Globalization of the Indian apparel industry

Abstract

The Indian economy grew at the rate of 6.2% in 2004 and is expected to continue to do well. The health of the economy is fuelled by key sectors like Information Technology, Drugs & Pharmaceuticals and Automotive Components & Ancillaries. These sectors are characterized by huge world demand and importantly, India enjoying a key competitive advantage – low cost services, knowledge resource base, for example – in each of these sectors. The Textile & Clothing sector exhibits similarities with these above-mentioned sectors as far as demand and national competitive advantage are concerned. Yet, the growth in this sector has remained constrained. For instance, a comparison of the IT industry and the Apparel industry clearly indicates this difference. Figure 1: Exports of Indian Software and Apparel Industry An examination of their industry structure curiously brings to light striking similarities and differences. While both industries are characterized by a large number of small companies, the Indian software industry has witnessed the emergence of few large enterprises like Tata Consultancy Services, Infosys Technologies Ltd and Wipro Technologies Ltd that dominate the market. Such large enterprises are conspicuous by their absence in the Indian Apparel Industry, where India’s largest exporter holds less than 2% of India’s export market.