1 A STUDY ON PERFORMANCE OF TEXTILE EXPORTS OF INDIA DURING AND AFTER MULTI FIBRE AGREEMENT Dr. C.PANDIARAJAN, Hod And Assistant Professor, Department Of Commerce, Government Arts College, Mettupalayam, Tamilnadu, India 1.1. Introduction Naturally, every country has to depend on other nation, which has adequate resources and the technology required for producing certain goods. Whatever is the type and number of goods exported or imported by countries, people cannot live without the basic requirement of life – food, shelter, and Clothing. India has the competitive advantage in the production of textiles – both cotton and synthetics fibres due to the availability of raw cotton, cheap labour and the economies of scale and it has specialized in the production of textile goods. The preferences of those essential items may also be changed in global market due to a number of varieties or brands, which are part of human nature, tastes and fashion. The removal of quota system by Agreement on textile and clothing of WTO put a new path for textile export because of India`s production of any goods under the textile category. The textile industry in India after agriculture is the only industry that had generated hugeemployment for both skilled and unskilled labour. Even today, the textile industry continues to be the second-largest employment-generating sector in India. It offers direct employment to over 35 million in the country. Many textile hubs exist in different states of India, for example, Kutch and Surat in Gujarat, Banaras in Uttar Pradesh, Aurangabad, Mumbai in Maharashtra, Maheshwar in Madhya Pradesh, Bengaluru in Karnataka, Malta in West Bengal, Bhagalpur in Bihar, Ludhiana in Punjab, New Delhi, Tirupur and Karur. In India, a large chunk of the population is engaged in textile manufacturing process while the majority of them belong to MSME (Micro, Small and Medium Scale Industries) category. Only a few companies are owned by Joint Stock companies, and it becomes difficult to achieve economies of scale and fix the competitive price against the Peoples Republic of China, which manufactures products on a mass scale at low cost with high quality and dominates the world market. It is always the challenge for India. Now Indian Government has taken many initiates to attract Foreign Direct Investment to International Journal of Pure and Applied Mathematics Volume 119 No. 18 2018, 3117-3131 ISSN: 1314-3395 (on-line version) url: http://www.acadpubl.eu/hub/ Special Issue http://www.acadpubl.eu/hub/ 3117
Transcript
1
A STUDY ON PERFORMANCE OF TEXTILE EXPORTS OF INDIA DURING AND AFTER MULTI FIBRE
AGREEMENT
Dr. C.PANDIARAJAN,
Hod And Assistant Professor, Department Of Commerce, Government Arts College,
Mettupalayam, Tamilnadu, India
1.1. Introduction
Naturally, every country has to depend on
other nation, which has adequate resources and the
technology required for producing certain goods.
Whatever is the type and number of goods exported
or imported by countries, people cannot live
without the basic requirement of life – food, shelter,
and Clothing. India has the competitive advantage
in the production of textiles – both cotton and
synthetics fibres due to the availability of raw
cotton, cheap labour and the economies of scale and
it has specialized in the production of textile goods.
The preferences of those essential items may also
be changed in global market due to a number of
varieties or brands, which are part of human nature,
tastes and fashion. The removal of quota system by
Agreement on textile and clothing of WTO put a
new path for textile export because of India`s
production of any goods under the textile category.
The textile industry in India after agriculture is the
only industry that had generated hugeemployment
for both skilled and unskilled labour. Even today,
the textile industry continues to be the
second-largest employment-generating sector in
India. It offers direct employment to over 35
million in the country. Many textile hubs exist in
different states of India, for example, Kutch and
Surat in Gujarat, Banaras in Uttar Pradesh,
Aurangabad, Mumbai in Maharashtra, Maheshwar
in Madhya Pradesh, Bengaluru in Karnataka, Malta
in West Bengal, Bhagalpur in Bihar, Ludhiana in
Punjab, New Delhi, Tirupur and Karur. In India, a
large chunk of the population is engaged in textile
manufacturing process while the majority of them
belong to MSME (Micro, Small and Medium Scale
Industries) category. Only a few companies are
owned by Joint Stock companies, and it becomes
difficult to achieve economies of scale and fix the
competitive price against the Peoples Republic of
China, which manufactures products on a mass
scale at low cost with high quality and dominates
the world market. It is always the challenge for
India. Now Indian Government has taken many
initiates to attract Foreign Direct Investment to
International Journal of Pure and Applied MathematicsVolume 119 No. 18 2018, 3117-3131ISSN: 1314-3395 (on-line version)url: http://www.acadpubl.eu/hub/Special Issue http://www.acadpubl.eu/hub/
3117
2
India for the industrial and infrastructural
development. There are many labour issues and low
labour; pollution with poor infrastructure, less
financial support and the companies are supported
by the huge funds spent by the government on the
development of industries. There are doubtful
questions whether the spending by the government
produce the expected results or not. This study
analysis the growth and trend of textile and garment
export from India.
1.2 TEXTILE SECTOR IN INDIA
The textile industry has two broad
categories. First, the un-organized segment which
consists of handloom, handicrafts, and sericulture
that are functioning on a small scale and with
traditional production methods. The second is the
organized segment including spinning, apparel and
garments sector, which apply modern machinery and
techniques for reaping the economies of scale. The
products of textile Industryare classified as
1) Natural fibres
1) Cotton- Yarn, fabric, Garments
2) Jute – garments and other products.
3) Silk – Dresses
4) Wool and Woolen –Carpets and
sweaters
2) Man-madefibres
1) Polyester – Garments
2) Viscose– Garments
3) Nylon-– Garments
4) Acrylic– Garments
1.3 SIGNIFICANCE OF THE STUDY
The significance of this study is that it
covers a broader area in the textile sector before and
after MFA while new initiatives are also taking
place. Primarily this study evaluates the growth of
textile export in the post-MFA era. The empirical
study entails some interesting insights, which could
be of greater interest to the employers, regulators,
and policy makers of India. Secondly, this study
provides useful insight to assess whether
or not, the changes in the efficiency of textile
exports have been in the right direction. Finally, this
study will be useful to textile industry, policy
makers, governments,persons involved in the sector
regardingthe future course of actions, which
happens as it does,and hence the researcher has
taken up this study for reference.
1.4 OBJECTIVES OF THE STUDY
1) To examine the trend in the export of
textiles and garment sector during this study
period,
2) To compare the export performance of
garments between Pre and Post MFA
regime.
1.5 RESEARCH METHODOLOGY
The study is empirical. The purpose of this
study is to analyse the present position of India`s
International Journal of Pure and Applied Mathematics Special Issue
3118
3
textile and garment sector, particularly during the
period after completion of
10 years of ATC implementation by WTO.
Accordingly, an attempt is madeby the researcher to
study the sector conveniently during pre and post
MFA period.
1.6. SOURCES OF DATA
The study is based on the use of data
collected from secondary sources.
The secondary data are collected from the websites
of Ministry of Commerce and Industries, Ministry
of textiles, annual reports of promotional councils
and Industry specific magazines such as Apparel
online, Apparel views, Apparel India and Apparel
Talk and published PhD research works, Newsletter
of SIMA, TEA and so on
1.7 PERIOD OF STUDY
The period of this study covers from 1995-96
to 2015-2016.
1.8 STATISTICAL TOOLS USED
The empirical analyses for the research
study have been made on the export performance of
various major products from India using the
following statistical tools
Annual Growth Rate
Time serious analysis -Trend Analysis
Simple percentage method
Paired Test
1.9 HYPOTHESES OF THE STUDY
The mean export of textile goods has shown
an increase during the pre-multi-fibre
agreement and post multifiber agreement.
1.10 LIMITATIONS OF THE STUDY
The study mainly focuses on industry-
specific determinants of textile and apparel exports
and does not cover several variables that may
influence the export patterns
of India, such as exchange rates and transportation
and communications and infrastructure as well as
internal government policies that which may
influence the size, structure, and costs of firms and
production facilities.
This study is carried out purely based on
secondary data, which has its inherent limitation
2.REVIEW OF LITERATURE
Chrlstensen(1964)1 in their study,
“International trade and economic growth”, found
out and discussed that there is a direct relationship
between development and trade and that maintained
the economic growth wouldtypically lead to boost
in the real.
These revenues and trade associations, as exposed
by a cross-sectional analysis of the 1959-60 trade
and revenues data for 9 main trading areas,
1 Chrlstensen, Raymond P., and Mackie, Arthur B.,
"Foreign Economic Development and Agricultural
Trade," Foreign Agricultural Trade of the United States,
September 1963.
International Journal of Pure and Applied Mathematics Special Issue
3119
4
recommend that world trade will enlarge to some
extent quicker than world revenue with constant
economic development and that imports from the
United States, total and agricultural, may grow up
faster than world income.
Ramaswamy(2000)2, found out that India‟s
comparative advantage in textile industry
competitive advantage only to meet small orders of
export and suggested that to move up the value
chain RMG, and create a product line to include all
the necessary and standard garments and synthetic
fibre garments. By reconstructing production base, the
industry would enhance quality, establish niche
markets abroad, and move up the more value
additions and value chain so this requireshuge
investment and access to imported inputs.
Balaji (2001)3in an article on “knitwear in
Tirupur" quoted that 2500 units are running in
Tirupur that produced garment products from
knitwear export waste fabric pieces. More than five
