INDIA: Post MFA -India Could Be A Big Winner

CHENNAI: According to a McKinsey study commissioned by DHL, with the dismantling of multi fibre agreement (MFA) and the end of quota restrictions in December 2004, India could be the big winner after China.

According to the DHL-McKinsey Apparel and Textile Trade Report, the value of the global textile and apparel industry is likely to go up to $248 billion by 2008 with China, India and Pakistan expected to be the ``clear winners''. The report forecasts that India has the potential to increase its share from the current 4 per cent to 6.5 per cent valued at $ 16 billion by 2008.

Outlining the key imperatives for India, Mr Charlie Taylor, Partner, McKinsey Singapore said that while some progress had been made such as de-reservation and piece rates for garment exporters, key reforms are still required if India is to capitalise on the emerging opportunities.

Some of the areas identified in the report include, creating level domestic market playing fields by extending de-reservation, uniform application of excise taxes and further reduction in import duties on apparel, textiles and machinery.

Another important point was revising of labour laws, improving infrastructure and improving availability of high quality textile to increase foreign direct investment,

There was also a need to establish bilateral agreement with the European Union and the US under the quota free regime, to be competitive against other low-cost exporters such as Sri Lanka.

For local manufacturers, the report recommended that organisational improvements were required to minimise absenteeism, rejection levels and delays. They would also have to make technology investments to speed production and gain scale. Manufacturers would have to address supply chain needs, optimise time to market and logistics costs, reliability, security and visibility.

March 19, 2004

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Added: March 19, 2004
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