are currently in the process of launching a
domestic private label. They have received financial support through TUF

17
(Technological Upgradation Fund) which provides a government subsidy of 5 percent on
bank interest rates.

Other issues which they feel are of concern is the exchange rate of the Rupee on the
world market, which is significantly stronger than the rates of Pakistan and Bangladesh,
whose currencies have been depreciating against the dollar. In addition, their importers
are looking for higher quality but the prices they are offering for goods decreases every
year.

They would like to see the government work on the development of polyester fibre
fabrics, which up to now has been completely neglected. Also, they want to understand
how to lower costs of production, given that Pakistan and China can currently
manufacture more inexpensively. As manufacturers they are concerned with quality,
timeliness, a bit more give and take with their customers, and teamwork.

Firm #3, Chennai

This company is part of a larger group, and the group controls marketing and finance. It
is a wholly Indian-owned company with 5000 employees. They do everything from
cutting to finishing, and produce branded apparel only. This was the only company
surveyed that was located in an EPZ. They claimed no advantage except for the fact that
the Ministry of Commerce was located there and all customs was done in the EPZ. There
was no advantage in terms of infrastructure.

This firm manufactures men's and women's trousers and tops for markets primarily in the
USA and also in the EU. They manufacture for big names like the Gap, Banana
Republic, Tommy Hilfiger, etc. Their annual turnover is 300 crore. They deal with
customers directly, and find using a buying agent to be slower. In the past, agents were a
key link to the customer, but this is changing.

The manager does not feel that there are ineffieciencies in the ports, and think the fact
that mother vessels don't berth in Madras is due to some other reason (but didn't know
what that was). The only general infrastructural issue they felt they had was with water
supply, which is scarce in Chennai.

The firm picks completely inexperienced labor and train them intensively. The firm
manager felt this was important as workers wouldn't be bringing bad habits or different
working standards with them. They also provide an extensive welfare package and pay
slightly above the market wage rate. They also have full time counselors who walk the
floors, find out who is having problems at home and see what the company can do to
help. The manager feels this has made a significant impact. Despite the welfare costs,
higher wage payments etc, he has reduced his overall labor costs by 20 percent. Having a
strong relationship with your workers and promoting a feeling of oneness will prevent
you from having problems with unions and unproductivity, according to this firm
manager. He feels people need to view meeting international compliances as an
investment and not an expenditure.

18
He feels the government needs to work on providing direction for the industry. He feels
there is no networking and that people in the industry must get together to compare what
they are doing and work together to strengthen each other. He felt very strongly that the
industry needs to develop open-mindedness and be willing to learn from each other rather
than being secretive and having a "cut-throat" attitude. He cited an example where he
was a speaker at a NIFT seminar on the garment industry and out of 400 attendants only
25 were actual manufacturers. He feels that if Indian manufacuturers can work together
to develop the industry and save the competitiveness for other countries than they can
improve a great deal. People need to be willing to allow people into their factories to see
what's going on and develop friendly business relationships.

The manager feels that the most successful manufacturers in India are family-owned but
run by professionals. His top five concerns are quality, timeliness, good attitude, right
infrastructure, and the right blend of education within the company.
He also says that the industry must improve productivity. The way this can be done is by
-educating people
-having systems in place for quality
-providing the best working environment
-involving yourself personally in your workers' lives
He thinks India's advantages are:
-cotton
-traditional designs and dying methods
-make-up (embroidery and bead work)
-skill levels
-acilities

Finally, he sees India as moving up the value chain, whereas China may be focused on
the lower-end of the market and on volume. He said that labor regulations in China are
very different which allows them to work workers longer and harder for less money.

Firm #4, Chennai

This firm is jointly owned with a New York-based company. It is three years old, and
financed completely by personal finances. It has 500 workers, and manufactures both
private and branded label clothing. It makes both mn's and women's wear, and has a $5
million annual turnover. About half of its exports goes to the USA and the other half to
non-quota countries (Latin America and the Carribbean).

This firm does not have difficulties with banking system, the manager feels that key to
obtaining good financing is having a good relationship with your bank. He also believes
that knowledge of the industry and market is critical. He thinks that the reason for lack of
openness in industry is because competitors will go to buyers and make lower offers. He
thinks it is very important to have good relationships with buyers, and to foster honesty
and openness. However, this company gets all its contracts from its New York partner,
so it has a strong advantage.

19
The company did report some problems. It argued that there are too many holidays for
Indian customs officials. Other countries’ customs work seven days a week. It also
reported that customs officers are indifferent and like to exercise power by making life
difficult for exporters. There are other problems with corruption as well; in particulary
factory inspectors often look for bribes.

The firm reported no infrastrucutral constraints because it self-generates power and has
its own water supply. (We found this to be fairly commonplace). The firm does use the
airport and found those facilities to be quite adequate.

The biggest complaint was about the requirements of the buyer, and what the firm viewed
as unreasonable standards. Buyers demand certain requirements knowing it is beyond the
capablilities of a single factory to produce it, this often leads to sub-contracting at
unreputable factories which don't adhere to standards.

The firm felt that labor not a problem; labor problems only arise when companies don't
care for their employees. But other problems were reported. Importing of accessories
(zips etc) was felt to be very cumbersome, involving too much paperwork and bank
guarantees for the import of raw materials.

The firm also believed that there was a need to slash duty rates (currently, if you import
less than 50 lakhs rupees, you cannot import duty free). It believed that this policy is
discriminatory to small scale firms, especially considering that they contribute 60 percent
of the value of the industry. It feels that smaller firms will do well after quotas are lifted,
the lack of economies of scale in labor-intensive industries will favour small firms. But
the firm also thinks that medium sized manufacturers stand to benefit the most.

The firm’s biggest concerns are the following:

-quality
-timeliness
-availability of finance
-quota policies (feels that large manufacturers influence quotas)

Finally, some general comments on textile firms in Chennai. All factories interviewed
were medium to large in terms of production. Labor unions were generally not a problem
because the industry employs mostly women, and women are typically not involved in
unions. Infrastructure on the whole seems to be good because the firms largely provide
their own. There were some complaints about the port; manufacturers on the whole
shipped by air cargo which is very good in Chennai. Factory conditions in Chennai
appear to be among the best in India and most forward thinking in terms of treatment of
labor and benefits they receive. These factories also generally catered to the big name
brands.

20
Firm #5, Bangalore

This is a wholly privately owned firm, owned by Indian owners. It is 25 years old, has
4,000 employees, would not give out annual turnover or any financing information, but
stated that credit is generally easy to obtain. It produces exclusively for branded apparel
in the US, Canada, and the EU. It manufactures every type of garment and also makes
shoes. It deals directly with companies and also uses brokers. The main concerns were
regarding competition and quality.

Firm #6, Bangalore

This firm is private and Indian-owned. It is 24 years old. All financing for expansion
comes from internal sources. It feels that credit is hard to obtain, that entry barriers are
very high, and that there are a lot of delays and too much paperwork. It has 500
employees, and manufactures all branded apparel (men's and women's wear). It is a
medium-sized firm, with annual turnover of $2 million plus (it wouldn't be specific). It
uses brokers and also deals directly with customers, it feels direct dealing is best and does
not like using agents. It manufactures for catalogs in the EU, USA, Australia and South
Africa.

The firm reported the following problems:

Power: cost too high and supply irregular
Ports: bad infrastructure, theft, and corruption
Customs: inadequate but feels this is improving
Raw material availability: irregular
Import duties: too high, particularly on all non-cotton materials
Labor: undisciplined and over-protected; exit-policy exacerbates the problem
Income tax: recently reintroduced and increasing by 5 percent every year, feels will
outprice them internationally and will kill the industry

This firm received technical assistance on machinery from an agengt from Hong Kong,
and wants to use the TUF to further raise productivity. The manager wants to see the
labor exit policy done away with; he feels that this will improve productivity
dramatically.

Firm #7, Bangalore

This firm operates under private Indian ownership, is 12 years old, has 700 employees,
and exports 75% of its production as branded apparel and sells 25% of its production as
domestic private label. It manufactures only outerwear and has a $3 million annual
turnover. It deals directly with international companies in the USA and EU.

This firm reported the following problems:

Banks: interest rates are too high, newcomers feel that obtaining credit is next to
impossible (that manager says that this mentality stems from Gandhi era when loans were

21
readily available and there was a high rate of default, so now excessive caution has
become the norm) and communication is slow.
Customers and their regulations: This was by far and away his biggest complaint as a
constraint to his doing business. He feels that factory standards imposed by companies
leave no scope for creativity. Importers demand higher standards but are decreasing what
they pay to manufacturers. This manager thinks that regulations are used selectively, and
sees the USA as a big bully. Finds customer company technicians to be overly aggresive,
feels that there is no partnership anymore, and that trade is less fair.

The firm reported domestic problems as well. It felt that the political atmosphere was not
good and that politicians try to interfere with work. With regard to the supply of
electricity, the manager felt that there was irregular supply and poor quality, and that the
firm was paying for bad service. Roads are poor and mother vessels won't berth in
inadequate ports, small vessels are ineffective because of weather and frequent stops,
ports are over-unionized and have frequent strikes, mother vessels in Colombo give
preference to local cargo so the cargo from the Madras feeder vessel may not go with the
ship. The manager says that shipping companies prefer to hire their own workers to
guarantee efficiency, but that this not allowed in India. Also, they prefer larger docking
spaces. Finally, goods from Madras to USA take 30 days, whereas goods from Colombo
to USA take 19 days.

The manager also expressed concern over the labor exit policy, which he believes leads
to undisciplined workers. Past policies have discriminated towards non-cotton fibres, so
India is now weak in this area. He thinks they China is the main threat and thinks its
advantage is that the government takes a “hands off” attitude with entrepreneurs.

Firm #8, Bangalore

This firm operates under private Indian ownership, and is part of a large group. It is 21
years old, has financing from internal capital, has 8,000 employees, and manufactures all
branded apparel for big names like Tommy Hilfiger, Gap, Liz Claiborne etc. It
manufactures all types of clothing items, has a $60 million annual turnover, deals with
brokers and directly with firms, and exports to the US, EU, and Canada.

This firm reports the following problems:

• Banks: high interest rates make upgradation difficult; the firm has used TUF but
did not obtain a subsidy, the TUF does not cover many types of equipment such as
second-hand equipment (the firm does think that the banking system is ok once you are
established).
• Quotas: USA discriminates against India in favour of South America.
• Customs: slow and inadequate
• Labor: exit policy is inefficient
• Shipping availability: lack of mother vessels docking in India
• Inspection procedures: cumbersome
• Electricity: has to generate own supply
• Roads: poor

22
• Air and sea ports: lack of available space, slow clearance time, no link facility
• Availability of raw materials: inadequate
• Exchange rate: current rate makes India uncompetitive compared to Pakistan and
others

The firm would like to see the following:

• opening of the import of fibres at low duty rates
• developing of multi-fibre capabilities as a country

Firm #9, Bangalore

This is a private Indian company, 9 years old, financed through an Indian bank, with 800
employees. It manufactures only branded apparel (men's/women's/children's), has an
annual turnover of 18 crore, and primarily exports to the EU and US. It deals both
directly and through brokers but prefers direct dealing.

• Banks: financing is difficult to obtain until well-established, the firm typically

uses internal resources or loans with high interest rates
• Customs: problematic with regard to imported inputs
• Electricity: poor and self-generated by most firms
• Transport system: poor
• Labor: exit policy and 8-hour day, not productive
• Taxes: high
• No investment benefits
• Difficult to obtain licenses
• Government is too bureaucratic
• Exchange rate is hurting exporters

This firm would like to see the following:

• a decrease in bureaucracy
• easily available credit

Finally, some general comments about firms in Bangalore. We interviewed firms that
were of varying sizes. They made the following common points:
• Infrastructure in general is poor (with the exception of water and
telecommunications)
• Labor unions are not an issue, but most firms found labor inefficient and all firms
complained of the labor exit policy
• Ports were a big problem across the board

Firm #10, Mumbai

This firm has public shareholders and is a large organized mill which manufacturers
fabrics, cotton and cotton yarn. It has an annual turnover of $120 million, of which $75
million is export-oriented. Yarn is exported to the Far East, Middle East, and Mauritius
while denim is exported to the USA, Canada, Hong Kong, Israel, Egypt, Dubai, and

23
Nepal. The firm also finishes and exports finished goods. This firm is 103 years old and
receives financing from Indian banks. It deals directly with customers and only
minimally with brokers.

This firm reported the following problems:

• Banks: high interest rates lead to difficulties in upgrading and make margins
tight.
• Cotton: prices are high (25 – 30 percent increase since January) and high quality
is hard to get
• Govt. systems are bureaucratic
• Exchange rate: Indian rupee has weakened 3.5% compared to Pakistan’s
exchange rate decline of 13.5% which is making Indian firms uncompetitive.
• Taxes: reintroduction of income tax on exports
• Licensing procedures: streamlined but more work is necessary
• Electricity: prices too high (Mumbai has the highest electricity cost in world, acc.
to this firm)
• Fuel prices: too high
• Freight rates: too high
• Ports: inadequate; procedural time too high (lead time needs to be reduced)
• Road systems: poor
• Labor: exit policy problematic
• Technology: unable to modernize (even with TUF ) because interest rates are too
high

Firm #11, Mumbai

This is one of the most prominent firms in the Indian textile industry. It is Indian owned
with public shareholders, and is over 100 years old. It has 5000+ employees and
manufactures fabrics and finished household goods. It deals directly with international
companies of which 35% are in the USA, 50% are in the EU, and 15% in other countries.
Financing comes from internal sources. The firm produces 3 lakhs metres/day, and has
500 domestic retail outlets.

The firm thinks that Indian companies must become more “global thinking” and be
willing to provide world-class services; companies in India are currently not forward
thinking enough.

This company just completed a major global assessment with a consultant and the three
biggest factors hurting them are labor, power, and finance. The issues mentioned are
similar to the problems described above. Additionally, the firm thinks that the removal of
quotas will simply lead to an increase of anti-dumping complaints. It does believe that
there is a move towards higher value added.

This firm reports the following problems:

• Cotton prices: increasing
• Utility costs: too high and increasing

24
• Inflation: rising
• Infrastructure: very poor (hindrance in servicing customer)
• Bureacracy: excessive
• Foreign exchange: main competitors Indonesia, Bangladesh, Sri Lanka, Thailand
who all have more rapidly depreciating currencies
• Import duties: still high
• Labor: exit policies are too stringent (they could release 3,000 workers with no
effect on production!); also prevents them from moving out of very expensive
Mumbai real estate; highest labor costs in India
• Voice: textile producers have little voice or influence on government
• Retail prices are stagnant while costs are increasing
• TUF: thinks of it as "noble intention" but too hard to obtain in reality

The firm does highlight that fact that India is relatively well-positioned globally and
produces 32 percent of the world’s cotton.

Firm #12, Mumbai

This firm manager spoke both about garments and textile production and this summary is
based solely on a conversation. This is a well-established firm, with 50/50 domestic and
export production. The manager voiced concern that big multi-nationals are drifting
towards Bangladesh and that most of the firm’s fabrics go to off-shore locations for
apparel manufacturing by big multi-national companies. He also expressed concern
about quota prices for garments [from discussions with others the price of quotas is sky-
rocketing]. Most textile manufacturers worried about imports, including those for
meeting domestic market demands.

The manager argued that it is essential for quota prices to stabilize and declines quickly.
He also said that the government is preferential towards small-scale manufacturers and
that his company is at a disadvantage because it is a big mill.
He would like to see rationalization in export duties charges and would like to see
banking support in financing and investment, better working capital margins and lower
interest rates.

Technology upgrades are not possible because of the high cost of capital.
Two of the biggest problems are differential duty structures [we think this refers to
having duty imposed on every level of production] and the high cost of capital.
Finally, the quota system is distorting industry production.

Firm #13, Mumbai

This is a privately Indian owned company, although it is looking for a joint venture
partner. It is a 104 year-old company with 3500 employees and produces cotton/poly
cotton/poly viscose/100% poly fabrics. Its annual turnover is 150 crore rupees, down
from Rs. 250-300 crores previously. It exports primarily to the UK but also to the US,
and deals directly with international companies.

25
This firm reported the following problems:

• Banks: there is a reluctance to lend because the industry is not viewed as

progressive; banks have high interest rates which can be high as 20 – 22 percent
• International Competition: Far East and lower value currencies
• Technology: not modern enough but cannot afford to upgrade
• Labor unions; uncooperative; high cost; bad exit policy; inefficient
• Ports: improving, paperwork being reduced
• Utilities: water and power too expensive

The firm would like to see the government change labor policy and do a study on what is
ailing the industry (we hope that this paper is a contribution in that direction). Overall,
the manager thinks that India fails to compete because of lack of modernization and high
cost and inefficiency of labor, despite it's strong raw material base.

The Apparel Export Promotion Council is a private body with the support of the Ministry
of Textiles. The Director-General is a government official but he emphasized that the
Council is private. He said that the government listens to their concerns and
recommendations seriously. They have a membership of 25,000 exporters, and their
executive committee is composed from these members. He said they are looking strongly
at issues of transparency and doing what is good for the country. They do certification
work between the Indian govt., EU, USA and Canada, which the govt has given them the
authority to do. The Council has recommended changes in bilateral agreements. Their
goals are--certification; export promotion activities (including informing manufacturers
of seasonal changes, apparel training and design and fashion trends), and the creation of
an apparel mart (250 show room for garment exports only, already under way).

The Director has the following concerns:

Lack of linkages between the textiles industry and garment industry

Procedural Problems:
• Timeliness
• Ports
• Import regulations

Policy Problems:
• Customs duty
• Labor environment
• Labor exit policies (firing)

The Indian labor law is common to all industries. He would like to see a labor law where
people are allowed to be fired or laid off. He views as India as lowest among other
garment producing countries in terms of labor productivity. Therefore he is concerned

26
about how India will compete in 2005. He does not think there would be a clash between
government and labor unions over a new law. He thinks that such a change in law will
simply promote discipline among workers.

India has a dependency on overseas suppliers for poly-cotton blends. Firms require a
license to import such fabrics, and are also subject to import duties. AEPC is requesting
the liberalizing of licensing requirements concerning importing of such fabrics such that
they will be used for garments to be exported. He would like to see a law where for
every $100 of exports, a firm is allowed to import $10 of fabric duty free. He thinks that
the government is concerned about pilferage and the loss of import duties. The
government has not been responsive to this recommendation. The D-G also feels that the
government is slow to act so that by the time such recommendations reach the
government it is too late.
•

•
The main problem with ports, according to the DG, is that they are inefficient. “Mother
vessels” do not come to India because of the inefficiencies of docking. It takes a mother
vessel 21 days to go from Colombo, Sri Lanka to New York. However, when you have
to add in a feeder vessel, it adds an additional 21 days to turnaround time. This prevents
Indian garment manufacturers from entering the niche or branded market (bringing
greater revenue) because of the fact that the seasons change too rapidly, and after 42 days
a new season is practically over (there are 6 fashion seasons per year). Therefore
garment manufacturers are currently focusing on the lower value added market.
Additionally, feeder vessels increase costs, adding 8750 million rupees annually. This
makes India’s costs higher than most other countries. He said that India needs to develop
export strategies, and rate their priorities. Other issues he mentioned include general
competitiveness, packaging, and quality of exports.

Textile production must also improve. The D-G says that Indian firms have good
spinning but poor weaving and processing facilities. He feels that processing and
weaving techniques need to be studied and improved. He would also like to see the
government develop a modernization index whereby they can determine how India ranks
in terms of these different areas. He feels there is a complete lack of supply chain
management. No awareness of “full package” capabilties or of the need to develop it.
He recommends a national cotton seed policy, feels there should be a reduction in
varieties in order to strengthen them. The D-G predicts a drop in exports by 2007, if the
above-mentioned problems are not addressed. He also thinks that a better understanding
the legal framework of the WTO is essential, in order to know how producers will be
affected. He thinks that the trade wars will essentially be won on technicalities, and that
India should be asking itself about its preparedness for 2005 and beyond.

27
Section V: Conclusions and Policy Implications

India has successfully undertaken policy reforms in order to improve efficiency and
competitiveness. However, India's share of world apparel exports has not risen
significantly since 1994. In the short term, the decline in the import growth of India's
major markets, namely the US and the EU, is the main reason for this trend. But in the
longer term, it is clear that the apparel industry must be restructured to meet the
competitive challenge of the new trading environment. There is a dire need for greater
investment in technology, and for policies that will enable more efficient resource
allocation and much needed increases in productivity.

The bold and very necessary step of de-reservation will open up the garment sector to
large investors, local and foreign, thereby providing much needed investment in the
latest, most efficient production technologies. The government needs to take additional
steps towards resolving the problem of excess labor in the garment sector, particularly
employment in mills. Alternatives in terms of employment and training must be provided
for garment sector employees who will find themselves unemployed in the new, more
competitive environment.

In the next decade, the pattern of textile exports will change drastically due to
liberalization of world trade. India stands to gain from these changes due to its relatively
low costs of production. The relaxation of quotas will inevitably result in a decline of
exports from conventional suppliers favored by the current trade regime. This and other
challenges must be met. In particular, the process of globalization has forced countries to
become niche players in an increasingly competitive marketplace. Retailers are becoming
increasingly powerful, placing greater and greater demands on the suppliers they source
from. They also favor full-package suppliers, who can buy the fabric, as well as cut,
manufacture, and ship the product to its final destination. Finally, regional trade
agreements have placed more pressure on Asian producers. And China poses a
significant challenge in the post-MFA era.

The Indian textile industry has several strengths including a supply of cheap cotton, low
wages, a good knowledge of production techniques and possible emergence as a
competitive supplier of manmades. But there are serious problems as well. The high cost
and lack of efficiency of infrastructure, from fuel to transport to ports to communications
to delivery, are all problematic. Uncompetitive firms within the industry will continue to
drain resources. The government needs to focus on the following areas—integration of
informal sector production into the mainstream economy, investment in much-needed
infrastructure, competitive positioning for the post-MFA trade environment, and a long-
term movement towards higher-value added, efficient production.

28
The government also needs to develop a more complete view of the textiles and garments
sector. Until now they have been viewed as two separate industries, but the linkages
between the two are significant and must be recognized and strengthened in order to
increase the comparative advantage of Indian producers. A major concern for importing
firms is that a country has “full-package” capabilities, from fabrics and processing to
stitching and finishing. In other words, there can be no weak links in the supply chain.
Three key weaknesses in the production chain are identified in our analysis—the inability
of Indian producers to supply an adequate amount of cloth, particularly manmades; the
lack of availability of textile machinery; and the lack of downstream capacity in weaving
and processing. These weaknesses must be addressed via investments in technology (and
greater access to the TUF), along with improvements in infrastructure (particular ports
and customs).

In terms of policy, the manufacturers we interviewed suggested that several changes must
be made. These are:
• revise the labor policy for Export Oriented Units
• improve the supply of credit and the functioning of capital markets
• ease up on taxation of composite mills so as to improve their competitiveness
• make the TUF accessible to all firms
• allow for the import of machinery older than 10 years when appropriate
• privatize the ports (or make them a private/public joint ventures; timeliness is critical
and delays are extremely costly)
• improve the supply of electric power
• improve the efficiency and transparency of customs

It is clear that India has the potential to become a major player in the textile and garment
sector in the twenty-first century. Implementing the policy changes described above as
well as the additional changes described below is perhaps the most important step in this
direction.

Additional Policies and Implementation Issues

In order to make the textile market more competitive and leverage India’s strength as a
low cost producer, the government’s role should be that of a facilitator to create a level
playing field, facilitate infrastructure build-up, and bring about policy changes to
facilitate labor rationalization. On the demand side, the government should encourage
proactive marketing efforts for promoting Indian products. The National Association Of
Software and Service Companies (NASSCOM) in India is a good example of how an
industry association can successfully market and build the profile of an industry.

On the supply side, the following aspects need to be urgently addressed to make the
textile sector more cost competitive:

Investment in agricultural research - The government should consider adopting tax

based incentives for research (either directly by corporates or through Textile Research
Associations) to encourage investment in seed and fertilizer technology. Apart from

29
cotton, technology for man-made fabric needs to be developed. Improving cotton acreage
and productivity is key because high cost of cotton is one of the main reasons for
uncompetitiveness. The setting up of the cotton technology mission is a step in the right
direction.

Labor - The government needs to take further steps to allow scrapping of excess
capacity. A combination of excess capacity in spinning and idle capacity in weaving has
brought the industry to a near level of asphyxiation. It may be instructive to follow
China’s example. China has recently scrapped 10m spindles and converted the area into
recreation centers. It is a fallacy to think that employment generation is helped by
preventing closure of mills because the bulk of mills are not in a position to pay workers.
In working out an exit policy, one of the options for re-deployment of labor would be to
encourage consolidation and setting up of modernized mills in a cooperative model and
employ existing workers. The other options could be to try and increase acreage under
cotton production or encourage multiple cropping etc in cotton growing areas to increase
income/employment potential of farmers who currently might be involved in farming and
spinning/weaving. Employment potential could also be increased by encouraging growth
of ancilliary industries like processing fabrics, fabric and dress design, by encouraging
additional investment in technology and training in the latest fashion trends. Another
way of redeploying labor would be to use displaced labor in some of the infrastructural
investments that the government would be making concurrently as the integrated policy
measures to be undertaken to improve competitiveness of the textile industry.

Investment in Training --China imparts 70 hrs of training per year vs. 10 hrs in India for
workers in the textile and garment sectors. Further investments in training would enable
deepening of value added and transition to higher-end production.

Mechanization- improving accessibility by all sectors, such as composite, small-scale,

etc. For example, the weaving mills need to switch to shuttleless looms to enhance
productivity and ensure quality to face global challenges. India has 16.5 lakh
powerlooms, but only 1000 are shuttleless vs China which has 1.5 lakh shuttleless looms.
The government could consider allowing imports of second hand shuttleless looms duty-
free. Similarly subsidy for effluent treatment plants would help the processing sector to
grow.

Improving infrastructure—Expansion of power, water, and port facilities are crucial–

for example, the cost of power in Tamil Nadu where a large section of the textile industry
is concentrated, is generally not reliable and of poor quality. Captive power generation is
also costly because of the high road tax and excise duty on fuel oil. A viable option is to
privatize the ports and the power sector.

Rationalization of tariffs--The government needs to move to an ad-valorem duty

structure. The government should also remove excise concessions and exemptions that
lead to cross subsidization, fiscal distortions, and encourage inefficient production. (e.g.
until the most recent budget, composite mills paid higher duty than independent
processors on finished fabrics.) The thrust should be on transparency of procedures and

30
speed of transactions. The cost of producing one metre of cloth by a power loom is 0.22
paise as compared to Rs 1.60 in a composite mill. More composite mills are being
classified as “sick.” The discriminatory tax regime towards composite mills has lowered
scope for value addition. Moreover discriminatory tax policies and evasion of taxes has
only resulted in lower funds/investment by government for furthering growth of the
textile industry.

Dismantling of regulatory framework – Further work is needed on the dismantling of

regulations. The duty structure currently encourages import of finished product and
discourages import of raw material which is a handicap for the industry. Currently the
weak links in the industry are weaving and processing. Processing could be encouraged
by subsidy for effluent treatment plants. While garments have been de-reserved, active
steps to implement garment industrial parks would help. China’s success in raising its
share in the global garment market is attributed to its large and integrated garment
factories which use the latest technologies and reap economies of scale. Mexico is a step
further. Its La Laguna textile park produces 4.5 million pairs of denim jeans every week.
It employs 70,000 workers and the entire work of assembly, laundry, cutting, stitching,
labeling and selling takes place in one complex. Government should allow relocation of
industries to low cost areas, and give export- related tax incentives to composite mills to
improve competitiveness.

The use of information technology has to be encouraged. Adoption of Supply Chain

Management, possibly in an Application Service Provider mode is a necessity to shorten
delivery times. Similarly front-end customer relationship management is going to be
essential to achieve effective mass customization. Setting up of a venture-capital fund
could help tap knowledge-based entrepreneurs of the industry. The technology
upgradation fund should fund ventures for investment in new designing techniques for
mass customization such as three dimensional non-contact body measurement and digital
printing. Linking textiles and garments will help to provide full package facilities to
customers.

One of the greatest challenges facing the textile industry today is the lack of a coherent
long-term vision and futuristic perspective on where the industry is headed in the near-
term and medium-term. Given the increasing challenges being faced by Indian textiles,
the only solution seems to lie in addressing the issues head-on, focusing as much on the
basic issues of improving quality, and upgrading technology as on exploring new markets
and implementing an exit policy.

Political constraints and other implementation issues

The main obstacle in implementing the above recommendations has been the need to
protect employment and the inability to implement an exit policy. State governments
have found it difficult to legally permit closure of mills because of implications for
employment especially of the politically potent organized work force and the lengthy
legal and other procedures involved in closure. Government takeover of sick mills
demonstrated the strength of political constraints on the leadership and the lack of

31
manouvrability vis-à-vis labor. Given the escalating losses in public sector mills, the
takeovers only mean that workers are redeployed in mills which continue to be
unproductive and terminally sick. Additionally, it was reported by the Bureau for
Industrial and Financial Reconstruction (BIFR) that in some cases, promoters were
unwilling to play their role in bringing in fresh equity contribution necessary for
implementing a modernization and expansion program.

Corruption is fairly widespread and is manifest, for instance, in the large scale evasion
of duties, indifference of customs officials, and factory inspectors looking for bribes.
Cumbersome procedures and paper work are deeply ingrained in the work environment.
Building enduring relationships with buyers, and fostering a culture of honesty and
openness are as essential for the success of the industry as knowledge of the industry and
market. It is beyond the scope of this paper to elaborate upon this topic, but there is a
wide range of options proposed in the academic literature and by policymakers to combat
corruption at the local and central government levels.

Finally, it is necessary for government to muster the necessary political will to focus on
improving infrastructure as infrastructural bottlenecks lead to delays and have a
dampening effect on competitiveness. Privatization of power and port facilities must be
seriously considered. The Indian textile industry stands at the crossroads today, facing
both challenges and opportunities. Whether the industry will flourish or perish will
depend on the will and ability to overcome the above obstacles.

32
Textile Production in India

Table 1: Consumption and Export of Cloth Per Capita

(metres)

Consumption Export Final Demand Export-

share in
Final
Demand
(%)
Cotton Man Total Cotton Man Total Cotton Man Total
made made made

1985-6 14.18 6.16 20.33 2.42 0.16 2.59 16.60 6.32 22.92 11.3
1986-7 13.40 6.45 19.85 3.19 0.34 3.53 16.59 6.79 23.39 15.1
1987-8 12.07 6.32 18.39 4.04 0.51 4.54 16.10 6.83 22.93 19.8
1988-9 13.14 7.41 20.55 3.93 0.54 4.48 17.07 7.95 25.02 17.9
1989-90 12.50 7.14 19.64 4.56 1.01 5.57 17.06 8.15 25.21 22.1
1990-1 13.93 7.55 21.48 4.55 1.43 5.98 18.48 8.98 27.46 21.8
1991-2 12.00 7.57 19.57 5.19 1.75 6.94 17.19 9.32 26.51 26.2
1992-3 12.81 8.23 21.04 6.02 1.79 7.81 18.83 10.03 28.85 27.1
1993-4 13.04 8.93 21.98 7.08 2.02 9.10 20.12 10.95 31.08 29.3
1994-5 11.48 9.70 21.18 7.43 2.70 10.13 18.91 12.40 31.31 32.3
1995-6 13.62 11.08 24.70 7.01 2.63 9.64 20.63 13.71 34.34 28.1

Source: T.Roy, 1998

Note: Please refer to T.Roy, 1998 for variable definition for Tables 1-4

33
Table 2: Aggregate Production of Cloth

Quantity (b sq metres) Value (Rs b) Expressed as ratio of

GNP (%)
Cotton Man Total Total Total Price.1 Price.2
made
Price.1 Price.2
1985-6 12.47 4.75 17.21 167.96 300.51 7.23 12.93
1986-7 12.73 5.21 17.21 156.58 327.39 6.06 12.68
1987-8 12.63 5.35 17.98 153.23 343.98 5.24 11.77
1988-9 13.66 6.36 20.02 201.18 420.73 5.78 12.08
1989-90 13.94 6.66 20.60 239.85 478.13 5.95 11.87
1990-1 15.43 7.50 22.93 293.54 552.41 6.24 11.75
1991-2 14.65 7.94 22.59 341.03 610.18 6.28 11.24
1992-3 16.34 8.70 25.05 443.98 758.84 7.18 12.27
1993-4 17.79 9.68 27.47 522.34 887.82 7.37 12.53
1994-5 17.02 11.16 28.18 576.91 1016.56 6.87 12.11
1995-6 18.90 12.56 31.46 720.31 1297.99 7.44 13.41

Source: T.Roy, 1998

Table 3: Price-ratios (1985-6 = 100)

Cotton- Cotton-CPI Manmade-CPI

manmade
(Price.1) (Price.1) (Price.1)
1985-6 100.0 100.0 100.0
1986-7 117.5 84.45 71.9
1987-8 154.3 82.6 53.5
1988-9 132.4 84.35 63.7
1989-90 123.8 89.0 71.9
1990-1 123.4 85.9 69.6
1991-2 143.8 93.9 65.35
1992-3 146.8 105.0 71.5
1993-4 148.6 102.8 69.2
1994-5 162.75 104.0 63.9
1995-6 164.6 107.2 65.2

Source: T.Roy, 1998

34
Table 4: Sector-shares in Production
(percentage of value)

Cotton Manmade Total

Mill Powerl Handl Mill Powerl Handl Mill Powerl Handl

oom oom oom oom oom oom
1985-6 18.1 63.2 18.7 17.4 80.4 2.1 17.8 69.7 12.4
1986-7 16.0 65.5 18.3 17.1 80.8 2.1 16.5 70.7 12.8
1987-8 15.5 64.3 20.2 15.5 82.3 2.2 15.5 69.5 14.9
1988-9 13.3 70.2 16.4 12.6 86.1 1.3 13.1 75.6 11.3
1989-90 11.6 72.1 16.2 10.7 88.0 1.3 11.3 77.7 11.0
1990-1 10.0 75.7 14.4 9.7 89.5 0.8 9.9 80.4 9.7
1991-2 9.4 75.8 14.8 9.1 90.1 0.7 9.3 80.5 10.1
1992-3 6.6 79.3 14.1 6.8 87.1 6.1 6.7 81.7 11.7
1993-4 6.2 80.3 13.5 6.5 87.2 6.3 6.3 82.3 11.3
1994-5 6.2 78.7 15.1 9.0 84.2 6.7 7.1 80.5 12.4
1995-6 5.7 77.9 16.4 6.8 85.5 7.7 6.1 80.4 13.5

Source: T.Roy, 1998

Table 5: Sector-shares in Exports

(percentage of value)

Cotton Total
Mill Powerloom Handloom Mill Powerloom Handloom
1985-6 58.5 33.5 8.0 52.4 40.4 7.2
1986-7 50.2 43.9 5.9 44.0 50.8 5.2
1987-8 43.7 51.0 5.3 39.0 56.3 4.8
1988-9 38.1 56.5 5.4 33.1 62.2 4.7
1989-90 38.3 57.3 4.4 30.5 66.0 3.5
1990-1 38.2 58.6 3.2 28.6 69.0 2.4
1991-2 28.5 68.2 3.2 22.1 75.4 2.5
1992-3 25.2 71.5 3.3 20.4 76.9 2.7
1993-4 23.6 73.9 2.5 19.6 78.3 2.1
1994-5 21.0 76.9 2.0 17.1 81.2 1.6
1995-6 22.9 75.5 1.6 18.5 80.3 1.3

Source: T.Roy, 1998

35
Apparel Exports

Table-6: International Labour cost differences: 1981-1993

($US per Hour)
Country 1981 1990* 1993*
USA 7.03 6.56 8.13
Mexico 3.06 0.92 1.08
Germany 8.17 7.23 17.22
Hong Kong 1.42 3.05 3.85
Taiwan 1.32 3.41 4.61
South Korea 1.35 2.46 2.71
China 1.35 0.26 0.25
Indonesia 0.63 0.16 0.28
India 0.69 0.33 0.27
Source: Extracted from Toyne (1984) and ILO (1995), in Ramaswamy and
Gereffi, 1999
Note: * wage costs +social security contribution

36
Table 7: Growth of World Trade in Clothing
(Average Annual Percentage Change)

1980-85 1985-90

World 4 17

1980-93 1990-94

India 15 10

China 21 25

Indonesia 32 18

Thailand 24 13

South Korea 6 -8

Pakistan NA 12

Source: WTO, 1996 in Ramaswamy and Gereffi, 1999

37
 Table-8: US Apparel Imports by Major Suppliers i
($US Millions)
Country/ 1990 1996
Region 1983
Value Share Value Share Value Share
China 7.8 3439 13.5 6340 15.2
759
Big Three 5734 58.9 9807 38.4 7595 18.2
Hong Kong 2249 23.1 3976 15.6 3998 9.6
Taiwan 1800 18.5 2489 9.8 2066 4.9
S. Korea 1685 17.3 3342 13.1 1531 3.7

South-East Asia 806 8.4 3436 13.5 5886. 14.1

South Asia 385 3.9 1716 6.7 4175 10.0

Of which
India 220 2.3 636 2.59 1350 3.2

Central America 389 4.0 1985 7.8 6076 14.6

Mexico 199 2.0 709 2.8 3850 9.2
Others 1328 14 4009 16 6996 17
Total 9731 100 25518 100 41679 100

Source: Ramaswamy and Gereffi (1999), estimates based on the official statistics of the US
Department of Commerce, US Imports for Consumption, customs value. Columns do to add up
exactly due to round-off errors.

38
Appendix: Additional Data on Global Trade Statistics for Textiles and Textile Production in
India

http://www.corporateinformation.com/cnsector/Apparel.html

Industry Overview : Diversified Textiles

The recovery of China’s textile industry has continued, despite continued rising prices for
synthetic fibers and recent increases in cotton prices. During the first six months of CY 2000, the
industry as a whole posted profits of $1.29 billion, of which $209 million came from state-owned
enterprises (SOEs). The State Economic and Trade Commission forecasts that industry profits
will reach $2.42 billion by the end of the year. During the first six months of CY 2000, yarn
production reached 3.12 MMT, increasing by 16.8%, and fabric production was 7.28 billion
square meters, increasing by 12.3%. Recent statistics confirm that the change in prices has
increased the use of cotton as compared with synthetic fibers. For 1999 as a whole, cotton use
increased by nearly 2% compared to synthetic fibers, even though cotton prices did not fall until
late in the year. A much more dramatic shift is likely to be evident once final numbers are
available for 2000.
Increased exports have contributed substantially to the improved fortunes of the textile industry.
During the first six months of the year, textile and garment exports increased by 41.8%, reaching
a total of $23.7 billion, and accounting for over 20% of China’s exports. General trade has grown
more quickly than processing trade, with growth rates of 71% and 23.9%, respectively. (Note:
processing trade refers to partially finished products that are imported, finished, then re-
exported). General trade now accounts for over half of total textiles exports, reversing a trend that
favored processing trade. Japan has become China’s top market for textiles for the first time, with
exports to Japan growing by 38.9%. Exports to Hong Kong have also recovered rapidly, jumping
by 38.81% over last year, when exports fell by 26.4%. Exports have also grown to other
destinations, particularly to South Korea (50.36%), Southeast Asia (56.93%), the European Union
(32.14%) and the U.S. (32.1%).
Source: US Department of Agriculture

39
The following WTO data from this site:
http://www.wto.org/english/res_e/statis_e/tradebysector_e.htm

Chart IV.1

World merchandise exports by product, 1990

and 1999
(Share based on value)

Machinery and transp. equip. a

Office and telecom equipment

Mining products

Automotive products

Agricultural products

Chemicals

Other consumer goods

Other semi-manufactures
1990

1999
Clothing

Textiles

Iron and steel

0 5 10 15 20

World mer chandise exports by

product, 1999
(Billion dollars and percentage)

Value Share Annual percentage change

1999 1990 1999 1990-99 1997 1998 1999

All products a 5473 100.0 100.0 5 4 -2 3

Agricultural products 544 12.2 9.9 3 -1 -5 -3

Food 437 9.3 8.0 4 0 -3 -4

Raw materials 107 2.9 2.0 1 -2 -11 -1

Mining products 556 14.3 10.2 2 3 -21 12

Ores and other minerals 56 1.6 1.0 1 7 -7 -5

40
 Fuels 401 10.5 7.3 1 1 -26 19
Non-ferrous metals 99 2.1 1.8 3 7 -4 -1

Manufactures 4186 70.5 76.5 6 5 1 4

Iron and steel 126 3.1 2.3 2 3 -2 -11

Chemicals 526 8.7 9.6 7 4 1 4
O t her semi-manufactures 414 7.8 7.6 5 1 0 3
Machinery and transport equipment 2295 35.8 41.9 7 6 3 5
Automotive products 549 9.4 10.0 6 5 5 5
Office and telecom equipment 769 8.8 14.1 11 10 0 10
Other machinery and transport 976 17.6 17.8 6 4 3 1
equipment
Textiles 148 3.1 2.7 4 4 -4 -2
Clothing 186 3.2 3.4 6 11 1 1
Other consumer goods 492 8.8 9.0 6 5 0 4

a Includes unspecified products. They accounted for 3 per cent of world merchandise exports in 1999.

Table IV.67

World trade in textiles, 1999

(Billion dollars and percentage)

Value 148

Annual percentage change

1980-85 -1

1985-90 15

1990-99 4

1997 4

1998 -4

1999 -2

Share in world merchandise trade 2.7

Share in world exports of 3.5

manufactures

Table IV.68

Major regional flows in world exports of

textiles, 1999
(Billion dollars and
percentage)
Value Annual percentage
change

1999 1990- 1998 1999

99

Intra-Western Europe 42.8 0 1 -9

Intra-Asia 36.4 6 -17 5

Asia to Western Europe 8.1 3 3 -7

41
Western Europe to

C./E. Europe/Baltic 7.1 13 7 -6

States/CIS
Asia to North America 7.0 7 3 4

Intra-North America 4.6 12 7 3

Table IV.69
Share of textiles in trade in total
merchandise and in
manufactures by
region, 1999
(Percentage)
Exports Imports

Share of textiles in total merchandise

World 2.7 2.7

North America 1.2 1.5

Latin America 1.4 3.2
Western Europe 2.7 2.5
C./E. Europe/Baltic 2.0 4.6
States/CIS
Africa 1.2 5.6
Middle East 1.0 4.2
Asia 4.4 3.6
Australia, Japan and New 1.5 1.8
Zealand
Other Asia 6.0 4.4
Share of textiles in
manufactures
World 3.5 3.5

North America 1.6 1.8

Latin America 2.3 4.0
Western Europe 3.3 3.2
C./E. Europe/Baltic 3.5 6.5
States/CIS
Africa 4.0 7.9
Middle East 3.8 5.6
Asia 5.3 5.0
Australia, Japan and New 1.7 2.9
Zealand
Other Asia 7.2 5.8

Regional shares in world trade in

textiles, 1999

42
 Western Europe

Asia

North America

Exports

C./E.Europe/Baltic Imports
States/CIS

Latin America

Africa

Middle East

0 10 20 30 40 50 60

(Percentage)

Table IV.70

43
Exports of textiles by
principal region, 1999
(Billion dollars and percentage)

Share in

Value Region's exports World exports Annual percentage change

1999 1990 1999 1990 1999 1990-99 1998 1999

World 147.9 - - 100.0 100.0 4 -4 -2

Western Europe

World 63.2 100.0 100.0 53.2 42.7 1 1 -7

Western Europe 42.8 78.1 67.6 41.5 28.9 0 1 -9
C./E. Europe/Baltic States/CIS 7.1 4.2 11.3 2.3 4.8 13 7 -6
Asia 3.5 5.7 5.5 3.0 2.4 1 -24 4
North America 3.5 4.5 5.5 2.4 2.4 4 5 5
Africa 3.5 4.5 5.5 2.4 2.4 4 12 -6
Middle East 1.4 2.2 2.2 1.1 0.9 2 -5 -7
Latin America 0.8 0.7 1.3 0.4 0.6 9 4 -6
Asia

World 61.8 100.0 100.0 35.3 41.8 6 -10 2

Asia 36.4 57.9 58.9 20.4 24.6 6 -17 5
Western Europe 8.1 16.2 13.0 5.7 5.4 3 3 -7
North America 7.0 10.4 11.3 3.7 4.7 7 3 4
Middle East 3.9 6.5 6.4 2.3 2.7 6 -8 -1
Latin America 3.1 2.4 5.0 0.8 2.1 15 1 -3
Africa 2.4 2.9 3.9 1.0 1.6 10 -2 6
C./E. Europe/Baltic States/CIS 0.8 2.5 1.4 0.9 0.6 -1 -6 -12
Japan

World 6.6 100.0 100.0 5.6 4.5 1 -12 10

Asia 4.9 60.3 73.8 3.4 3.3 4 -17 17
Western Europe 0.7 14.2 11.0 0.8 0.5 -1 16 -2
North America 0.6 11.2 9.0 0.6 0.4 -1 -1 1
Middle East 0.3 9.5 4.4 0.5 0.2 -7 -5 -20
All other regions 0.1 4.7 1.6 0.3 0.1 -10 -13 -8
Other economies in Asia

World 55.2 100.0 100.0 29.7 37.3 7 -11 1

Asia 31.6 57.4 57.1 17.1 21.3 7 -19 4
Western Europe 7.3 16.6 13.3 4.9 5.0 4 1 -8
North America 6.4 10.2 11.6 3.0 4.3 8 8 -5
Middle East 3.6 5.9 6.6 1.8 2.5 8 -5 0
Latin America 3.0 2.6 5.5 0.8 2.0 16 -1 4
Africa 2.4 3.1 4.3 0.9 1.6 10 3 2
C./E. Europe/Baltic States/CIS 0.8 2.5 1.5 0.8 0.6 1 -6 -8
North America

World 11.6 100.0 100.0 5.5 7.8 8 1 4

North America 4.6 28.8 39.9 1.6 3.1 12 7 3
Latin America 4.0 20.2 34.7 1.1 2.7 15 14 23
Western Europe 1.4 25.0 12.0 1.4 0.9 0 -4 -19
Asia 1.2 19.1 10.3 1.1 0.8 1 -22 -4
Middle East 0.2 4.4 1.8 0.2 0.1 -2 -22 -25

44
 All other regions 0.1 2.3 2.2 0.1 0.1 1 -22 -17

Table IV.71

Textile imports of selected economies by region

and supplier, 1999
(Million dollars and percentage)

Canada a United States

Annual Annual
percentage percentage
Value Share change Value Share change

1999 1999 1998 1999 1999 1999 1998 1999

Region Region

World 3996 100.0 4 -1 World 14305 100.0 8 6

North America 2610 65.3 4 -1 Asia 7154 50.0 9 7

Asia 806 20.2 2 2 Western Europe 3104 21.7 5 3

Western Europe 397 9.9 5 -5 North America 1781 12.5 10 9
Latin America 125 3.1 2 4 Latin America 1704 11.9 3 8
Middle East 26 0.7 13 0 Middle East 237 1.7 26 11
C./E. Europe/ C./E. Europe/
Baltic States/CIS 16 0.4 -13 -20 Baltic States/CIS 187 1.3 4 -1
Africa 11 0.3 0 0 Africa 138 1.0 27 -14
Suppliers Suppliers

United States 2610 65.3 4 -1 European Union (15) 2601 18.2 3 1

European Union (15) 357 8.9 4 -2 Canada 1781 12.4 10 9

China 197 4.9 7 10 China 1692 11.8 5 12
Korea, Rep. of 119 3.0 -4 2 Mexico 1342 9.4 6 11
India 107 2.7 7 1 India 1065 7.4 14 12
Above 5 3389 84.8 4 -1 Above 5 8481 59.3 7 8

Taipei, Chinese 101 2.5 -2 3 Korea, Rep. of 908 6.3 0 4

Pakistan 92 2.3 5 7 Taipei, Chinese 819 5.7 -1 6

Mexico 79 2.0 4 4 Pakistan 789 5.5 30 1
Indonesia 53 1.3 3 -9 Japan 595 4.2 -1 0
Japan 45 1.1 -1 -7 Turkey 387 2.7 30 25
Hong Kong, China 32 0.8 -6 4 Thailand 311 2.2 26 4

Turkey 26 0.7 9 -20 Hong Kong, China 226 1.6 19 11

Brazil 22 0.5 -11 -6 Israel 207 1.4 26 11
Thailand 20 0.5 -22 -18 Indonesia 176 1.2 7 -29
Iran, Islamic Rep. of 16 0.4 10 -11 Brazil 161 1.1 -9 4
Australia 13 0.3 7 -19 Philippines 145 1.0 32 30

Switzerland 9 0.2 14 -11 Sri Lanka 111 0.8 19 13

Viet Nam 9 0.2 53 23 Egypt 96 0.7 33 -16
Israel 7 0.2 21 5 Switzerland 94 0.7 9 -8
Bangladesh 6 0.2 34 49 Bangladesh 94 0.7 43 11
Czech Rep. 6 0.1 -21 -5 Malaysia 81 0.6 -7 22

South Africa 5 0.1 -18 14 Australia 47 0.3 17 14

Egypt 5 0.1 17 7 Colombia 43 0.3 0 22
Malaysia 5 0.1 10 -28 Czech Rep. 40 0.3 12 -1
Uruguay 4 0.1 49 -42 Russian Fed. 39 0.3 -4 -16

45
Dominican Republic 4 0.1 62 93 Dominican Republic 34 0.2 4 -17

Haiti 4 0.1 - - Nepal 34 0.2 43 5

Peru 4 0.1 -16 -22 El Salvador 33 0.2 22 6
Romania 3 0.1 -11 -28 South Africa 30 0.2 2 -3
Sri Lanka 3 0.1 -10 75 Belarus 24 0.2 122 35
Norway 2 0.1 36 -31 Macau, China 24 0.2 2044 183

Poland 2 0.1 -3 -47 New Zealand 19 0.1 41 28

Philippines 2 0.1 6 -43 Peru 19 0.1 -17 -22
Colombia 2 0.1 -20 61 Costa Rica 18 0.1 -7 6
Chile 2 0.0 -18 28 Poland 13 0.1 -22 13
New Zealand 2 0.0 38 33 United Arab Emirates 13 0.1 -31 53

Saudi Arabia 1 0.0 121 40 Guatemala 13 0.1 -14 -4

Cuba 1 0.0 113 30 Romania 12 0.1 -4 -23
Nepal 1 0.0 13 92 Uzbekistan 12 0.1 482 500
Slovenia 1 0.0 -15 -54 Slovenia 11 0.1 -38 -13
Above 40 3980 99.6 - - Above 40 14162 99.0 - -

Table IV.71 (continued)

Textile imports of selected economies by

region and supplier, 1999
(Million dollars and percentage)

European Union (15) Japan

Annual Annual
percentage percentage
Value Share change Value Share change

1999 1999 1998 1999 1999 1999 1998 1999

Region Region

World 53916 100.0 2 -7 World 4546 100.0 -25 4

Western Europe 39010 72.4 1 -8 Asia 3396 74.7 -26 9

Asia 8719 16.2 4 -3 Western Europe 728 16.0 -24 -11

C./E. Europe/ North America 324 7.1 -20 -4
Baltic States/CIS 2513 4.7 21 5 Middle East 39 0.9 -23 26
North America 1788 3.3 0 -9 Latin America 34 0.7 -16 -11
Middle East 779 1.4 1 -1 C./E. Europe/
Africa 755 1.4 -16 -6 Baltic States/CIS 16 0.4 18 23
Latin America 271 0.5 -15 -5 Africa 9 0.2 -17 -10
Suppliers Suppliers

European Union (15) 35297 65.5 1 -9 China 1726 38.0 -20 12

Turkey 1900 3.5 13 1 European Union (15) 688 15.1 -24 -10
India 1778 3.3 -1 -9 Korea, Rep. of 390 8.6 -33 13
United States 1623 3.0 0 -11 United States 317 7.0 -20 -4
China 1611 3.0 7 5 Indonesia 315 6.9 -23 13
Above 5 42210 78.3 1 -8 Above 5 3436 75.6 -23 5

Switzerland 1241 2.3 2 -9 Taipei, Chinese 258 5.7 -33 -1

Pakis tan 1059 2.0 3 -6 Pakistan 212 4.7 -39 -8

Korea, Rep. of 875 1.6 6 -3 India 158 3.5 -29 1
Japan 824 1.5 11 5 Thailand 112 2.5 -30 8
Czech Rep. 711 1.3 12 9 Malaysia 81 1.8 -42 29
Taipei, Chinese 652 1.2 18 -10 Viet Nam 78 1.7 -12 12

Indonesia 569 1.1 0 -27 Iran, Islamic Rep. of 33 0.7 -27 22

Poland 471 0.9 30 -5 Philippines 25 0.6 -18 34

46
Iran, Islamic Rep. of 355 0.7 -4 -10 Switzerland 23 0.5 -13 -22
Thailand 346 0.6 -4 -18 Brazil 19 0.4 -20 -18
Egypt 255 0.5 -24 -23 Turkey 16 0.3 -26 -10

Israel 239 0.4 4 -4 Bangladesh 11 0.3 -21 0

Hungary 214 0.4 11 -5 Hong Kong, China 11 0.2 -50 42
Slovak Rep. 179 0.3 10 -4 Uzbekistan 10 0.2 312 36
Slovenia 170 0.3 4 -12 Mexico 10 0.2 39 8
Hong Kong, China 144 0.3 4 -1 Australia 9 0.2 -14 7

Lithuania 133 0.2 26 8 Canada 7 0.1 -12 -33

Romania 131 0.2 24 -3 Egypt 6 0.1 -13 -8
Malaysia 122 0.2 -3 -18 Israel 5 0.1 62 28
Nepal 115 0.2 -18 -1 Peru 4 0.1 -39 -20
Canada 113 0.2 -6 -6 Singapore 3 0.1 -22 -40

Bangladesh 109 0.2 -4 -3 Sri Lanka 2 0.0 -26 -2

Tunisia 108 0.2 -11 -3 Macau, China 2 0.0 -99 9011
Brazil 103 0.2 -9 -15 South Africa 2 0.0 -36 36
Estonia 100 0.2 13 -9 New Zealand 2 0.0 -16 -16
Norway 96 0.2 -2 -6 Romania 2 0.0 -35 -7

Morocco 90 0.2 -8 -1 Saudi Arabia 1 0.0 -34 436

Latvia 85 0.2 69 -6 Tanzania, United Rep. 1 0.0 16 -60
of
South Africa 78 0.1 18 -15 Myanmar 1 0.0 21 27
Bulgaria 76 0.1 10 -13 Russian Fed. 1 0.0 -46 58
Russian Fed. 69 0.1 -1 -14 Nepal 1 0.0 6 24

Mexico 59 0.1 -19 -16 Latvia 1 0.0 -15 67

Viet Nam 58 0.1 43 47 Belarus 1 0.0 281 82
Croatia 56 0.1 8 -11 Norway 1 0.0 -38 -2
United Arab Emirates 48 0.1 7 -21 Korea, Dem. People's 1 0.0 38 -39
Rep. of
Above 40 52263 96.9 - - Above 40 4543 99.9 - -

a Imports are valued f.o.b.

Table IV.72

Leading exporters and importers

of textiles, 1999
(Billion dollars and percentage)

Share in world

Value exports/imports Annual percentage change

1999 1980 1990 1999 1990-99 1997 1998 1999

Exporters

China a 13.04 4.6 6.9 8.8 7 14 -7 2

Hong Kong, China 12.27 - - - 5 3 -11 -6

domestic exports 1.22 1.7 2.1 0.8 -6 -8 -15 -12
re-exports 11.05 - - - 7 5 -10 -5
Germany 11.89 11.4 13.5 8.0 -2 -4 3 -13
Italy 11.78 7.6 9.1 8.0 2 -2 1 -10
Korea, Rep. of 11.62 4.0 5.8 7.9 7 5 -15 3
Taipei, Chinese 10.99 3.2 5.9 7.4 7 6 -13 -2

United States 9.51 6.8 4.8 6.4 7 15 0 3

France 7.03 6.2 5.8 4.8 2 -1 5 -7
Japan 6.59 9.3 5.6 4.5 1 -3 -12 10

47
Belgium 6.59 - - 4.5 - - - -
Pakistan 4.51 1.6 2.6 3.1 6 -6 -7 5

India b 4.56 2.1 2.1 3.0 10 6 -13 …

United Kingdom 4.48 5.7 4.2 3.0 0 4 -3 -17
Netherlands 3.86 4.1 2.8 2.6 3 -7 34 -5
Turkey 3.48 0.6 1.4 2.4 10 23 6 -2
Above 15 111.15 75.1 78.3 75.1 - - - -

Importers

United States 14.31 4.5 6.2 9.2 9 16 8 6

Hong Kong, China 12.56 - - - 2 -2 -17 -7

retained imports 1.51 3.7 3.8 1.0 -11 -22 -43 -17
China a 11.08 1.9 4.9 7.1 9 2 -10 0
Germany 9.89 12.1 11.0 6.4 -2 -9 8 -15
United Kingdom 7.41 6.2 6.5 4.8 1 5 -2 -11
France 6.92 7.2 7.0 4.4 -1 -1 8 -8

Italy 5.83 4.6 5.7 3.7 -1 4 3 -12

Mexico a, c 4.83 0.2 0.9 3.1 19 29 20 41
Japan 4.55 2.9 3.8 2.9 1 -4 -25 4
Canada c 4.00 2.3 2.2 2.6 6 17 4 -1
Belgium 3.69 - - 2.4 - - - -

Spain 3.29 0.6 1.9 2.1 5 7 12 -6

Korea, Rep. of 3.00 0.7 1.8 1.9 5 -7 -38 35
Netherlands 2.60 4.0 3.4 1.7 -4 11 -24 -11
Poland 2.50 0.5 0.2 1.6 29 3 14 -9
Above 15 85.40 55.3 62.5 54.9 - - - -

a Includes significant shipments through processing zones.

b 1998 instead of 1999.
c Imports are valued f.o.b.

Table IV.73

Exports of textiles of selected

economies, 1990-99
(Million dollars and
percentage)
Share in economy's
total
Value merchandise
exports

1990 1996 1997 1998 1999 1990 1999 a

World 104270 I 151060 157730 151310 147920 3.1 2.7

Austria 2083 I 2005 1938 1828 1532 5.0 2.4

Bangladesh 343 445 465 433 ... 22.0 8.6

Belgium - - - - 6585 - 3.7
Belgium-Luxembourg 6374 I 7438 7393 7472 - 5.4 -
Brazil 769 1007 1022 892 822 2.4 1.7
Bulgaria ... 174 171 146 116 ... 2.9
China b 7219 12112 13828 12817 13043 11.6 6.7
Colombia 133 284 294 267 237 2.0 2.0
Croatia - 110 91 89 82 - 1.9
Czech Rep. b - 976 983 1136 1097 - 4.1

48
Egypt 554 426 533 441 ... 21.4 13.8

France 6057 I 7303 7214 7570 7030 2.8 2.3

Germany 14033 I 13787 13228 13672 11885 3.3 2.2
Greece 500 I 507 389 537 411 6.2 3.7
Hong Kong, China 8212 14146 14602 13040 12271 10.0 7.0
domestic exports 2170 1770 1634 1390 1223 7.5 5.5
re-exports 6042 12376 12968 11650 11048 11.3 7.3
India 2179 4936 5243 4558 ... 12.1 13.6
Indonesia 1241 2835 2255 2359 3019 4.8 6.2
Iran, Islamic Rep. of c 510 547 467 443 ... 3.0 3.5
Israel 269 397 446 473 477 2.2 1.8
Italy 9492 I 13205 12907 13034 11783 5.6 5.1
Japan 5858 6927 6750 5971 6591 2.0 1.6

Korea, Rep. of 6075 12718 13337 11279 11618 9.3 8.0

Luxembourg - - - - 373 - 4.8
Macau, China 136 155 148 175 228 8.0 10.6
Malaysia b 343 1302 1292 1095 1120 1.2 1.3
Mexico b 713 1548 1910 2030 2518 1.8 1.8
Morocco b 202 I 158 135 ... ... 4.7 1.9
Netherlands 2911 I 3240 3010 4044 3860 2.2 1.9
Pakistan 2662 4919 4608 4302 4512 47.6 50.8
Peru 220 159 196 164 115 6.8 1.9
Philippines b 132 312 337 287 276 1.6 0.8

Poland 284 562 662 I 753 727 2.0 2.7

Portugal 1328 I 1610 1683 1773 1694 8.1 7.1
Romania 125 167 188 191 165 2.5 1.9
Russian Fed. c - 583 514 442 392 - 0.5
Singapore 903 1347 1242 860 853 1.7 0.7
domestic exports 141 250 250 203 249 0.4 0.4
re-exports 762 1097 992 657 604 4.3 1.3
Slovak Rep. - 303 I 343 328 291 - 2.8
Slovenia - 325 305 324 ... - 3.6
Spain 1497 I 2886 3027 3235 3142 2.7 2.9
Sri Lanka 24 166 ... ... 206 1.2 4.5
Switzerland 2556 2010 1795 1811 1641 4.0 2.0

Taipei, Chinese 6128 12048 12772 11159 10986 9.1 9.0

Thailand 927 1891 2020 1760 1816 4.0 3.1
Tunisia 111 151 127 126 129 3.1 2.2
Turkey 1440 2722 3352 3549 3478 11.1 13.4
United Kingdom 4379 I 5399 5618 5427 4484 2.4 1.7
United States 5039 8009 9193 9216 9510 1.3 1.4
Uruguay 84 85 92 85 ... 5.0 3.1
Memorandum item:

European Union (15) 50795 I 60040 61393 61693 57437 3.4 2.6
Intra-exports 35672 I 37495 38387 38636 35297 3.6 2.5
Extra-exports 15123 22544 23006 23057 22140 2.9 2.8

a Or nearest year.
b Includes significant exports from processing zones.
c Includes Secretariat estimates.

Table IV.74

Imports of textiles of selected

economies, 1990-99
(Million dollars and percentage)

Share in economy's
total
Value merchandise imports

1990 1996 1997 1998 1999 1990 1999 a

49
Argentina 52 609 792 794 632 1.3 2.5

Australia b 1442 1818 1770 1636 1667 3.6 2.6

Austria 1971 I 1894 1782 1751 1599 4.0 2.3
Bangladesh 452 1380 998 1522 ... 13.2 21.7
Belgium - - - - 3691 - 2.3
Belgium-Luxembourg 3579 I 3935 4309 4422 - 3.0 -
Brazil 252 1110 1201 1065 898 1.1 1.7
Canada b 2325 3317 3887 4031 3996 2.0 1.9
Chile 203 494 491 452 ... 2.6 2.4
China c 5292 11980 12267 11082 11079 9.9 6.7
Colombia 75 379 442 468 414 1.3 3.9

Croatia - 203 212 194 160 - 2.1

Czech Rep. b, c - 1007 970 1122 1123 - 3.9
Egypt 210 289 300 394 ... 2.3 2.4
France 7595 I 7041 6972 7504 6921 3.2 2.4
Germany 11867 I 11892 10771 11652 9894 3.3 2.1
Greece 1204 I 1171 1083 1137 935 6.1 3.1
Hong Kong, China 10182 16515 16205 13484 12562 12.0 7.0
retained imports 4140 4139 3237 1834 1514 13.2 5.3
Hungary c 270 I 992 1020 1169 1146 2.6 4.1
Indonesia 785 1266 1152 1021 803 3.6 3.3
Israel 474 759 771 769 758 2.8 2.3

Italy 6132 I 6152 6420 6612 5827 3.4 2.7

Japan 4105 6075 5807 4357 4546 1.7 1.5
Korea, Rep. of 1946 3838 3560 2218 3001 2.8 2.5
Kuwait 168 251 263 245 206 4.2 2.7
Luxembourg - - - - 221 - 2.0
Macau, China 619 769 840 842 803 40.4 39.4
Malaysia c 951 1363 1225 928 1015 3.3 1.6
Mauritius 350 458 448 468 413 21.6 19.3
Mexico b, c 992 2221 2869 3435 4829 2.5 3.3
Morocco c 360 I 399 389 ... ... 5.3 4.1

Netherlands 3615 I 3437 3801 2907 2599 2.9 1.4

New Zealand 396 474 452 340 401 4.2 2.8
Philippines c 910 1256 1322 1195 1278 7.0 3.9
Poland 245 2353 2417 I 2747 2499 2.1 5.4
Portugal 1680 I 1910 1965 2105 1839 6.7 4.8
Romania 67 1050 1250 1471 1574 0.9 15.1
Russian Fed. d - 1551 1649 1341 1138 - 2.8
Saudi Arabia 1312 1164 1088 1075 ... 5.5 3.6
Singapore 1778 1916 1721 1049 1119 2.9 1.0
retained imports 1016 819 729 392 515 2.4 0.8
Slovenia - 322 326 384 ... - 3.8

South Africa b 561 675 679 I 597 526 3.3 2.2

Spain 2050 I 2937 3133 3506 3288 2.3 2.3
Sri Lanka 412 822 ... ... 1331 15.3 24.9
Switzerland 1848 1717 1522 1569 1467 2.7 1.8
Thailand 898 1412 1249 1159 1345 2.7 2.7
Tunisia 790 1296 1245 1441 1332 14.3 15.7
Turkey 567 1933 2324 2317 1907 2.5 4.7
United Arab Emirates d 1009 1952 1979 1815 ... 9.0 6.7
United Kingdom 7017 I 8081 8456 8307 7411 3.1 2.3
United States 6730 10702 12463 13462 14305 1.3 1.4
Memorandum item:

European Union (15) 50370 I 54776 56588 57756 53916 3.2 2.4
Intra-imports e 36133 I 3.7
Extra-imports 14237 17280 18201 19120 18619 2.5 2.2

a Or nearest year.
b Imports are valued f.o.b.
c Includes significant imports into processing zones.
d Includes Secretariat estimates.
e See the Technical Notes for information on intra -EU imports.

50
Table IV.75

World trade in clothing, 1999

(Billion dollars and percentage)

Value 186

Annual percentage change

1980-85 4

1985-90 17

1990-99 6

1997 11

1998 1

1999 1

Share in world merchandise trade 3.4

Share in world exports of 4.4

manufactures

Table IV.76

Major regional flows in world exports of

clothing, 1999
(Billion dollars and
percentage)
Value Annual percentage
change

1999 1990- 1998 1999

99

Intra-Western Europe 46.6 2 -7 -2

Asia to North America 31.5 5 6 1

Intra-Asia 21.0 10 -7 8

Asia to Western Europe 19.7 4 -2 3

Latin America to North 18.1 23 30 15

America
C./E. Europe/Baltic States/CIS to

Western Europe 7.9 17 11 -2

Table IV.77
Share of clothing in trade in total
merchandise and in
manufactures by
region, 1999
(Percentage)
Exports Imports

Share of clothing in total merchandise

World 3.4 3.4

North America 1.1 4.8

Latin America 6.5 3.1

51
Western Europe 2.6 3.5
C./E. Europe/Baltic 4.1 3.1
States/CIS
Africa 5.5 2.1
Middle East 1.3 2.2
Asia 5.7 2.2
Australia, Japan and New 0.2 5.1
Zealand
Other Asia 8.6 0.9
Share of clothing in manufactures

World 4.4 4.4

North America 1.4 5.9

Latin America 10.7 4.0
Western Europe 3.2 4.5
C./E. Europe/Baltic 7.2 4.3
States/CIS
Africa 18.0 2.9
Middle East 5.3 2.9
Asia 6.7 3.0
Australia, Japan and New 0.2 7.9
Zealand
Other Asia 10.3 1.2

Chart IV.14

Regional shares in world trade in

clothing, 1999

52
(Percentage)

Western Europe

Asia

North America

Exports
Imports
Latin America

C./E.Europe/Baltic
States/CIS

Africa

Middle East

0 10 20 30 40 50 60

Table IV.78

Exports of clothing by principal region,

1999
(Billion dollars and percentage)

Share in

Value Region's exports World exports Annual percentage change

1999 1990 1999 1990 1999 1990-99 1998 1999

World 186.03 - - 100.0 100.0 6 1 1

Asia

World 79.14 100.0 100.0 43.6 42.5 6 -1 3

North America 31.49 44.7 39.8 19.5 16.9 5 6 1
Asia 21.04 18.6 26.6 8.1 11.3 10 -7 8
Western Europe 19.73 29.9 24.9 13.0 10.6 4 -2 3
C./E. Europe/Baltic States/CIS 2.04 2.3 2.6 1.0 1.1 7 2 -9

53
 Latin America 1.56 1.0 2.0 0.4 0.8 15 12 -4
Middle East 1.49 2.7 1.9 1.2 0.8 2 -11 -3
Africa 0.74 0.7 0.9 0.3 0.4 10 13 -5
Western Europe

World 60.31 100.0 100.0 43.6 32.4 3 -5 -2

Western Europe 46.62 82.7 77.3 36.1 25.1 2 -7 -2
North America 3.80 5.8 6.3 2.5 2.0 4 11 4
C./E. Europe/Baltic States/CIS 3.59 3.7 5.9 1.6 1.9 9 -1 -9
Asia 3.14 5.2 5.2 2.3 1.7 3 -21 2
Africa 1.41 1.1 2.3 0.5 0.8 12 22 -5
Middle East 1.23 1.1 2.0 0.5 0.7 10 8 -10
Latin America 0.45 0.5 0.7 0.2 0.2 8 21 -8
Latin America

World 19.19 100.0 100.0 3.3 10.3 21 28 14

North America 18.15 79.2 94.6 2.6 9.8 23 30 15
Latin America 0.77 12.4 4.0 0.4 0.4 7 11 -1
Western Europe 0.21 7.3 1.1 0.2 0.1 -2 -16 -10
All other regions 0.04 0.9 0.2 0.0 0.0 3 -42 -4
North America

World 10.17 100.0 100.0 2.7 5.5 15 4 -3

Latin America 6.43 47.4 63.2 1.3 3.5 19 9 -5
North America 2.56 18.2 25.2 0.5 1.4 19 13 7
Asia 0.62 14.8 6.1 0.4 0.3 4 -33 -6
Western Europe 0.46 16.9 4.5 0.5 0.2 -1 -18 -20
All other regions 0.11 2.7 1.0 0.1 0.1 3 -11 -30

Table IV.79

Clothing imports of selected economies by

region and supplier, 1999
(Million dollars and percentage)

Canada a United States

Annual Annual
percentage percentage
Value Share change Value Share change

1999 1999 1998 1999 1999 1999 1998 1999

Region Region

World 3282 100.0 8 0 World 58785 100.0 11 6

Asia 2164 65.9 10 3 Asia 32812 55.8 7 3

North America 564 17.2 3 -10 Latin America 17817 30.3 16 10

Western Europe 256 7.8 4 -5 Western Europe 3536 6.0 10 -1
Latin America 214 6.5 20 12 North America 1759 3.0 16 12
C./E. Europe/ Middle East 1212 2.1 18 14
Baltic States/CIS 33 1.0 19 -11 Africa 1086 1.8 24 3
Africa 29 0.9 3 -3 C./E. Europe/
Middle East 18 0.5 8 38 Baltic States/CIS 563 1.0 25 -10
Suppliers Suppliers

54
 China 745 22.7 8 9 Mexico 7908 13.5 27 15

United States 564 17.2 3 -10 China 7735 13.2 -4 4

Hong Kong, China 329 10.0 -1 -8 Hong Kong, China 4552 7.7 11 -3
European Union (15) 216 6.6 1 -7 European Union (15) 2485 4.2 8 -2
India 211 6.4 12 16 Dominican Republic 2403 4.1 6 0
Above 5 2064 62.9 4 -1 Above 5 25084 42.7 9 5

Korea, Rep. of 182 5.5 33 8 Korea, Rep. of 2382 4.1 23 12

Mexico 110 3.4 30 26 Honduras 2244 3.8 13 15

Taipei, Chinese 99 3.0 11 -10 Taipei, Chinese 2191 3.7 2 -5
Thailand 94 2.9 18 14 Indonesia 1933 3.3 3 2
Indonesia 87 2.6 15 -4 Philippines 1914 3.3 8 3
Bangladesh 87 2.6 13 3 Thailand 1879 3.2 18 6

Malaysia 78 2.4 21 -1 Bangladesh 1797 3.1 12 5

Pakistan 54 1.6 -3 5 India 1778 3.0 9 1
Philippines 50 1.5 0 -10 Canada 1758 3.0 16 12
Sri Lanka 37 1.1 15 -10 Sri Lanka 1380 2.3 8 -2
Turkey 31 1.0 40 16 El Salvador 1361 2.3 11 14

Macau, China 31 0.9 5 -9 Malaysia 1344 2.3 10 -5

Honduras 26 0.8 48 10 Guatemala 1280 2.2 18 8
Dominican Republic 24 0.7 8 18 Macau, China 1075 1.8 9 2
Viet Nam 21 0.7 4 -18 Turkey 896 1.5 15 7
Singapore 13 0.4 44 58 Pakistan 876 1.5 10 8

Mauritius 13 0.4 24 10 Costa Rica 847 1.4 -3 1

Myanmar 12 0.4 -17 81 Cambodia 628 1.1 263 64
El Salvador 10 0.3 -11 15 Israel 439 0.7 27 16
Egypt 9 0.3 42 14 Colombia 385 0.7 4 3
Costa Rica 9 0.3 -1 -36 Egypt 350 0.6 16 -7

Israel 8 0.2 29 16 Jamaica 349 0.6 -11 -19

Peru 7 0.2 4 51 Singapore 345 0.6 7 8
Cambodia 7 0.2 38 91 Peru 319 0.5 15 38
Guatemala 7 0.2 4 -17 United Arab Emirates 316 0.5 9 12
Romania 7 0.2 5 -5 Nicaragua 284 0.5 27 20

Japan 6 0.2 2 3 Haiti 265 0.5 56 14

Bulgaria 6 0.2 -8 -40 South Africa 254 0.4 14 18
United Arab Emirates 5 0.2 -13 144 Mauritius 246 0.4 26 -1
Poland 5 0.2 39 12 Myanmar 200 0.3 50 46
Above 35 3200 97.5 - - Above 35 56399 95.9 - -

Table IV.79 (continued)

Clothing imports of selected economies by

region and supplier, 1999
(Million dollars and percentage)

European Union (15) Japan

Annual Annual
percentage percentage
Value Share change Value Share change

1999 1999 1998 1999 1999 1999 1998 1999

Region Region

World 86853 100.0 -1 1 World 16402 100.0 -12 11

Western Europe 43450 50.0 -7 -2 Asia 14157 86.3 -11 16

Asia 25418 29.3 1 5 Western Europe 1617 9.9 -12 -12

55
C./E. Europe/ North America 514 3.1 -33 -5
Baltic States/CIS 9222 10.6 16 3 Latin America 65 0.4 -5 12
Africa 6782 7.8 9 3 C./E. Europe/
Middle East 828 1.0 -3 3 Baltic States/CIS 27 0.2 8 -4
North America 700 0.8 -18 -13 Africa 12 0.1 33 0
Latin America 324 0.4 -11 -1 Middle East 6 0.0 -22 -14
Suppliers Suppliers
European Union (15) 35869 41.3 -9 -2 China 11434 69.7 -9 20

China 7460 8.6 1 10 European Union (15) 1585 9.7 -13 -12
Turkey 5447 6.3 11 -2 Korea, Rep. of 1031 6.3 5 14
Hong Kong, China 4546 5.2 1 1 United States 488 3.0 -33 -4
Tunisia 2772 3.2 12 -2 Viet Nam 450 2.7 -12 4
Above 5 56094 64.6 -5 0 Above 5 14987 91.4 -10 14

Romania 2380 2.7 23 7 Thailand 301 1.8 -23 -5

Morocco 2326 2.7 7 -5 Indonesia 219 1.3 -30 -7

India 2306 2.7 -1 -1 Taipei, Chinese 138 0.8 -32 -13
Poland 2066 2.4 11 -8 Malaysia 136 0.8 -17 14
Bangladesh 1996 2.3 10 4 Philippines 119 0.7 -33 3
Indonesia 1679 1.9 -1 2 Hong Kong, China 97 0.6 -44 -35

Thailand 1122 1.3 11 11 India 90 0.5 -4 1

Hungary 1033 1.2 14 -18 Korea, Dem. People's 59 0.4 -33 -7
Rep. of
Korea, Rep. of 887 1.0 9 17 Canada 27 0.2 -18 -21
Pakistan 814 0.9 0 -6 Mexico 25 0.2 -5 38
Sri Lanka 789 0.9 2 5 Bangladesh 16 0.1 12 -33

Viet Nam 763 0.9 8 10 Switzerland 16 0.1 -11 -21

Malaysia 730 0.8 -8 -7 Sri Lanka 16 0.1 -34 -2
Mauritius 689 0.8 -1 1 Macau, China 13 0.1 -29 -27
Bulgaria 616 0.7 26 3 Hungary 13 0.1 9 -9
Taipei, Chinese 606 0.7 -10 4 Pakistan 11 0.1 21 -15

United States 585 0.7 -20 -19 Singapore 9 0.1 -34 44

Czech Rep. 542 0.6 4 -10 Turkey 8 0.0 30 -14
Macau, China 492 0.6 -16 -6 Peru 7 0.0 -21 4
Croatia 463 0.5 4 -17 El Salvador 7 0.0 27 -19
Slovak Rep. 449 0.5 12 -6 Honduras 6 0.0 34 12

Lithuania 447 0.5 17 4 Slovenia 6 0.0 44 -21

Slovenia 406 0.5 -8 -17 Dominican Republic 5 0.0 5 38
Switzerland 398 0.5 -4 1 Mauritius 5 0.0 7 -8
Ukraine 325 0.4 22 8 Romania 5 0.0 34 3
Israel 321 0.4 -11 10 Jamaica 4 0.0 41 -33

Philippines 302 0.3 -16 -4 Brazil 4 0.0 -36 25

Egypt 285 0.3 14 11 Australia 4 0.0 -43 -8
TFYR M acedonia 262 0.3 27 6 Tunisia 4 0.0 121 0
United Arab Emirates 257 0.3 6 -8 Israel 3 0.0 -23 -36
Madagascar 240 0.3 18 10 Mongolia 3 0.0 12 39

Cambodia 232 0.3 -3 52 New Zealand 2 0.0 -28 -19

Singapore 204 0.2 -2 9 Nepal 2 0.0 -9 75
Latvia 195 0.2 18 10 Costa Rica 2 0.0 -40 -7
Estonia 181 0.2 9 -2 Poland 2 0.0 -21 -24
Above 40 83482 96.1 - - Above 40 16367 99.8 - -

a Imports are valued f.o.b.

Table IV.80

Leading exporters and importers of

clothing, 1999
(Billion dollars and percentage)

56
 Share in world

Value exports/imports Annual percentage change

1999 1980 1990 1999 1990-99 1997 1998 1999

Exporters

China a 30.08 4.0 9.0 16.2 13 27 -6 0

Hong Kong, China 22.37 - - - 4 5 -4 1

domestic exports 9.57 11.5 8.6 5.1 0 4 4 -1
re-exports 12.80 - - - 9 6 -9 2
Italy 13.24 11.3 11.0 7.1 1 -8 -1 -10
United States 8.27 3.1 2.4 4.4 14 15 1 -6
Mexico a 7.81 0.0 0.5 4.2 33 50 17 18
Germany 7.44 7.1 7.3 4.0 -1 -1 7 -7

Turkey 6.52 0.3 3.1 3.5 8 10 5 -8

France 5.69 5.6 4.3 3.1 2 -3 8 -1
Korea, Rep. of 4.87 7.3 7.3 2.6 -5 -1 11 5
India b 4.78 1.5 2.3 2.6 8 3 10 …
United Kingdom 4.49 4.6 2.8 2.4 4 2 -7 -9

Indonesia 3.86 0.2 1.5 2.1 10 -19 -9 47

Belgium 3.83 - - 2.1 - - - -
Bangladesh b 3.79 0.0 0.6 2.1 25 21 41 …
Thailand 3.45 0.7 2.6 1.9 2 -1 -4 -3
Above 15 117.68 59.6 65.1 63.3 - - - -

Importers

United States 58.79 16.4 24.1 30.0 9 16 11 6

Germany 20.77 19.7 18.2 10.6 0 -7 1 -10

Japan 16.40 3.6 7.8 8.4 7 -15 -12 11
Hong Kong, China 14.76 - - - 9 10 -5 3
retained imports 1.96 0.9 0.7 1.0 11 96 45 9
United Kingdom 12.53 6.8 6.2 6.4 7 15 7 5
France 11.58 6.2 7.5 5.9 4 -1 8 -1

Italy 5.84 1.9 2.3 3.0 10 6 10 0

Netherlands 5.14 6.8 4.3 2.6 1 9 -11 -3
Belgium 4.87 - - 2.5 - - - -
Mexico a, c 3.65 0.3 0.5 1.9 23 40 12 -3
Spain 3.53 0.4 1.5 1.8 9 2 7 10

Switzerland 3.41 3.4 3.1 1.7 0 -9 4 -3

Canada c 3.28 1.7 2.1 1.7 4 19 8 0
Austria 2.79 2.2 2.1 1.4 2 -9 2 -6
Denmark 2.46 1.2 1.0 1.3 10 15 10 6
Above 15 156.99 75.6 84.2 80.2 - - - -

a Includes significant shipments through processing zones.

b 1998 instead of 1999.
c Imports are valued f.o.b.

57
Table IV.81

Exports of clothing of selected

economies, 1990-99
(Million dollars and percentage)

Share in economy's
total
Value merchandise exports

1990 1996 1997 1998 1999 1990 1999 a

World 108000 I 164140 182280 183330 186030 3.2 3.4

Austria 1168 I 1390 1357 1377 1257 2.8 2.0

Bangladesh 643 2218 2688 3786 ... 41.3 74.9

Belgium - - - - 3833 - 2.2
Belgium-Luxembourg 2000 I 3017 3494 4042 - 1.7 -
Bulgaria ... 281 354 451 620 ... 15.3
China b 9669 25034 31803 30048 30078 15.6 15.4
Colombia 459 476 445 433 427 6.8 3.7
Croatia - 633 633 556 524 - 12.3
Czech Rep. b - 622 621 705 670 - 2.5
Denmark 859 I 1288 1542 1752 1939 2.3 4.0
Egypt 144 239 259 333 ... 5.6 10.4

France 4670 I 5529 5345 5748 5690 2.2 1.9

Germany 7881 I 7579 7503 8014 7441 1.9 1.4
Greece 1714 I 1878 1632 1821 1505 21.1 13.5
Hong Kong, China 15406 21976 23107 22164 22371 18.7 12.8
domestic exports 9266 8979 9329 9667 9571 31.9 42.8
re-exports 6140 12997 13778 12497 12800 11.5 8.4
Hungary b 375 I 1135 1119 1277 1312 3.8 5.2
India 2529 4217 4343 4782 ... 14.1 14.2
Indonesia 1646 3591 2904 2630 3857 6.4 7.9
Israel 482 644 600 651 731 4.0 2.8
Italy 11838 I 16172 14857 14742 13240 7.0 5.7
Jamaica 83 250 228 ... ... 7.3 16.5

Korea, Rep. of 7878 4221 4192 4651 4871 12.1 3.4

Luxembourg - - - - 66 - 0.9
Macau, China 1110 1547 1805 1642 1630 65.5 75.6
Malaysia b 1315 2376 2337 2304 2253 4.5 2.7
Mauritius 619 919 892 970 910 51.8 58.9
Mexico b 587 3753 5636 6603 7805 1.4 5.7
Morocco b 722 I 779 724 ... ... 16.9 10.3
Netherlands 2188 I 3053 3655 2860 2631 1.7 1.3
Pakistan 1013 1872 1810 1840 1957 18.1 22.0
Peru 120 257 326 336 414 3.7 6.8

Philippines b 1733 2389 2319 2324 2111 21.5 5.8

Poland 384 2373 2223 I 2386 2199 2.7 8.0
Portugal 3490 I 3591 3457 3462 3151 21.3 13.2
Romania 363 1559 1752 1979 2044 7.3 24.0
Russian Fed. c - 382 306 303 351 - 0.5
Singapore 1588 1398 1491 1427 1603 3.0 1.4
domestic exports 996 495 440 430 471 2.9 0.7
re-exports 592 903 1051 997 1132 3.3 2.5
Slovak Rep. - 271 I 516 536 529 - 5.2
Slovenia - 593 550 538 ... - 5.9
Spain 598 I 1377 1434 1730 1827 1.1 1.7
Sri Lanka 637 1805 ... ... 2287 32.1 49.7

Taipei, Chinese 3987 3206 3409 3189 2883 5.9 2.4

Thailand 2816 3729 3686 3540 3449 12.2 5.9
Tunisia 1125 2396 2299 2474 2375 31.9 40.2
Turkey 3330 6067 6697 7058 6516 25.7 25.0
United Kingdom 3041 I 5185 5281 4920 4487 1.6 1.7
United States 2564 7511 8672 8793 8269 0.7 1.2
Uruguay 153 141 153 145 ... 9.0 5.2
Memorandum item:

European Union (15) 40782 I 51332 56127 52347 51371 2.7 2.4

58
 Intra-exports 29444 I 35442 40366 36535 35869 3.0 2.6
Extra-exports 11338 15890 15761 15812 15501 2.1 1.9

a Or nearest year.
b Includes significant exports from processing zones.
c Includes Secretariat estimates.

Table IV.82

Imports of clothing of selected

economies, 1990-99
(Million dollars and
percentage)
Share in economy's
total
Value merchandise
imports

1990 1996 1997 1998 1999 1990 1999 a

Australia b 711 1411 1519 1519 1661 1.8 2.6

Austria 2346 I 3184 2911 2967 2790 4.8 4.1

Belgium - - - - 4870 - 3.0
Belgium-Luxembourg 3589 I 4584 4914 5297 - 3.0 -
Canada b 2388 2544 3017 3269 3282 2.0 1.5
Chile 52 416 441 468 ... 0.7 2.5
Croatia - 286 270 257 215 - 2.8
Czech Rep. b, c - 501 432 438 426 - 1.5
Denmark 1069 I 1834 2111 2315 2458 3.2 5.5
Finland 887 I 877 903 933 907 3.3 2.9
France 8380 I 10891 10755 11653 11578 3.6 4.0

Germany 20410 I 24647 22846 23084 20765 5.7 4.4

Greece 433 I 952 934 1054 931 2.2 3.1
Hong Kong, China 6913 13630 15019 14297 14757 8.2 8.2
retained imports 773 633 1241 1800 1957 2.5 6.8
Hungary c 167 I 402 386 446 510 1.6 1.8
Ireland 825 I 1019 1091 1145 1152 4.0 2.5
Israel 61 332 341 364 356 0.4 1.1
Italy 2580 I 5028 5311 5855 5843 1.4 2.7
Jamaica 87 239 220 ... ... 4.7 7.0
Japan 8736 19672 16727 14723 16402 3.7 5.3
Jordan 27 52 38 62 ... 1.0 1.6

Korea, Rep. of 150 1507 1394 504 763 0.2 0.6

Kuwait 206 322 350 372 330 5.2 4.3
Luxembourg - - - - 237 - 2.2
Macau, China 25 102 107 126 169 1.6 8.3
Mexico b, c 573 2394 3355 3750 3645 1.4 2.5
Netherlands 4768 I 5436 5921 5274 5141 3.8 2.7
New Zealand 148 350 407 352 402 1.6 2.8
Norway 1231 1381 1394 1429 1380 4.5 4.1
Poland 209 453 519 I 599 610 1.8 1.3
Portugal 436 I 869 890 985 962 1.7 2.5
Romania 26 189 219 272 292 0.3 2.8

Russian Fed. d - 2345 3253 2717 1847 - 4.5

Saudi Arabia 832 846 829 922 ... 3.5 3.1
Singapore 922 1730 1805 1410 1650 1.5 1.5
retained imports 330 827 754 413 518 0.8 0.8
Slovenia - 481 446 448 ... - 4.4
Spain 1648 I 2927 2988 3198 3531 1.9 2.4
Sweden 2510 I 2172 2116 2166 2146 4.6 3.1
Switzerland 3437 3731 3405 3528 3410 4.9 4.3
Tunisia 190 475 493 517 476 3.4 5.6
United Arab Emirates d 528 1199 1222 1118 ... 4.7 4.1

59
United Kingdom 6960 I 9695 11169 11977 12533 3.1 3.9

United States 26977 43317 50297 55720 58785 5.2 5.6

Memorandum item:

European Union (15) 56844 I 81678 87484 86354 86853 3.6 3.9
Intra-imports e 28549 I 2.9
Extra-imports 28295 46235 47118 49819 50983 4.9 6.0

a Or nearest year.
b Imports are valued f.o.b.
c Includes significant imports into processing zones.
d Includes Secretariat estimates.
e See the Technical Notes for information on intra -EU imports.

60
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