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Planning for the End of Quotas in 2005: Strategies of India's Apparel Exporters
published in Issue 125, April 2023
India’s apparel exporters have been implementing various strategies to ensure that they remain competitive in the liberalised trading environment of 2005 and beyond. At the end of 2004, all quotas restricting exports of textiles and clothing from developing countries to the USA, the EU and Canada are due to be eliminated.
A number of firms are responding to the challenge by improving production efficiency through increased automation, re-engineering of production systems, merging separate production units, and backward and forward integration of operations. Some companies are expanding their production capacity in anticipation of enhanced demand in 2005 and beyond. Others have been moving up the value chain by diversifying their product ranges, exporting high value apparel, and improving their design capabilities. Some are planning to raise added value by setting up joint ventures with foreign firms, to take advantage of their technical, design and marketing expertise. Others are building relationships with foreign buyers to enhance their marketing expertise.
Help has also come from the Indian government. The latter has removed restrictions on investment by large companies and foreign investors. It has also taken steps to improve the infrastructure for exporters, and has provided incentives for technological upgradation. However, a major constraint is the rigidity of labour laws, which makes it hard for large firms to cut their workforces when necessary.