Delicensing, de-regulation and decontrol had increased the sphere of competition. The globalisation of the Indian economy made it easy for capital and technology from abroad to enter the country. Mergers and acquisitions remained on the increase.

As more capital and technology flows in, Indian companies will be faced with even more stiff competition.

The Budget and the Foreign Trade Policy for 2005-06 disappointed the garment exporters as both failed to provide the required fiscal and commercial benefits to the apparel industry which was facing intense international competition.

The major constraints which continued to obstruct the growth of the industry included high cost of power, restrictive labour regulations inhibiting the expansion of knitted and garment units, poor infrastructure and high turnaround time at all major ports.

Even as the discriminatory quota regime came to an end, the Indian textiles sector continued to face non-tariff barriers in major markets like the European Union (EU), United States (US), Turkey and South Africa.

Finance Minister P Chidambaram had disappointed the garment exporters by not addressing the problems of Duty Drawback/DEPB clarification under Income Tax Act, which were creating unnecessary hardships and harassement to garment exporters.

A notification by the Ministry of Finance on January 18, 2005 had drastically changed the method of determination of Duty Drawback Rates base din terms of metric tonne/kg instead of determining them on the basis of ad valorem rates as followed earlier.

The industry followed the issue vigorously and later the Government revised the duty drawback rates on ad valorem basis.

The exporters also urged the Government for labour reforms with flexible labour laws to prepare the Indian textile industry for competing in the new quota-free environment where only efficiency along with quality could ensure survival.

In so far as the current calendar year is concerned, the latest trade figures compiled and made public by the Directorate General of Commercial Intelligence and Statistics (DGCIS), Kolkata show that overall, the textile exports of the country including handicrafts, coir and coir manufactures and jute, showed a decline of 13.5 per cent for the first five months of calendar year 2005.

The said report added that readymade garments, which account for a substantial portion of overall exports also put up a tepid show, registered a 10.4 per cent decline at Rs 11,279.9 crore during January to May 2005 as compared to Rs 12,583.6 crore in the corresponding period last calendar year.

These figures were, however, disputed by the Ministry of Textiles, saying that according to industry sources the exports were on the higher trajectory to the EU and the US and there was no complaint from the exporters.

However, India's export to EU between January and September 2005 grew at 16 per cent (against China's 45 per cent), while its textile shipment to the Us rose to 28.6 per cent (China 82 per cent), according to industry sources.

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