Staff Research Study 27 Office of Industries U.S. International Trade Commission India’s Textile and Apparel Industry: Growth Potential and Trade and Investment Opportunities March 2001 Publication 3401 The views expressed in this staff study are those of the Office of Industries, U.S. International Trade Commission. They are not necessarily the views of the U.S. International Trade Commission as a whole or any individual commissioner. U.S. International Trade Commission Vern Simpson Director, Office of Industries This report was principally prepared by Sundar A. Shetty Textiles and Apparel Branch Energy, Chemicals, and Textiles Division Address all communications to Secretary to the Commission United States International Trade Commission Washington, DC 20436 TABLE OF CONTENTS Page Executive Summary . v Chapter 1. Introduction . 1-1 Purpose of study . 1-1 Data and scope . 1-1 Organization of study . 1-2 Overview of India’s economy . 1-2 Chapter 2. Structure of the textile and apparel industry . 2-1 Fiber production . 2-1 Textile sector . 2-1 Yarn production . 2-4 Fabric production . 2-4 Dyeing and finishing . 2-5 Apparel sector . 2-5 Structural problems . 2-5 Textile machinery . 2-7 Chapter 3. Government trade and nontrade policies . 3-1 Trade policies . 3-1 Tariff barriers . 3-1 Nontariff barriers . 3-3 Import licensing . 3-3 Customs procedures . 3-5 Marking, labeling, and packaging requirements . 3-5 Export-Import policy . 3-5 Duty entitlement passbook scheme . 3-5 Export promotion capital goods scheme . 3-5 Pre- and post-shipment financing . 3-6 Export processing and special economic zones . 3-6 Nontrade policies . 3-6 Technology Upgradation Fund . 3-6 Cotton Technology Mission . 3-8 Hank yarn obligation . 3-8 Quota Entitlement Policy . 3-8 Investment policies and foreign direct investment . 3-9 National Textile Policy 2000 . 3-9 Chapter 4. Textile and apparel market and trade . 4-1 Market profile . 4-1 Domestic consumption of textiles . 4-2 Yarn and fabrics . 4-2 Apparel . 4-4 Marketing infrastructure . 4-5 Distribution . 4-5 Transportation and communication . 4-5 i TABLE OF CONTENTS-Continued Page Chapter 4. Textile and apparel market and trade—Continued Consumer finance . 4-5 Advertising and market research . 4-6 Market entry strategy for foreign investors . 4-6 Textile and apparel trade . 4-6 Chapter 5. Competitive assessment . 5-1 Textiles . 5-1 Competitive strengths and weaknesses . 5-1 Level of technology and rate of modernization . 5-1 Production cost comparison in spinning and weaving . 5-4 Apparel . 5-4 Limited fabric supply . 5-4 Technical backwardness . 5-5 Fragmentation . 5-5 Product range and geographic distribution . 5-5 Other factors . ..