The Indian Textile and Clothing Industry: An Economic Analysis

113 Pages·2015·1.63 MB·English

by  Mausumi Kar (auth.)

SPRINGER BRIEFS IN ECONOMICS
Mausumi Kar
The Indian Textile
and Clothing
Industry
An Economic
Analysis
123
SpringerBriefs in Economics
More information about this series at http://www.springer.com/series/8876
Mausumi Kar
The Indian Textile
and Clothing Industry
An Economic Analysis
1 3
Mausumi Kar
Department of Economics
Women’s Christian College
University of Calcutta
Kolkata
India
ISSN 2191-5504 ISSN 2191-5512 (electronic)
SpringerBriefs in Economics
ISBN 978-81-322-2369-6 ISBN 978-81-322-2370-2 (eBook)
DOI 10.1007/978-81-322-2370-2
Library of Congress Control Number: 2015936377
Springer New Delhi Heidelberg New York Dordrecht London
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Preface
This monograph revisits the Textile and Clothing Industry in India and its rela-
tionship with international trade from a new global perspective. Global investment
and collaboration opportunities, technological changes, and diminishing barriers
to trade worldwide have transformed the structure of production and international
competition in the textile and apparel industries. Along with the liberalization of
trade policies and the subsequent removal of quantitative restrictions on the tex-
tile products, the domestic market in India has presently been exposed to several
international brands, which eventually led to the recent spurt in foreign collabora-
tions for this important industrial sector in the country. The study ornately exam-
ines the nature and impact of such external changes on the industry-structure and
its labor-related issues. The key feature of this book is that it presents a snapshot
of all the domestic and international policies related to this sector from the earli-
est relevant period till date and analyzes issues in trade and industrial organiza-
tion. This is missing in most of the related studies on textile and clothing sector. It
should help the reader not only to gather a comprehensive knowledge of the policy
changes affecting this sector, but also the implications it carries for the economy
at large. Besides, we also offer suitable empirical analyses on how concentration
of firms and regional disparity are associated with the rather pervasive presence
of this industry in India. The changes in factor income for those involved with the
T&C sector will also be of interest to researchers following up on the growth tra-
jectory of this industry. Additionally, this book deals with another striking feature,
namely the role of preferential trading bloc or Regional Trading Arrangements
(RTA) in analyzing the trade pattern of this sector and potential trade-diverting
effects. Furthermore, a review of this industry shows that the issues in mergers and
acquisitions, popularly called M&A, might offer varying implications for those
willing to investigate the cross-border industrial changes associated largely with
capital movements and technological spill over. The analyses carried out in this
study may also prove beneficial for understanding the patterns in other industries
where policy shocks have been of vital importance.
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vi Preface
In completing this research, I received support from many people. First,
I sincerely thank Saibal Kar for his cooperation and inspiration without which
it would not have been possible for me to complete this study. It is my pleasure
and privilege to offer thanks and gratitude to all my family members, colleagues
and friends who always encouraged me and stayed by my side whenever I needed
them. The responsibility for any remaining error lies entirely with me.
Contents
1 An Introductory Note About the Textile and Clothing
Industry of India ............................................ 1
1.1 Background ............................................ 2
References .................................................. 5
2 International and Domestic Policies Associated with the Textile
and Apparel Industry and Trade: An Overview ................... 7
2.1 Past Trends of India’s Textile and Apparel Trade ................ 9
2.2 India’s Domestic Textile Policy ............................. 11
2.2.1 Textile Policy, 1948 ................................ 11
2.2.2 Textile Policy, 1985 ................................ 12
2.2.3 Textiles (Development and Regulation) Order, 1993 ....... 12
2.2.4 The Export Entitlement Distribution Policy (Quota Policy) ... 13
2.2.5 New Textile Policy, 2000 ............................ 14
2.2.6 New National Textile Policy, 2013 ..................... 15
2.3 International Rules for Textile and Apparel Trade ............... 15
2.3.1 The Short-Term Arrangement (STA)—1961 ............. 16
2.3.2 The Long-Term Arrangement (LTA)—1962 ............. 16
2.3.3 Multi-Fibre Arrangement (MFA)—1974 ................ 17
2.4 Consequences of MFA .................................... 21
2.5 GATT Integration of Textile Trade ........................... 23
2.6 Agreement on Textiles and Clothing (ATC) .................... 24
2.6.1 Product Coverage of ATC ............................ 24
2.6.2 Monitoring and Implementing ATC .................... 25
2.6.3 Transitional Phase-Out of MFA Quotas ................. 25
2.6.4 Additional Safeguards Outside ATC ................... 27
2.7 China’s WTO Accession and Its Follow-Ups ................... 27
2.8 Implications for Developing Countries ....................... 28
2.9 Concluding Remarks ..................................... 30
Documents .................................................. 31
References .................................................. 31
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viii Contents
3 Impact of Liberalization on Indian Firms—Some Issues ........... 35
3.1 Role of Sales Promotion Activities: A Theoretical Proposition
and Empirical Support .................................... 37
3.1.1 Increasing Cost Industry ............................. 38
3.1.2 Constant Cost Industry .............................. 42
3.1.3 Empirical Observations ............................. 44
3.2 Issues Related to Labor Income and Employment ............... 47
3.2.1 The Firm-Level Analysis ............................ 48
3.2.2 The State-Level Analysis ............................ 51
Documents .................................................. 54
References .................................................. 67
4 The Role of Foreign Collaborations in the Textile
and Clothing Sector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
4.1 Foreign Direct Investment Policy in Textiles ................... 70
4.2 Cross-Border Mergers and Acquisitions in Textile .............. 74
4.3 Case Studies ............................................ 77
References .................................................. 82
5 India’s Trade Scenario in the New World Order .................. 83
5.1 Formation of SAFTA ..................................... 84
5.2 India’s Trade Scenario .................................... 85
Documents .................................................. 91
References .................................................. 93
6 A Concluding Discussion ..................................... 95
6.1 Scope of Further Research ................................. 101
Documents .................................................. 103
Further Readings .............................................. 105
About the Author
Dr. Mausumi Kar is the Head of the Department of Economics, Women’s
Christian College, Kolkata, India. She works in the field of international trade and
her research interest is focused on trade and various other aspects of the textile and
clothing industry of India. She has published in peer-reviewed journals on topics in
public economics, international trade. Dr. Kar has presented in some well-regarded
international conferences like that of UNU-WIDER and possesses a handful of
good academic publications with the reputed international publishers.
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