OBJECTIVE OF THE STUDY

To study the export potential of readymade garment to USA To do a through study of US market , its mains exporters and importers readymade garments

To do a critical analysis of Indias competitive advantage in the readymade garment sector. To study the major importers of readymade garments of USA an find Indias edge over them. To study the global scenario of readymade garments

RESEARCH METHODOLOGY

An intensive primary and secondary research was undertaken for finding the export potential of readymade garments to USA. Various individuals like commercial attach of embassy of USA, journalists and exporters specialised in the field of readymade garments were interviewed. The relevant data were collected from various sources such as: Embassy of USA US library

Apparel Export Promotion Council (AEPC)

Libraries such as PHD Chamber of Commerce, ITPO, FIEO, UN Library & FICCI Journals, magazines and newspapers

EXIM news and various issues and report published by garments related organisations.

Finally a through desk research was undertaken to complied and analysis the information to achieve the objective of the study.

LIMITATIONS

Some statistics and information of readymade garment was clubbed with apparels as a whole and somewhere even with accessories and so the trends ha to be analysed as a whole.

The statistical data in few cases is couple of years old i.e. 1997-98 so the conclusion analysed out of the same.

INTRODUCTION

US imports of the major textile and clothing categories reached an all-time high of 19 billion sq. m in 1996. Yarn imports rose the fastest (up by

13.3%). However, this category accounts for a small share of the US import total. Finished products both apparel and made up textiles hold a dominant share of US imports, reflecting strong US demand for cheap labor-intensive goods. Mexico was the USAs fastest growing supplier in 1996. Furthermore, to become the second largest supplier by value and the leading supplier by value. China remained the top source in terms of value but was displaced to second position in value terms. In the near future, Mexico is also likely to become the USAs largest supplier in value terms as it continues to take advantage of its preferential status under the North American Free Trade Agreement (NAFTA).Meanwhile, the growth of US textile and clothing imports from Caribbean Basin Initiative (CBI) countries slowed in 1996. Shipments from the Philippines, the only Asian country among the top ten suppliers, also leveled off after seeing substantial growth in 1995. The share of textile and clothing imports held by the Asian big three, meanwhile, continued to decline as their production migrated to lower cost locations.

India today is the 33rd largest export market for America while US is the largest export market for India. In 1998, India enjoyed a bilateral trade surplus of $ 4.6 billion, with exports to the US valued at $ 8.2 billion, while imports from the US to India, was $ 3.6 billion. Textiles apparel forms a major chunk of export earnings from USA. In 1998, India earned an amount of $ 101 billion by exporting textiles & apparel to USA. In return Indias import was only $ 18 million. Indias apparel exports consist of 66.3% of the total textile exports basket to USA and moreover apparels accounts for 71% of the total apparel exported to USA in 1998. To further enhance our exports and find the potential of readymade garment to USA, the following study was undertaken.

INDIAN TEXTILES A HISTORICAL PERSPECTIVE

Today is an integral part of textiles in India. Nearly four million handlooms are engaged in weaving fabrics of nearly 23 different varieties of. It was a piece of stuck to a silver vase and some spindles discovered in excavations which revealed that the spinning and weaving of was known to the Harrappans, nearly five million years ago. The foundation of the Indian textile trade with other countries began as early as the second century BC. Kalyan, a port, is place in that time from where textiles were exported. A variety of fabrics, including brocade, is mentioned in Chinese literature as Indian products exported to China. India is the home of. It was an export commodity even during very early times. Romans used the word carbasina for, which is derived from the Sanskrit word karpasa. Fine muslin called nebula venti, during Neros time was being woven in Sonargaon (now in Bangladesh) until the end of the last century. Weavers, who specialized in weaving fine quality fabrics were, supplied the yarn by specialized spinners who used to hands pin very fine count yarn.

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The weavers of central India wove very fine, and in Chanderi, Paithan, Hyderabad, Gadwal and Wanaparti, pallus and borders were woven in the paithani technique. Maheshwar on the banks of Narmada weaves fine and silk sarees with tiny checks which combine complementary colours together. Pune, Kolhapur and Shahpur weave the nine yard sarees in which the warp and weft are in soft contrasting shades giving the dhoopchaon, light shade, effect. The Illkal sarees of Karnataka use natural indigo for dyeing the warp yarn. Important saree making centres of Tamil Nadu are kanjeevaram, Salem, Pudukottai, Madurai and Shankeranaiyerkovil, Coimbatore has developed its own style producing fine s which imitate the Chanderi patterns, but are far less expensive. Recently sarees woven with traditional silk patterns known a Kalakshetra sarees have become popular. Kerala has special karalkkudi sarees of unbleached with rich broad gold borders and pallus.

INDIAN TEXTILE INDUSTRY - A SCENARIO

Radical economic changes introduced by India & the move towards integrating India with the rest of the world in the context of technology & trade have opened up new vistas & opportunities for Indian Textiles. Today, India is ranked among the 12 most competitive textile exporting nations in the world. The Indian textiles industry has a fairly complex structure. On one end of the spectrum is the hand spinning, handlooms, powerlooms, & on the other, a highly sophisticated capital intensive & high speed manufacturing activity. Within the 2 extreme faces, the industry produces a staggering range of fabrics, furnishing, dress material, floor coverings, made-ups & garments. Within textile, Readymade Garments constitute the largest product Group of exports for nearly 40% of Indias total exports (about 15% of countrys total exports.). This is followed by textile fabrics &

made-ups which account for nearly 30% other major productive gaps of exports carpets, man made textiles, silk & silk product & suite items.

Globalization, abolition of quotes & establishment of WTO are source of the challenges for developing countries as well as industrialized countries. Textile industry requires large labor force as a most the important global country. About 6% of world merchandise trade is constituted by textile & clothing. Particularly for textiles, the textile industry is regarded as an engine for economic growth. Indias textile industry is worth around Rs, 800b (US $ 22.05 b) offering for approx. 20% of Indias total industrial output. Textile Export of US$ 10.68b achieved in 1995-96 accounts for more than 1/3rd of Indias overall exports. Indias textile exports are increasing at the rate of 20% annually & a target of US$ 20b has been set by 2000 AD. Indias textile industry is poised to take up a leap in the new globalised scenario as it is implementing modernization programmers costing US$6b. Trade barriers are increasingly falling and scope for expansion is increasing, thus promising a better export scenario for India. The abundance of cheap labour, proximity of raw material i.e. Especially of the medium and long staple varieties and high capital utilization gives a cost advantage to Indian textile industry. 12-15% of export growth should be our target it is very achievable within next four or five years.

Exports of Textiles ($ Million) 2000-01 (Fabrics + made-ups + yarn & threads) Garments 3,418.50 Non 1,343.70 4,762.20 Rayon synthetics( Fabrics + yarn+ other items) Woolen ( Fabric + made-ups + yarn) Silk (Fabrics + made-ups + garments) Grand total 9,872.08 10,365.95 10,534.89 248.01 243.76 252.80 158.13 175.09 145.44 911.47 3,491.40 1,418.90 4,901.30 1,013.16 3,767.80 1,507.8 5,275.60 950.37 3,792.27 2001-02 4,023.64 2002-03 3,910.68

Source: Respective Export Promotion Councils

North America Apparel Imports

Latin AMERICA 48%

India 5%

South Asia 3%

China 14% Hong Kong /Korea Others /Taiwan 12% 18%

Total Market: 2,041 mkg imports growing at 4% per annum Figures are for 2001.

Export Destinations

Western Europe 43%

North America 40%

Africa /West Asia 7%

Others 10%

Western Europe Imports

India 6% Others 36% Africa /We st As ia 15%

South Asia 26%

Easte rn Europe 17%

INDIAN READYMADE GARMENTS - A SCENARIO

India is among the top 10 garments manufacturers in the world. Here both small medium scale readymade garment makers are laughing all the way to the bank thumbing their noses to their big brother counterparts. If you thought brands were the exclusive preserves of big players with deep pockets, think again, specially if it is the readymade garment sector. Not only are local brands owned by small companies making waves in the domestic market, but many are even managing to penetrate in the export markets to make their presence in the global apparel market along with their big fishes who are dictating the world with their existing brands. It is boom time for readymade garment makers in the country specially the ones in mens wear & childrens wear. Both national and local ready to wear garment makers are euphoric about the spurt in demand for their brands. Large scale migration to urban areas & increasing desire to dress well has contributed to the general growth of garment industry, leading to a large number of players, jumping into the lucrative readymade garment business. The entry of the global fashion designers has stimulated the market further. With the rising tailoring costs and relatively low prices of

standardized products, the Indian consumer is increasingly taking to ready-mades. In the past, the ready-mades market was confined mainly to baby dresses and small bushirts and shirts. Now it has extended to trousers, suits, and lady dresses and of course, fashion garments for men and women. Ready-mades of specific brands have become not only status symbol; they have also brought in a style in offices as much as in social circles. Franchised boutiques have been established as tools for brand and image building. The garment industry has come to be categorized into many segments: formal wear and casual wear; womens dresses, mens and kid wear; suits, trousers, jackets and blazers; shirts, sportswear, tee-shirts, denims, neckwear; undergarments ( mens and womens) knitwear, saris. The market segmentation by price differentials is notable: high end for the affluent, medium priced for the core and high middle classes, low end for the low and core middle class. The market size of casual wear itself is estimated at Rs. 12 bn. This market segment has developed equally fast with consumer acceptability of brands like Warehouse, Weekender, Benton. Allen Solly has emerged as one of the leading brands. It is owned by Madura Garments, a division of Coats Viyella. Madura Garments introduced two of the leading brands. Louis Philippe and Van Heusen.

Allen Solly with an Anglo- American heritage was picked up to enter the Indian market. Allen Solly introduced the concept of Friday Dressing. Friday Dressing is internationally established in US, a term for the dressing down work culture. The brand had registered more than 200% growth in 2001, almost 100% in 2002 and was targeted to have doubled in 2003 as well. National brands like Zodiac and Park Avenue have also benefited from the newly created ambience. The local brands cover all products including mens suits and not only shirts and trousers. Pantaloon Fashions, which markets Pantaloon trousers and John Miller shirts for men, has set up a chain superstores called Pantaloon Shoppes to cater to families with its household products and clothing for women and children.

Demand: Past & Future

7000

6000

5000

4000

3000

2000

1000

0 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999- 2000- 2001- 2002- 200791 92 93 94 95 96 97 98 99 00 01 02 03 08

MARKET STRUCTURE
Market Segmentation
Segment Gents Ladies Children Organized Informal Shirts by brands Arrow Parke Avenue Zodiac Others: Allen Solly Van Heusen Louis Phillipe Domestic Market Exports North East West South 65 35 32 18 30 20 20 35 15 30 Share (%) 30 60 10 5 95

Exports
The Indian readymade garments industry, which accounts for around 50% of textile exports, earns the major portion of the bread for the country. The readymade garment export sector is the main thrust area of textile industry contributing around 15% of the total exports from India. From a country traditionally known to be producing low cost products, it is now being increasingly looked upon as major supplier of high quality fashion garments. Indian garments have not reached all leading markets in Europe, North America, the Nordics, Australia, Japan to mention just a few of them. The Indian garment exports made a modest entry into international market by exporting garments worth US$ 0.08 million during 1978. Today with the sheer determination, innovation and with active co-operation from the Government the exports of ready-made garments have reached a figure of US$ 5.2 billion in 1998-99. The garment industry has been evolving over the years. In this process its profile has undergone discernible changes. Many leading Fashion Labels are now associated with Indian products. The Industry is shaping itself to meet the demands of product specialization in a highly segmented buyers market. Although our exports continue to be directed towards the restricted markets, there has been a

steady growth in exports to non-restricted countries and of non- restricted items. A very sizeable portion of garment export from India is accounted for by countries with which India has entered into bilateral agreements under the Multi Fibre Arrangement. The countries covered by the MFA in 1996 accounted for 71.75% of the exports, the rest being to non-quota countries. Sheer entrepreneurship and booming world demand are the factors, which have brought the Indian garment industry into the unique position it occupies today as the top foreign exchange earner for the country. The achievements of the Indian garment industry over the last two decades are many More notable ones are:Where many large scale units today compared to only small scale are operates into the earlier years. Manufacturing methods have definitely improved over the years and thus from the casuals, the industry is moving into higher fashion. Many famous international brand names are now associated with the Indian Apparel Industry. Exports of garments have surged in both quantity and value terms, in both rupee and hard currency. The average unit export prices have also gone up considerably indicating the improvements in the quality of the merchandise. The table below gives the details of averages unit export prices during the last few years.

Though garments are Indias main forte, there has been a distinct improvement in synthetic /MMF fabric based garment exports in recent years.

Average unit value realization Year Qty in Mn. Pcs Value in Mn. US$ Value realized per Pc. In US$ 1997 1998 1999 2000 2001 2002 2003 602.7 664.8 758.5 905.2 996.0 1060.2 1184.7 2494.50 2407.50 2883.10 3466.60 4421.90 4473.50 4292.10 4.14 3.61 3.80 3.83 4.44 4.22 4.04

Source: International Statistics Yearbook, 2003, pages various. In terms of export India is No.10 in the world having a share of 2% in the world after China (19%), Hong Kong (14%), Italy(6%), US (5%), Germany & Turkey (4%), France, Mexico & Korea (3% each). Exports of readymade garments have continued to record impressive growth in recent years, especially in light of the overall export scenario, having touched the figure of US $ 5.2 billion in the year 2000-01 which was up 7 per cent ( in dollar terms) over the previous year. The target for 2001- 2002 has been pegged at US $6 billion and the Council expects, that as in the past, good business would be generated at the Fair, which would facilitate achieving of the target for the year.

It may be noted that exports of readymade garments for the country during the period April- June 2003 went up by 5.3 per cent ( in dollar terms) and over 10 per cent ( in rupee terms) recording figures of US $ 1245.4 million (Rs. 53550.4 crores) as against exports worth US $ 1182.6 million (Rs. 48592.5 ) during the period April June, 2003.

WORLD TRADE SCENARIO

The world trade of textiles comprising of the yarn, fabric, and apparel & made-ups trade has shown a rise of approximately 42% from 1997 to 2003. Out of the total textile trade, the apparel trade alone has shown a tremendous growth rate of 45% from US$ 105 bn in 1997 to US$ 152 bn in 2003. Moreover, the share of apparel trade in total textiles trade comprises of 85% in 2003, showing a marginal increase of 2% as compared to its share in 1997. After having such a large share in the textiles trade India is still not among the top 10 list of countries in textiles trade. Though it is ranked 8th among the worlds major textiles producers of developing countries in 1997. Besides, her main competitors like China, Hong Kong, Thailand & Indonesia have emerged as Asian giants leaving behind Taiwan. Even more surprising thing to note is that apparel trade which comprises of 50% share of Indias total textile trade contributes a shall of Just 2% in the worlds total apparel trade. USA leads the worlds apparel imports with a share of 28% followed by Germany (14%) & Japan (10%) whereas the worlds apparel exports is topped by China with a share of 19% followed by Hong Kong & Italy having a share of 14% & 16% respectively in 2003.

World Production
Year All Garments 2001 2002 2003 13831 12773 13606 *Estimated Source: Industrial Commodity Statistics Yearbook UN. Indias estimated production is added to the total. 3458 3193 3402 Garments*

Germany 5% Japan 6% Hong Kong 11%

Korea Republic Spain 4% 5%

USA 48%

India 21%

Major Producing Countries (All Garments)

Apparel Importers

Belgium Netherlands 3% 4% UK 4%

Sw itzerland 3%

Canada 3% US 35%

France 8%

Hong Kong 11%

Japan 12%

Germany 17%

Apparel Exporters

Mexico 5% France 5%

Korea 5%

India 3%

China 30%

Turkey 6%

Germany 6%

US 8%

Italy 10%

Hong Kong 22%

India as a Textile Player.

Indias Share of World Trade 97 Yarn Fabrics Apparel Made-ups Overall Source: KSA Techno Pac 22% 3.2% 2% 9% 2.8%

PRODUCTION PROCESS

MANUFACTURING PROCESS
The designs of Readymade Garments are never the same. They keep on changing according to designers / consumer / wearers will. Since these garments vary vastly in designs and arts work, no specific process of manufacturing can be given for these garments. But general process of garment manufacture consists of the following basis steps: Design making Patterns Cuttings Fabrication Accessories Checking, Finishing and checking Packing Shipment

Design making:
The first step in the process is design, which is made on a paper as per idea. The design gives total understanding about the garment including design, art work, accessories, measurements, cloth / fabric particulars, stitching advice and all other particulars required for accurately fabrication of garment.

Patterns:
Patterns are made from the design as per measurements. Generally four to five years of sizes are prevalent as such patterns are made for all the required sizes and for all components of the garment to facilitate accuracy in garment to garment and accurate cutting of the fabric.

Cutting:
The first process of transforming fabric into garment a cutting according to the pattern. Considering number of pieces to be made, the fabric is folded many times and patterns put on it, the electrically operate hand cutting machine goes found the pattern slicing the fabric into presumed and decided patterns. All components of garments are cut like this. After this all the components of garment set of each garment is made consisting of all components and sent for fabrication.

Fabrication:
Considering the requirement of garment according to design, the cut fabric is stitched with plain sewers and whenever required hand sewn sometimes according to design needs of the garment, crochests or other type of work before the watching of some or all components of garment, in that case the garment parts are sent for these works and then stitched.

Accessories fitting:
After the garment is stitched, there are many types of accessories needs to fitted like, buttons, zips, belts heads or other ornamental work, so often, these are added in accessories fitment section. Now the garment is ready for finishing.

Checking:
After complete fabrication of garment it is sent to checking department where these are thoroughly checked for any defect. The select pieces are cross- checked for accuracy of design as per sample and sent for finishing. Garments that are defective beyond repair or not accurate are rejected.

Finishing:
During fabrication the garments gets dirty with mains, soils and other ugly looking patches these are removed in finishing department. All stains are thoroughly washed and ultimately the garment is sent for washing or drycleaning and pressing. After finishing again checking is done on selected pieces and sent for packing.

Packing:
Finished garments are carefully packed in polythene bags with cardboard packing and sent for checking at Textile Commissioners Office, where official sample checking is done to ensure that the quality being sent for export conforms to standards laid down by Textile Commissioners Office and as per order of the importer.

Shipment:
After official checking the garment boxes are based and sent for shipment or airlift as the case may be.

MAJOR TRADE POLICY CHANGES IN TEXTILE

In the GATT Uruguay Round negotiations, textiles and apparel were significant areas were at issue, with the developing exporting countries emending a reduction of restraints on their products exported to the developed countries markets. The World Trade Organisation (WTO) was created when the Uruguay Roun Agreement became effective on January 1, 1997. At the same time the Multifiber Arrangement that permitted quota restrains into the general trade rules (i.e., remove from the quota). Textile and apparel trade restraints are being reduced in three stage over a 10 years period as follows: Stage 1, 1995; (a) Quotas were removed for a least 16% of products based on U.S. import levels for 1990. (b) A growth on-growth provision required that remaining quotas be permitted to grow each year at no less than 16% higher than in 1994 (generally 6% I). (C) Tariffs were reduced. Stage 2, 1998 (a) Quotas will be removed from another 17% of goods based on 1997 improved levels, (b) remaining quotas will be permitted to grow each year at rates at least 25% higher than under Stage1,(c) Tariffs will be further reduced.

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Stage 3, 2003: (a) Quotas re to be removed from at least 18% of textile an apparel trade based on 1997 levels. (b) remaining quotas will be allow to grow each year at rates at least 27% higher than under stage 2, (C) Tariffs will continue to be reduced. Final stage, i200i6: Textiles and apparel trade will be fully integrated into WTO trade rules. After 2006, only tariffs will remain on textile and apparel products. If exporting countries are not members of the WTO, however, quotas may still be applied to those products.

GLOBAL COMPETITION AFTER MFA PHASE OUT

The adoption of right technology is a crucial elements in the process of speeding up the growth of the cottage and small scale sector. Experience shows that often technology is chosen without a proper cost benefit study, appropriate technical consultancy and in house research and development.

Growth issues:
Strategic development of an appropriate and responsive technology mix is necessary to make units achieve success despite frequent changes in variables, including technology.

Extension or transfer of technology must be undertaken with sufficient intensity.

Perpetual features in all units so that quality control, product diversification and changing customers choice can be tackled effectively.

Adoption of new technologies has often been impeded by poor credit support, infrastructural imbalances and inadequate motivational impetus.

Design or process development has always been a subject matter beyond the level of the small sector. As a result, the application of design, research for alternative raw materials, improved packaging; applied HRD and changed technology have not taken place with any degree of vigor.

Present barriers:
There is little motivation among small scale entrepreneurs to create in house research and development cells.

Unwillingness to change product lines or bring changes in product dimensions with the help of technical support and faster technological growth to meet changing markets demand.

Aspiring entrepreneurs often do not pay attention to improving levels of communication through faster technological growth.

Funding institutions often fail to provide credit support to technological growth.

echnological innovations are often offered without a proper costbenefit study with the result that they fail to earn the entrepreneurs confidence.

There is, at present, no effective mechanism for helping the small scale sector to forecast technological change which is vital for economizing the use of productive resources like the raw materials, man- power and core technological applications.

Future strategies:

Design Developmental centers must be established.

Cheap and affordable technical consultancy exclusively for the small sector should be made available to entrepreneurs.

Establishment of in house research and development wings should be made compulsory and they should be funded by the available credit package.

An effective technology data base with responsive servicing wings should be set up to cater to the various needs of small entrepreneurs.

Promotional processes with faster developmental strategies should be put in place.

Evaluation:

Finally there should be mechanisms for evaluating whether (a) the best technology is being adopted, and (b) the project is viable and has good potential.

PROBLEMS FACED BY INDIAN GARMENT EXPORTERS

While garments export may have a lot of potential, realising that potential will require immediate government action to sort out the major problems that exporters are facing today. Right from AEPC to Confederation of Indian Apparel Exporters (CIAE) and All India Garment Exporters and Manufacturers Association (AIGEMA) to garment exporters it is felt that unless the government urgently address the problems with labour an scheme lines for procedure for inputs, not much head way can be made in garment exports. Moreover, certain policy issues should also be sorted out and the present syndrome of frequent policy changes should stop. For e.g. , the textile ministry announced a long term 5 year garment quota policy after much delay and even after that went on making amendments as the trade was not much taken into confidence i. The issue of brining discipline in labour needs to be tackle at the earliest Workers should not be retrenched rather discipline is needed to increase their productivity and to meet the shipping schedule in time. Andhra Pradesh has already come out with a good labour policy and has also set up garment parks. Other dynamic states like Maharashtra and Gujarat should follow.

ii.

Another major problem the exporters are facing is too much paper work because of the bureaucratic approach in government policy. Neither the AEPC nor the textile ministry want to give way any controls. This is because the officials that they know much more about the trade then the traders. If the present approach continues, the country will not be able to face the competition when market will be opened up.

iii.

The need for the simplifying the procedure import of fabric and trimmings for further growth and value addition in export is also stressed upon.

iv.

The garment industry must be removed from the SSI list and there should be changes in labour laws to bring in more discipline.

v.

Another contentious issue is the new investment entitlement (NIE) quota. The council committee members and the ministry hold different views on this issue. Nothing has been done about the NIE quota which in turn is a source of malpractice and fraud. It takes away 15% quota from exporters who have been servicing their buyers for so many years which is not good policy for coming years. The industry has advised the government to abolish the NIE quota as most of the quota was going to people who has nothing or very little to do with garment manufacturing.

vi.

It is suggested that the validity of first-come-first-served (FCFS) quota should be reduced to 15 to 30 days form present 75 days to avoid quota cornering.

vii.

On the whole it is felt by the industry that it can realise its potential provided exporters are given a free hand by minimising bureaucratic controls.

EXPORT POTENTIAL OF READYMADE GARMENTS FROM INDIA TO USA

COUNTRY PROFILE OF USA

Introduction
Background: Buoyed by victories in World Wars I and II and the end of the Cold War in 1991, the US remains the world's most powerful nationstate. The economy is marked by steady growth, low unemployment, low inflation, and rapid advances in technology. The biggest cloud over this affluent society is the distribution of gainssince 1975 most of the increase in national income has gone to the 20% of people at the top of the income ladder.

Geography
Location: North America, bordering both the North Atlantic Ocean and the North Pacific Ocean, between Canada and Mexico Geographic coordinates: 38 00 N, 97 00 W Area: total: 9,629,091 sq km land: 9,158,960 sq km water: 470,131 sq km note: includes only the 50 states and District of Columbia

Areacomparative: about one-half the size of Russia; about threetenths the size of Africa; about one-half the size of South America (or slightly larger than Brazil); slightly larger than China; about two and onehalf times the size of Western Europe Land boundaries: total: 12,248 km border countries: Canada 8,893 km (including 2,477 km with Alaska), Cuba 29 km (US Naval Base at Guantanamo Bay), Mexico 3,326 km note: Guantanamo Naval Base is leased by the US and thus remains part of Cuba Coastline: 19,924 km Climate: mostly temperate, but tropical in Hawaii and Florida, arctic in Alaska, semiarid in the great plains west of the Mississippi River, and arid in the Great Basin of the southwest; low winter temperatures in the northwest are ameliorated occasionally in January and February by warm Chinook winds from the eastern slopes of the Rocky Mountains Terrain: vast central plain, mountains in west, hills and low mountains in east; rugged mountains and broad river valleys in Alaska; rugged, volcanic topography in Hawaii Natural resources: coal, copper, lead, molybdenum, phosphates, uranium, bauxite, gold, iron, mercury, nickel, potash, silver, tungsten, zinc, petroleum, natural gas, timber

Land use: arable land: 19% permanent crops: 0% permanent pastures: 25% forests and woodland: 30% other: 26% (1993 est.) Irrigated land: 207,000 sq km (1993 est.) Natural hazards: tsunamis, volcanoes, and earthquake activity around Pacific Basin; hurricanes along the Atlantic and Gulf of Mexico coasts; tornadoes in the midwest and southeast; mud slides in California; forest fires in the west; flooding; permafrost in northern Alaska, a major impediment to development Environmentcurrent issues: air pollution resulting in acid rain in both the US and Canada; the US is the largest single emitter of carbon dioxide from the burning of fossil fuels; water pollution from runoff of pesticides and fertilizers; very limited natural fresh water resources in much of the western part of the country require careful management; desertification

Geographynote: world's third-largest country (after Russia and Canada)

People
Population: 272,639,608 (July 1999 est.) Age structure: 0-14 years: 22% (male 30,097,125; female 28,699,568) 15-64 years: 66% (male 89,024,052; female 90,379,328) 65 years and over: 12% (male 14,189,132; female 20,250,403) (1999 est.) Population growth rate: 0.85% (1999 est.) Birth rate: 14.3 births/1,000 population (1999 est.) Death rate: 8.8 deaths/1,000 population (1999 est.) Net migration rate: 3 migrant(s)/1,000 population (1999 est.) Sex ratio: at birth: 1.05 male(s)/female under 15 years: 1.05 male(s)/female 15-64 years: 0.99 male(s)/female 65 years and over: 0.7 male(s)/female total population: 0.96 male(s)/female (2003 est.) Life expectancy at birth: 76.23 years (2003 est.)

Nationality: noun: American(s) adjective: American Ethnic groups: white 83.5%, black 12.4%, Asian 3.3%, Amerindian 0.8% (1992) Religions: Protestant 56%, Roman Catholic 28%, Jewish 2%, other 4%, none 10% (1989) Languages: English, Spanish (spoken by a sizable minority) Literacy: 97%

Government
Country name: conventional long form: United States of America conventional short form: United States abbreviation: US or USA Data code: US Government type: federal republic; strong democratic tradition Capital: Washington, DC Administrative divisions: 50 states and 1 district; Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District

of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming Independence: 4 July 1776 (from England) National holiday: Independence Day, 4 July (1776) Constitution: 17 September 1787, effective 4 March 1789 Legal system: based on English common law; judicial review of legislative acts; accepts compulsory ICJ jurisdiction, with reservations Suffrage: 18 years of age; universal Executive branch:

Economy
Economyoverview: The US has the most powerful, diverse, and technologically advanced economy in the world, with a per capita GDP of $31,500, the largest among major industrial nations. In this marketoriented economy, private individuals and business firms make most of the decisions, and government buys needed goods and services predominantly in the private marketplace. US business firms enjoy considerably greater flexibility than their counterparts in Western Europe and Japan in decisions to expand capital plant, lay off surplus workers, and develop new products. At the same time, they face higher barriers to entry in their rivals' home markets than the barriers to entry of foreign firms in US markets. US firms are at or near the forefront in technological advances, especially in computers and in medical, aerospace, and military equipment, although their advantage has narrowed since the end of World War II. The onrush of technology largely explains the gradual development of a "two-tier labor market" in which those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get pay raises, health insurance coverage, and other benefits. Since 1975, practically all the gains in household income have gone to the top 20% of households. The years 1994-98 witnessed solid increases in real output, low inflation rates, and a drop in unemployment to below 5%. Long-term problems include inadequate investment in economic infrastructure, rapidly rising medical costs of an

aging population, sizable trade deficits, and stagnation of family income in the lower economic groups. The outlook for 1999 is for GDP growth somewhat below 1998's, continued low inflation, and about the same level of unemployment. Two shadows for 1999 are the severe financial crises in East Asia and Russia and the exuberant level of stock prices in relation to corporate earnings. GDP: purchasing power parity$8.511 trillion (1998 est.) GDPreal growth rate: 3.9% (1998 est.) GDPper capita: purchasing power parity$31,500 (1998 est.) GDPcomposition by sector: agriculture: 2% industry: 23% services: 75% (1998 est.) Population below poverty line: 13% (1997 est.) Household income or consumption by percentage share: lowest 10%: 1.5% highest 10%: 28.5% (1994) Inflation rate (consumer prices): 1.6% (1998) Labor force: 137.7 million (includes unemployed) (1998) Unemployment rate: 4.5% (1998)

Budget: revenues: $1.722 trillion expenditures: $1.653 trillion, including capital expenditures of $NA (1998) Industries: leading industrial power in the world, highly diversified and technologically advanced; petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food processing, consumer goods, lumber, mining Industrial production growth rate: 3.6% (1998) Exports: $663 billion (f.o.b., 1998 est.) Exportscommodities: capital goods, automobiles, industrial supplies and raw materials, consumer goods, agricultural products Exportspartners: Canada 22%, Western Europe 21%, Japan 10%, Mexico 10% (1997) Imports: $912 billion (c.i.f., 1998 est.) Importscommodities: crude oil and refined petroleum products, machinery, automobiles, consumer goods, industrial raw materials, food and beverages Importspartners: Canada, 19%, Western Europe 18%, Japan 14%, Mexico 10%, China 7% (1997) Debtexternal: $862 billion (1995 est.)

Economic aiddonor: ODA, $7.4 billion (1995) Currency: 1 United States dollar (US$) = 100 cents Exchange rates: British pounds () per US$0.6057 (January 1999), 0.6037 (1998), 0.6106 (1997), 0.6403 (1996), 0.6335 (1995), 0.6529 (1994); Canadian dollars (Can$) per US$1.5192 (January 1999), 1.4835 (1998), 1.3846 (1997), 1.3635 (1996), 1.3724 (1995), 1.3656 (1994); French francs (F) per US$5.65 (January 1999), 5.8995 (1998), 5.8367 (1997), 5.1155 (1996), 4.9915 (1995), 5.5520 (1994); Italian lire (Lit) per US$1,668.7 (January 1999), 1,763.2 (1998), 1,703.1 (1997), 1,542.9 (1996), 1,628.9 (1995), 1,612.4 (1994); Japanese yen () per US$113.18 (January 1999), 130.91 (1998), 120.99 (1997), 108.78 (1996), 94.06 (1995), 102.21 (1994); German deutsche marks (DM) per US$1.69 (January 1999), 1.9692 (1998), 1.7341 (1997), 1.5048 (1996), 1.4331 (1995), 1.6228 (1994); Euro per US$0.8597 (January 1999) Fiscal year: 1 October30 September

Communications
Telephones: 182.558 million (1987 est.) Radio broadcast stations: AM 4,987, FM 4,932, shortwave 0 Radios: 540.5 million (1992 est.)

Television broadcast stations: more than 1,500 (including nearly 1,000 stations affiliated with the five major networksNBC, ABC, CBS, FOX, and PBS; in addition, there are about 9,000 cable TV systems) (1997) Televisions: 215 million (1993 est.)

Transportation
Railways: total: 240,000 km mainline routes (non-government owned) Highways: total: 6.42 million km paved: 3,903,360 km (including 88,400 km of expressways) unpaved: 2,516,640 km (1996 est.) Waterways: 41,009 km of navigable inland channels, exclusive of the Great Lakes Pipelines: petroleum products 276,000 km; natural gas 331,000 km (1991) Ports and harbors: Anchorage, Baltimore, Boston, Charleston, Chicago, Duluth, Hampton Roads, Honolulu, Houston, Jacksonville, Los Angeles, New Orleans, New York, Philadelphia, Port Canaveral, Portland (Oregon), Prudhoe Bay, San Francisco, Savannah, Seattle, Tampa, Toledo Merchant marine: total: 385 ships (1,000 GRT or over) totaling 11,123,848 GRT/15,255,996

DWT ships by type: barge carrier 10, bulk 61, cargo 28, chemical tanker 13, combination bulk 2, container 83, liquefied gas tanker 9, multifunctional large-load carrier 3, oil tanker 114, passenger 7, passenger-cargo 1, rollon/roll-off cargo 43, short-sea passenger 3, specialized tanker 1, vehicle carrier 7 (1998 est.) Airports: 14,459 (1998 est.) Airportswith paved runways: total: 5,167 Airportswith unpaved runways: total: 9,292 Heliports: 122 (1998 est.)

Business hours:
Although there are some showrooms that are open on Saturdays during market weeks, most New York wholesale operations operate between 9 am to 5 pm Monday through Friday. Appointments are usually necessary. International buyers must also realize that during the months of June, July and August, Friday afternoon appointments are rare. In addition, appointments prior to major national holidays are also rare.

American holidays:
New Year's Day Memorial Day Independence Day Labor Day Thanksgiving Day Christmas Day January 1 May 31 July 4 First Monday in September Fourth Thursday in November December 25

US INDUSTRY & MARKET FOR GARMENTS

Changing consumer markets:
Consumer spending will be a major factor in the industrys outlook, and consumer apparel spending is directly affected by the economy. The moderate growth of the economy in the 1990s has resulted in modes income growth, leading to unimpressive apparel sales. Population growth and composition of the population will shape the apparel market of the future. The U.S. population is expected to reach almost 300 million by the year 2010, with noticeable growth among certain age groups. The birth rate is expected to drop slightly; however, increasing number of children of baby boomers entered heir teens in the 1990s ending a 15- year decline among the teen population When the teen cohort reaches its pack of 30.8 million in 2010, this will exceed the baby boom teen explosion of the 1960s and 1970s in both size and duration. Teens are a powerful force in the apparel market and are likely to have a tremendous impact in spending. At the same time, the population is growing older. Baby boomers are beginning to enter their fifties and this group looks, acts and feels younger than previous generations did. Most Americans will have more years of adult life after

their children leave home than they spent parenting. At this age, consumers generally have their highest spending potential and their continued interest in remaining active and youthful is encouraging for the apparel industry. Similarly, the over 65 group accounts for a growing portion of the population. This cohort also is healthier than ever before, leading active, vital lives, retaining an interest in being well-dressed and having the financial means to do so. Although the trend-setting 25-to-44 years old cohort will decrease by 2010, the overall population predictions are favourable for the industry. Many U.S. consumer interest in fashion has been low in recent years. Consumers often report too much sameness in the market, a result of the mass production that characterises the U.S. industry. The trends toward more casual workplace apparel have also affected the market. Some of the limited enthusiasm toward apparel also may be attributed to competing interests such as home-related purchases, new computer technology, or travel. Although the industry has assumed more of a marketing orientation than in the past, most apparel firms have conducted little or no market research to determine what consumers actually want. However, the slowdown in spare spending has emphasised to apparel firms that the consumer must be a t the centre of all industry activities. At the same time consumers have become more value oriented and demanding wanting higher quality products at ever lower prices. Having

grown to expect mark-downs, many consumers wait for price reductions rather than buy items at full price. This purchasing pattern, which has its roots in an oversaturated market an intense competition, has led to apparel price deflation in recent years. This US consumer is perhaps unique in the world I having an extensive selection of apparel from which to choose and in being above to buy clothing a very affordable prices.

Retail Consolidation:
Market proximity gives U.S. manufacturers and advantages I todays changing business environment. As retailers strive toward having complete assortments available to consumers yet maintaining increasingly loan inventories, this represent an advantage to domestic suppliers able to participate in rapid replenishment strategies. Through use of computer technologies that capture daily point- of sale information, retailers are able to reduce market risk by adjusting store inventories parallel closely actual demand. Apparel firms with electronic data interchange (EDI) capabilities are able to replenish quickly the stores inventory. These increasingly integrated supply distribution networks serve consumers more effectively than distribution networks serve consumer more effectively than the past, permit retailers to reduce inventory investments, at give quick responding domestic manufacturers an edge over imports. Style-testing strategies that introduced new styles determine consumer response to an

apparel line before producing large quantities are sometimes used to reduce cost errors in inventories for both manufacturers and retailers. Many apparel firms view rapid replenishment strategies yet another way retailers are shifting more of the costs doing business back to be suppliers. That is, raid replenishment shifts inventory carrying costs back to the producer. Fact, apparel suppliers have felt increasingly squeezed by the retail customers to perform additional services and to be costs once considered part of the retailers operations. Reconsolidations have resulted in a new breed of giant merchant who are positioned to make increasing demands of their suppliers. For example, many major retailers are demanding apparel firms pre-ticket garments with the stores price tag merchants often expect garments to be floor-ready-that is hangers and presentable to be taken from shippers trough directly to the selling floor. Retailers continue, to demand chargebacks, the financial penalties imposed for personal infractions ranging from alleged errors in purchase orders failure to deliver merchandise floor-ready. All these demand add cost to the apparel firm to the advantage of the retailer. A number of major apparel firms have made acquisition penetrate different levels of the retail market. Brand apparel manufacturers have learned they cannot sell identical merchandise to different levels in the distributors channel for the same product line. Once a brand it has apparel in discount stores, it loses its appeal to department store consequently, large firms such as VF corporation official spectrum of

brands to appeal to the different levels of retail Rustler and Wrangler jeans are produced for the discount kit; Lee jeans are for department and speciality stores; and Girbaud line is for upscale department stores. Similarly under fashion companies penetrate different channels and even produce private label merchandise for retailers such. The Limited Victorias Secret.

Technological advances :
Computers are dramatically transforming the apparel industry ways not seen sirlce the invention of the sewing machine. Early every aspect of the industry now incorporates some term of computerisation. New technology enables the industry speed up the product development process, preassembly operations, assembly process and finishing operation while reducing labour time per garment. Computers also contribute in other areas; production planning, marketing sales, financial management, inspection of fabrics, costing, programmable sewing machines; unit production systems that move garments on a conveyer manner from one operation to another during the sewing process and state of art automated distribution facilities. Additionally, the computer permit communication and transfer of information among a companies facilities whether these are located in other parts of US or other countries.

Channels of Distribution in USA

Trends in Apparel Purchase (% of Value)

2002 Dept Stores Off- price Discounters Specialty stores National Chains 25.1 21.4 19.4 20.2 13.9

2003 24.2 22.6 19.4 19.1 14.7

Source: Exporters Handbook, APEDA Publication, p 40

The 1980s a saw rising trend exclusive designer merchandise, but the 1990s have the American consumers leaning towards value buying. This is one reason why outlet, off price, close- out stores and discounters are showing an increase (17.5% increase in sales in 1990-91) Mail order has also seen an increase with time constrained consumers shopping a their leisure. The American market is highly competitive with various low cost countries manufacturing garments under agreements ranging from subcontracting to assembly to cut fabric imported from the USA.

THE US TEXTILE AND APPAREL INDUSTRY - DOMESTIC CONCERNS

The US textile an apparel industry employed approximately 1.6 million workers in 1994 and is the largest US industrial employer, with about 9.0% of the manufacturing work force. Since the early 1960s the industry has faced growing foreign competition. The price advantage that low foreign labour costs create continues to be a problem for many US textile and apparel companies. To limit disruption of the US market by surges in textile imports, congress, under section 204 of the agricultural act of 1956, authorised the executive branch to negotiate textile restraint agreements. This law is the domestic authority to impose quotas for trading partners that are not World Trade Organisation (WTO) members.

The committee for the implementation of textile agreements

The committee for the implementation of textile agreements (CITA) was established by Executive Order to administer the import control program an monitor import of textile and apparel products to avoid damage of the U.S. market. When the growth in imports of a specific textile product or products causes serious damage or threat to the US market, CITA may

issue a call for consultations to countries contributing to that damage. The purpose of the consultation is to set an appropriate limit (also called a restrain or quota) on such imports. The decision to call is voted on by all give CITA agencies.

The Uruguay round agreement on textiles and clothing

The agreement on textile and clothing (ATC) entered into force on January 1,1995 as part of the World Trade Organisation (WTO) agreements. Under the ATC, the US can impose or re-impose quotas if textile imports are found to damage or threaten damage to the US market. The ATC set in place a ten-year transitional program to systematically integrate textiles and clothing into the GATT / WTO . Textile products, which are integrated, will no longer be subject to US quotas.

INDIA-US TEXTILE & APPAREL AGREEMENTS

The following provisions are drawn from the United States - India bilateral textile and apparel agreement of December 17 and 19, 1991; the Memorandum of Understanding of January 22, 1994; and the Memorandum of Understanding of December 31, 1994 have been agreed to be necessary for the proper implementation of restrictions notified to the Textile Monitoring Body under Article 2.1 of the Agreement on Textiles and Clothing.

CLASSIFICATION
2. (A) Tops, yarns, piece goods, made-up articles, garments, and other textile manufactured products which derive their chief characteristics from their textile components of , wool, man-made fibers, silk blends, nonvegetable fibers, or blends thereof, in which any or all of those fibers in combination represent the chief weight of the product, are subject to this Agreement. Components of an article which are not considered relevant to the classification under the General Rules of Interpretation or the Legal Notes to Section XI of the Harmonized System are likewise to be disregarded here.

(B) For the purposes of this Agreement, textile products covered by subparagraph (A) above shall be classified as: (I) Man-made fiber textiles, if the product is in chief weight of man-made fibers, unless:

(a) The product is knitted or crocheted apparel in which wool equals or exceeds 23 percent by weight of all fibers, in which case the product will be a wool textile; or

(b) The product is apparel, not knitted or crocheted, in which wool equals or exceeds 36 percent by weight of all fibers; in which case the product will be a wool textile; or

(c) The product is a woven fabric in which wool equals or exceeds 36 percent by weight of all fibers, in which case the product will be a wool textile.

(II) textiles, if not covered by (I) and if the product is in chief weight of , unless the product is a woven fabric in which wool equals or exceeds 36 percent by weight of all fibers, in which case the product will be a wool textile.

(III) Wool textiles if neither of the foregoing applies, and the product is in chief weight of wool. (IV) Silk blend or non- vegetable fiber textiles, if none of the foregoing applies and the product is in chief weight of silk or non- vegetable fiber, unless:

(a) with wool and/or man-made fibers in the aggregate equal or exceed 50 percent by weight of the component fibers thereof and the component equals or exceeds the weight of each of the total wool and/or man-made fiber components, in which case the product will be a textile. (b) If not covered by (IV) (a) and wool exceeds 17 percent by weight of all component fibers, in which case the product will be considered a wool textile.

(c) If not covered by (IV) (a) or (b) and man-made fibers in combination with and/or wool in the aggregate equal or exceed 50 percent by weight of the component fibers thereof and the man-made fiber component exceeds the weight of the total wool and/or total component, in which case the product will be considered a man-made fiber textile. (C) Notwithstanding the above, garments which contain 70 percent or more silk (unless they also contain over 17 percent by weight wool), and products other than garments which contain 85 percent or more by weight

silk, are not subject to this Agreement. Silk blend and non- vegetable fiber sweaters, as determined above, shall be divided into "silk blend" sweaters and "non- vegetable fiber" sweaters. For the purposes of this provision sweaters shall be classified as "silk blend" if the silk component exceeds by weight the non- vegetable fiber component (if any). Sweaters not classified as "silk blend" sweaters in accordance with the foregoing shall be classified as "non- vegetable fiber" sweaters. Garments containing 70 percent or more by weight silk and over 17 percent by weight wool shall be classified as wool textiles, under subparagraph 2 (B) (IV) (b). (D) Coverage under this paragraph is intended to be identical with the terms of the Arrangement and in conformance with the July 31, 1986, Protocol of Extension. In the event of a question regarding whether a product is covered by this Agreement by virtue of being in chief weight of , wool, man-made fiber, silk blend, or non- vegetable fiber, the chief value of the fibers may be considered.

COVERAGE OF AGREEMENT
3. (A) The system of categories and the rates of conversion into square meters equivalent listed in Annex A shall apply in implementing this Agreement, except, as provided for in subparagraph (C) below. (B) For the purposes of this Agreement, the categories listed below are merged and treated as single categories as indicated:

Designation in the Categories merged Agreement 334 and 634 335 and 635 336 and 636 338 and 339 340 and 640 342 and 642 347 and 348 351 and 651 647 and 648 334/634 335/635 336/636 338/339 340/640 342/642 347/348 351/651 647/648

AGREEMENT STRUCTURE
4. Textiles and textile products covered by this Agreement will be classified in three groups, as follows: Group Definition (I) specific limits listed in Annex B.

(II) products of , man-made fiber and apparel of other vegetable fiber and silk-blends. (III) products of wool (not subject to group limitation).

GROUP AND SPECIFIC LIMITS

5. (B) Properly marked commercial samples, which are valued at U.S. 250.00 dollars or less, and items for the personal use of the importer, which accompany the traveler, shall not be subject to the limits set forth in this Agreement.

HANDLOOM FABRICS AND INDIA ITEMS

6. (A) In accordance with article 12, paragraph 3 of the Arrangement, handloom fabrics of the cottage industry, and "India Items" will not be subject to the provisions of this Agreement, provided such products conform to the descriptions set out in Annex E and are certified by the competent Indian authorities in accordance with the provisions of the mutually agreed visa and certification systems. A list of "India Items" which are traditional folklore handicraft textile products is appended to this Agreement at Annex E. Additional items may subsequently be added to this list by mutual agreement. (B) In recognition of the difficulties that may arise in classifying certain "India Items," both parties agree to consult where differences of opinion may occur.

(C) The sub-limit for blouses made of yarn-dyed fabrics within category 341 shall be established at 60 percent of the base level for each

agreement period. Consultations may be held, at the request of the Government of India, should they determine that current shipments of blouses made of yarn-dyed fabrics are greater than 60 percent of their overall blouse exports to the United States.

VISA ARRANGEMENT
7. The mutually agreed visa and certification systems to facilitate the implementation of this Agreement are attached as Annex F.

U.S. ASSISTANCE IN IMPLEMENTATION OF THE LIMITATION PROVISIONS

8. For the purposes of implementing this Agreement, the date of export from the Republic of India will be used to determine the agreement year to which textiles and textile products subject to this Agreement will be charged. Until systems are developed to resolve data discrepancies expeditiously, such discrepancies will be resolved through consultations in accordance with the provisions of paragraph 21 below. In such consultations the date of consignment to the carrier will be taken into consideration.

9. The Government of India will maintain a control system to regulate its exports of textiles and textile products under the provisions of this Agreement. The Government of the United States of America will admit

imports of textiles and textile products subject to limits under the provisions of this Agreement, up to the applicable limits, including adjustments in accordance with paragraphs 12 through 16 below, provided they are authorized by the competent Indian authorities in accordance with the visa and certification systems in Annex F.

MUTUALLY SATISFACTORY ADMINISTRATIVE ARRANGEMENTS

10. Mutually satisfactory administrative arrangements or adjustments may be made to resolve minor problems arising in the implementation of this Agreement, including differences in points of procedure or operation. The Government of the United States and the Government of India agree to consult upon the request of the other, on any question arising in the implementation of this Agreement.

OVERSHIPMENT CHARGES
11. (A) Imports from India in excess of applicable limits, as adjusted pursuant to paragraphs 12 through 16 below, in any agreement period, may be denied entry into the United States. Any such shipments denied entry may be permitted entry into the United States in the succeeding agreement period. Any shipments in excess of applicable limits in any agreement period will, if allowed entry into the United States during that

agreement period, be charged to the applicable limit in the succeeding agreement period pending:

(I) exchange of relevant information between the Government of the United States of America and the Government of India with a view to facilitating the identification of discrepancies, if any, between the data maintained by the Government of the United States of America and the Government of India; and, (II) Consultations, as provided for in paragraph 21 below, with a view to resolution of the problem, including adjustment of charges to the relevant limits, if necessary.

(C) Any action taken pursuant to paragraphs 11(A) above, will not prejudice the rights of either side regarding consultations.

FLEXIBILITY ADJUSTMENTS
12. (A) The group limits and specific limits set out in Annexes B and C do not include any adjustments permitted under paragraphs 12, 13, 14, 15, and 16.

(B) During any agreement period the specific limits set out in Annex B applicable to such agreement period may be exceeded by not more than the percent shown in the "swing column" thereof, provided that the

amount of the increase in one specific limit is compensated for by an equivalent decrease, in terms of square meters equivalent, in another specific limit within the same group (swing). Swing shall be calculated on the base level of the receiving category. Adjustments made pursuant to this paragraph are in addition to those pursuant to paragraph 13 below. (C) Beginning in 1994, special swing of ten (10) percent into category 342/642 shall be available from any specific limit or from the Group II limit. (D) Special swing of 5 percent shall be available into the Group II limit (calculated on the base level of Group II) from category 369-S and 369-D only, provided that a corresponding reduction in square meters equivalent from category 369-S and/or 369-D is made. 13. In any agreement year, in addition to any adjustment pursuant to paragraphs 11 (overshipments) and 12 (swing) above, exports may exceed the group and specific limits set out in Annex B applicable for such agreement period as follows:

(A) By a maximum of eleven (11) percent of the receiving agreement period's applicable limits, by allocating to those limits an unused portion, (shortfall), of the corresponding applicable limits for the previous agreement period, which will be decreased by the same amount (carryover);

(B) by a maximum of six (6) percent of the receiving agreement period's applicable limits, by allocating to those limits a portion of the corresponding applicable limits for the succeeding agreement period, which will be deducted from the succeeding agreement period's applicable limits (carry forward); (C) the combination of carryover and carryforward may not exceed eleven (11) percent of the receiving agreement period's relevant applicable limits in any agreement period;

Special shift shall be available as follows, and shall be calculated on the base limit of the receiving category in square meters equivalent: (D) Special shift of ten (10) percent shall be available into category 313 from other non-apparel specific limits in Group I; (E) special shift of ten (10) percent shall be available between fabric specific limits except into category 219; (F) special shift of five (5) percent shall be available into category 341 from category 641;

(G) special shift of twenty (20) percent shall be available into category 641 from category 341; (H) special shift of fifteen (15) percent shall be available between categories 347/348 and 647/648; and

(I) special shift of ten (10) percent shall be available between categories 369-S and 369-D.

Special carryforward shall be available as follows: (J) Special carryforward of fifteen (15) percent shall be available into category 342/642 for three consecutive years beginning in 1995. In addition, ten (10) percent special carryforward for category 342/642 shall be available for three consecutive years beginning in 1998; and (K) special carryforward of ten (10) percent for category 218 shall be available for the 1994 agreement year only. (L) For purposes of this Agreement, applicable limits are base restraint levels established under the Agreement increased by applicable growth rates.

14. In any agreement period, in addition to any adjustment pursuant to paragraph 11 (overshipments) above, the group limit set out in Annex C applicable for such agreement period may be increased as follows: (A) by 15 percent swing provided that a corresponding reduction in square meters equivalent is made in one or more of the Group I specific limits. In addition, swing into Group II shall be available under the special provisions for category 369-S and 369-D (subparagraph 12 (D) above). The maximum swing and special swing into Group II may not exceed

twenty (20) percent (15 percent swing and 5 percent special swing) of the Group II base level. Swing shall be calculated on the base level of the receiving category; (B) by a maximum of eleven (11) percent of the receiving agreement period's applicable limits, by allocating to those limits an unused portion, (shortfall), of the corresponding applicable limits for the previous agreement period, which will be decreased by the same amount (carryover); (C) by a maximum of six (6) percent of the receiving agreement period's applicable limits, by allocating to those limits a portion of the corresponding applicable limits for the succeeding agreement period, which will be deducted from the succeeding agreement period's applicable limits (carryforward); (D) any additional carryover/carryforward for the group limit set out in Annex C is subject to consultation under paragraph 21 of this Agreement. (E) For purposes of this Agreement, applicable limits are base restraint levels established under the Agreement increased by applicable growth rates.

EXCHANGE OF DATA
17. (A) The Government of the United States shall promptly supply the Government of India with data on monthly imports of , wool, man-made,

silk-blend and vegetable fiber textiles and textile products into the United States from India for categories and groups for which limits are established under this Agreement.

(B) The Government of India shall promptly supply the Government of the United States with data on monthly exports of , wool, man-made, silkblend and vegetable fiber textiles and textile products from India to the United States for categories and groups. (C) Each government agrees to promptly supply any other available statistical data necessary to the implementation of this Agreement requested by the other government.

SPACING PROVISIONS
18. The Government of India will endeavor to ensure that exports of all textiles and textile products under restraint are spaced as evenly as possible during each restraint period, taking into account normal seasonal factors.

COOPERATION IN THE PREVENTION OF CIRCUMVENTION

24. The Government of the United States takes note of the fact that there has not been any documented case of circumvention involving India in recent years. Both Governments note that they are willing and prepared to cooperate with each other in addressing specific cases of circumvention. Since both sides are agreed that circumvention is not desirable, both the Governments of the United States and India agree to the following provisions: (A) The Government of the United States and the Government of India agree to take measures necessary to address, to investigate and, where appropriate, to take legal and/or administrative action to prevent circumvention of this Agreement, such as by transshipment, rerouting, false declaration concerning country of origin or falsification of official documents. (B) Both parties agree to cooperate fully, consistent with their domestic laws and procedures, in instances of circumvention or alleged circumvention of the Agreement to address problems arising from circumvention and to establish the relevant facts in the places of import, export and, where applicable, transshipment. Such cooperation, to the extent consistent with domestic laws and procedures, will include investigation of circumvention practices, exchange of documents, correspondence, reports and other relevant information to the extent available; and facilitation of joint plant visits and contacts by representatives of both parties upon request and on a case-by-case

basis. When either party wishes to visit certain plants, the party seeking the plant visit or visits shall give written notice, including the reasons for such visits, to the authorities of the other party (i.e., the U.S. Customs authorities in the U.S.A. or the Ministry of Textiles in India) two weeks in advance. The plants will not be notified in advance of the visit. When the visit occurs, permission from a responsible representative of the plant will be obtained before the visit is commenced. Upon completion of such visits during each trip, the visiting party shall furnish a report to the respective Government officials of the other party on the visits. (C) If either party believes that this Agreement is being circumvented, it may request consultations to address the matter or matters concerned with a view to seeking a mutually satisfactory solution. Each party agrees to hold such consultations promptly, beginning within 30 days of the receipt, by a party, of a written request accompanied by an explanation for the request from the other party and concluding within 90 days, unless extended by mutual agreement, and to cooperate fully in terms of the elements set out in paragraph B above. (D) Should the parties be unable in the course of the consultations to reach a satisfactory solution within the period specified in paragraph C, then the Governments of India and the United States agree that the United States may introduce a restraint, or where a restraint already exists, may deduct from the quantitative limits for that agreement period,

amounts not more than the amount of transshipped products of Indian origin, in cases: (I) where clear evidence regarding circumvention has been provided by the Government of the United States to the Government of India; or

(II) where the Government of the United States has provided factual information to the Government of India demonstrating a substantial likelihood that circumvention has occurred and has requested from the Government of India cooperation or information relevant to the possible circumvention that is of a type that is available to or could reasonably be obtained by the Government of India, and the Government of India has without adequate reason withheld such information or cooperation; or (III) where there is clear evidence showing that goods originating in another country have been shipped through India to the United States as though they were products of India. The United States and the Government of India agree that there may be shipments transiting through India with no change or alterations made to the goods contained in such shipments in India. Both the parties agree that it may not be generally practicable for India to exercise control over such shipments.

(E) Should the United States find it necessary to resort to the provisions of paragraph D (I) or (II) to deduct an amount or amounts from the quantitative limits of India where repeated instances of circumvention have been demonstrated within the current or immediately preceding agreement year, then the United States may deduct from the quantitative limit amounts up to three times the amounts transshipped, provided that such deductions are distributed equally in each of the three following years. Both parties agree that the above provision will be resorted to by the United States only if not less than three instances of circumvention by India have been demonstrated during the current of immediately preceding agreement year and no, or inadequate measures are being applied by India to address the problem of repeated circumvention.

(F) Parties agree that false declaration concerning fiber content, quantities, description or classifications of merchandise also frustrates the objective of this Agreement. Where there is clear evidence that any such false declaration has been made for purposes of circumvention, both parties agree to take appropriate measures, consistent with their domestic laws and procedures, against exporters or importers involved. Should either party believe that this Agreement is being circumvented by such false declaration and that no, or inadequate, administrative measures are being applied to address and/or to take action against such circumvention, that party should consult promptly with the party involved with a view to seeking a mutually satisfactory solution. Such consultations

should be held promptly, beginning within 30 days of the receipt of a written request by a party accompanied by an explanation for the request from the other party and concluding within 90 days, unless extended by mutual agreement. Should the parties be unable to reach a satisfactory solution, then the Government of India and the United States agree that in cases where clear evidence regarding such false declarations has been provided, then the United States may deduct from the quantitative limits established for the current agreement year an amount equivalent to the amount of product subject to the false declaration or classification. Any such action shall be notified to the TSB with full justification. This provision is not intended to prevent parties from making technical adjustments when inadvertent errors in declarations have been made. Both parties agree that any differences or discrepancies in the declaration given by an exporter which are based on a decision indicated by the textiles committee of India will not be regarded as a false declaration made for purposes of circumvention. (G) In the event of a need arising to take recourse to any adjustment as set out in paragraphs D, E, and F, the United States will explore with India all possible avenues for finding a mutually satisfactory solution before taking such action, together with its timing and scope. Action taken under paragraphs D, E, and F may be referred by either party to the TSB for recommendation.

27. The Annexes to this Agreement shall form an integral part of the Agreement.

US TRADE POLICY
US trade policy aim to raise standards of living in the US and around the world. Trade accounts for 30% of the US gross domestic products; for many nations, the figure is much higher. In a changing and more interdependent world, the key to prosperity an improved living standards is engagement and competition rather than withdrawal and protections. The Clinton Administration is committed to harnessing the forces of changes for the benefit of all Americans and the people of all nations through reducing trade barriers and promoting sustainable development. When the General Agreement on Tariffs and trade was established in 1948, it dealt only with tariffs,. Through eight rounds of trade negotiations, the US successfully reduced the average US tariff from more than 35% to 3.5%. but significant barriers remained in 1979 at the end of the Tokyo Round, especially with regard to agricultural exports, and areas such as services and intellectual property rights were not covered, consequently, in the Uruguay Round the US began to address non-terriers to global trade and has been successful in establishing new rules in these areas. Opening new market is critical to fostering global growth and creating jobs both in the United States and abroad. But sustainable development also is important to such growth, and it has both environmental and social dimensions. As President Clinton cautioned in January 1994: While we continue to tear down anti-competitive practices and other barriers to

i .x e e

trade we simply have to ensure that our economic policies also protect the environment and the well-begin of workers. More nations are recognising that economic growth must occur at a rate hat the environment can sustain. The US strongly favoured the establishment of the WTOs committee on trade and Environment to discuss, inter alia, the environmental aspects of sustainable development. Another dimension of sustainable development is that a rise in productivity should occur in tandem with the growth of middle classes, the rise in standards of living an the affirmation of internationally recognised core labour standards. These core labour standards include freedom of association, freedom to begin collectively freedom from forced or compulsory labour, an end to child labour exploitation, and nondiscrimination in employment.

CURRENT VISA REQUIREMENTS

TEXTILE VISA AND EXPORT LICENSE REQUIREMENTS:
A textile visa is an endorsement in the form of a stamp on an invoice or export control license, which is executed by a foreign government. It is used to control the Exportation of textiles and textile products to the United States and to prohibit the unauthorized entry of the merchandise into this country. A visa system is the most effective way to prevent illegal transshipments and quota fraud. It also ensures that both the foreign government and the United States count merchandise and charge quotas in the same way so that over shipments, incorrect quota charges and embargoes can be avoided. If a visa has an incorrect category, quantity or other incorrect or missing data, or a shipment arrives without a visa, the entry is rejected and the merchandise is not released until the importer reports the discrepancy to the foreign government and receives a new visa or visa waiver from the government. By issuing a new visa or visa waiver the foreign government is acknowledging that it has been advised of the category under which Customs is classifying the merchandise and charging the quota, if any, and/or the quantity that is being charged.

However, a visa does not guarantee entry of the merchandise into the U.S. If the quota closes between the time the visa is issued in the foreign country and the shipments arrival in the U.S. the shipment will not be released to the importer until the quota opens again. A visa may cover either quota or non-quota merchandise. Conversely, quota merchandise may or may not require a visa depending upon the country of origin. Each visa agreement is different. Most are comprehensive agreements. This means that all commercial shipments of textiles or textile products of vegetable fibers, wool, man-made fibers, and silk blends covered by a category number from a country with which the U.S. has such an agreement must be accompanied by a visa in order to enter the U.S. However, other agreements cover only a specific, limited number of categories, (e.g., only in categories 300-369). Also, some agreements have exemptions for commercial shipments valued at $250 or less (although this exemption is being phased out of all new or renegotiated agreements), or for traditional folklore cottage industry products. A further difference can be found in agreements which require the visa to show the exact category and quantity in the shipment while others do not. To administer these agreements, textile products are grouped under 3-digit category numbers. The category numbers were developed by the Committee for the Implementation of Textile Agreements (CITA). These category designations cover some several thousand 10-digit legal/statistical item numbers under which the merchandise is classified in

the Harmonized Tariff Schedule of the United States Annotated (HTSUSA). However, this effort to simplify the system has been hampered by the fact that these 167 categories have been further subdivided by country into approximately 400-450 subcategories, sub-sub-categories and merged categories in order to establish quotas on a more narrow range of merchandise. Each of these subparts has a separate quota. These narrow breakouts were made to protect specific segments of the market for U.S. domestic producers who are being affected by the large volume of foreign imports in these subcategories. When a shipment arrives at a port in the United States, the Customs import specialist reviews the visa documents for accuracy and completeness prior to release of the merchandise. The review ensures that the category number, quantity, signature, date, and visa number are correct and match the shipment involved. Only after this action is completed and the merchandise is charged to the quota (if required) is the shipment released to the importer.

PERSONAL USE SHIPMENTS:

Merchandise imported for the personnel use of the importer and not for resale, regardless of value, whether or not accompanying the traveler, except for tailor-made suits from Hong Kong, are exempt from quota, visa and exempt certification requirements.

Personal use shipments are defined in Chapter 98, Subchapters IV, V, VI, VII, and XVI of the HTSUSA, CFR 143.21 and Section 5.2 of the Customs Inspector's Handbook. To qualify as a personal shipment, the article must be for the personal or household use of the importer (including gifts) and not intended for resale or sale on commission.

COMMERCIAL SAMPLE SHIPMENTS:

Properly marked commercial sample shipments, valued at $800 or less, from certain countries do not require a visa or exempt certification and are not subject to quota. These shipments may also be entered under the informal entry procedures except d, e & h. The guidelines are quoted, in part, as follows: a) The invoice for these shipments must contain the statement "Marked Sample - Not for Resale". b) The inside of the article must be indelibly stamped with the word "Sample". This stamping must be in contrasting color to the article, near the country of origin label, in one (1) inch or greater letters and physically placed on the article itself. c) Articles which are transparent or incapable of being marked (such as briefs, bikinis, hosiery, blouses without collars, sheer or very thin scarves or garments, etc.) and for which the stamping of "Sample"

would render the article unsuitable for use as a trade sample, the following guidelines are provided: 1. Fabric labels, not smaller than 2 1/2" by 1/2" containing the words "SAMPLE-Not to be sold", must be conspicuously and permanently affixed to the article in close proximity to the country of origin label. f. The invoice must have been annotated with the notation required in paragraph 4a above and the article marked in accordance with the provisions of 4b and c above, prior to importation into the U.S. The importer will not be allowed to do this after importation. g. Although these "samples" may be entered under the informal entry procedures (and are exempt from quota, visa and exempt certification requirements) they do not qualify for entry under item 9811.00.60, HTSUSA. Accordingly, they are subject to duty under the appropriate HTSUSA item number.

MUTILATED SAMPLES - HTSUSA 9811.00.60:

Samples classified under HTSUSA 9811.00.60 are duty-free, do not require a visa or exempt certification and are exempt from quota requirements.

STANDARDIZED VISA NUMBER:

Visa numbers are required for all visas and export licenses. Certain countries use the standard nine digit number (e.g., 9IN123456) which is reported to the Quota Section. If a country is not on the standardized system, do not report the visa number to the Quota Section. Prior to the effective dates for countries using the standard number, report the standardized dummy number when reporting shipments (i.e. yr, country code, 3 zeros, and then the category number, 9IN000348). The standardized visa number is included in reports sent to each foreign government. A government can then verify the categories and quantities they authorized for export to the U.S. against the categories and quantities charged by U.S. Customs at the time of entry. This can reduce the reverification of discrepancies to the specific shipments at variance rather than having to review all entries covering a particular category as had been the case before the creation of the standardized visa number. It is expected that more countries will adopt the standardized visa number in the future.

VISA NUMBER REQUIRED ON CF 7501:

Under the authority of paragraph 34 D of Customs Directive No. 3550-03, dated September 28, 1984, the visa number (whether or not it is the standard nine digit number) must be reported in column 34 on the CF 7501, Entry Summary, for shipments which require a textile visa or export

license (including Hong Kong). The number must be shown for each line item covering each separate category number. Failure to report this number will result in rejection of the entry summary and if it is a "live entry" (entry/entry summary) the shipment will not be released until the entry summary is in proper form. Only one visa number may apply to a single line. If a line could have more than one visa number, then separate lines must be provided for each visa number. DATE OF EXPORT FROM COUNTRY OF ORIGIN REQUIRED ON CF 7501: If the country of exportation is different from the country of origin, the ate of export from the country of origin must be reported on the CF 7501 in column 34, for all textiles and textile products classified in Chapters 5063, plus Chapters 42 and 94 of the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), regardless of whether or not the merchandise requires a visa or is subject to quota restraints. As in the case of the visa number, failure to report this date will result in rejection of the entry summary and may delay release of the shipment.

US QUOTA FOR INDIA

DIRECTIVE DATE: 12-10-1999 CONTROL PD: 01-01-2000 - 12-31-2000 CATEGORY GROUP-II* 218 219 313 314 315 317 326 334/634 335/635 336/636 338/339 340/640 LIMIT 135,993,674 17,359,237 78,290,621 46,446,892 9,320,312 15,654,390 44,777,942 10,176,806 166,594 741,674 1,053,498 4,409,949 2,295,317 UOM M2 M2 M2 M2 M2 M2 M2 M2 DOZ DOZ DOZ DOZ DOZ RELEASED 14,321,629 1,264,596 3,408,042 1,763,062 320,171 456,084 1,364,960 446,752 6,970 46,605 263,428 792,732 570,077 %FILLED 10.5 7.3 4.4 3.8 3.4 2.9 3.0 4.4 4.2 6.3 25.0 18.0 24.8

CATEGORY 341 (341-Y)* 342/642 345 347/348 351/651 363 369-D* 369-S* 641 647/648

LIMIT UOM 4,733,345 2,840,005 1,501,893 232,071 746,646 317,471 54,248,537 1,553,985 847,628 1,748,587 1,015,388 DOZ DOZ DOZ DOZ DOZ DOZ NO KG KG DOZ DOZ

RELEASED 817,245 363,665 230,314 4,582 160,301 81,564 6,445,799 200,685 24,650 261,401 80,406

%FILLED 17.3 12.8 15.3 2.0 21.5 25.7 11.9 12.9 2.9 14.9 7.9

VISA FOOTNOTES:
Subject to visa and exempt certificate requirements for categories 200239, 300-369, 400-469, 600-670, AND 831-859. Standardized visa numbers required.

EMBASSY AUTHORIZED TO ISSUE REPLACEMENT VISAS.

Category, part category (when required), merged category (when applicable, either the correct category or the merged category), and quantity are required and must be reported on the visa. Properly marked commercial sample shipments valued at $800 or less require no visa or exempt certification and are not subject to quota.

THE WTO AND US ADVANTAGE

The World Trade Organisation (WTO) established in Geneva, Switzerland on January 1, 1995,is the legal and institutional foundation of the multilateral trading system and one of the principal results of the Uruguay Round trade negotiation. The WTO has three principal functions: To prove a forum of negotiation to liberalise the trading system and to open national markets progressively; To oversee and enforce rules for the conduct of trade relations among most of the countries of the world and To prove a mechanism for members to resolve trade disputes arising in areas covered by the WTO agreements. As of June 1996, 120 economies are members of the WTO and an additional 30 are in the process of accession. The TWO is the successor to the General Agreement on Tariffs an Trade (GATT) , the arrangement tat ha served as the basis for international trade since 1948. The agreement establishing the WTO agreements brings together under one institutional umbrella disciplines on government practices affecting trade in goods (The General Agreement On Tariffs And Trade 1994), trade in services (the General Agreement on Trade in Services), and the protection of intellectual property rights (the Agreements on Trade-Relate Aspects of Intellectual Property Rights). In addition to these main areas,

associated multilateral agreements provide specific discipline in the areas of agriculture, textiles and clothing, safeguards, antidumping, subsidies and countervailing measures, trade-related investments measures, balance of payments, imports licensing procedures, customs valuation, pre-shipment inspection, rules of origin, technical barriers to trade, sanitary and phytosanitary measures, and regional integration. The WTO agreement also includes a work program on trade and environment to ensure the responsiveness of the multilateral trading system to environmental trading system to environment objectives. The WTO agreements extend and clarify GATT dispute settlement procedures. All of the Uruguay Round agreements are now subject to a single dispute settlement system. The agreements also formulised a mechanism to provide periodic reviews of member countries trade an economic policies having a bearing on the international trading environment. In addition, members may choose to accede to several further agreements referred to as plurilateral covering the areas of government procurement, civil aviation, and trade in dairy and bovine meat products. The WTO system is available only to countries that agree to accept the obligations of the Uruguay Round multilateral agreements and ministerial decisions and declarations and hat submit schedules of markets access commitments for industrial goods, agricultural goods, and services. Under

the WTO, members must apply certain basic principles to trade with other members. These principles include: Most favoured nation treatment Members must provide to all WTO members the most favourable treatment with respect to tariffs and related matters granted to any trading partner. Protection through tariffs The use of quantitative restrictions (such as quotas) is generally no longer allowed. Dispute settlement Members may challenge trade actions of other members that may be inconsistent with the WTO agreements. In joining the WTO, a member agrees to the definitive application of the obligations of the Uruguay Round multilateral trade agreements. The WTO agreement allows some exceptions o these rules, for instance for preferential treatment of customs unions and free-trade areas. It also provides transition periods to allow developing countries in transition to market economies to adjust to the more difficult provisions. The agreements does not permit non-application for specific sectors. Members can election to apply this entire WTO to a new member at the time of accession.

How the WTO Is Organised

The WTO is located in Geneva. It has a staff of about 450 an is headed by director- General Renato Ruggiero and four deputies. The highest WTO authority is the Ministerial Conference, which meets at least every tow years. The WTOs General Council delegates responsibility to three other council- the Councils for Trade in Goods, Trade in Services, and Trade-Relate Aspects of Intellectual Property Rights. Three committees have been established by the Ministerial Conference and report to the General Council : the Committees on Trade and Development: Balance of Payments: and Budget : Finance, and Administration. The General Council also formally established, in early 1995, a Committee on Trade Environment. Each of the plurilateral agreements of the WTO ( civil aircraft, government procurement, airy products, and bovine meat) has its own management body which reports to the General Council.

Ongoing Activities
The establishment of the WTO a the beginning of 1995 was the first major task laid out in the Uruguay Round Final Act. Many other tasks remain, although it is still too early to assess overall implementation. Most GATT members have completed their accession procedures for the WTO: they are proceeding to implement tariff concessions and are carrying out other

commitments as agreed at the April 1994 ministerial meeting in Marrakesh, Morocco, which concluded the Uruguay Round. At the same time, WTO members are working to ensure progress in certain key areas. The multilateral Agreement on Trade-Related Aspects of Intellectual Property Rights and the plurilatral Agreement on Government Procurement, for instance, took effect at the beginning of 1996. Dispute settlement appear to be working smoothly. Although negotiations on basic telecommunications services do not result in an agreement by April 1996, they have been extended until February 1997. In additions, work continues on` the applications of 30 nonmembers including China, Taiwan and Russia- to accede to the WTO. Ministry may also consider the incorporation of several emerging issues into the WO agenda, such as the relationship between trade and labour standards, trade and competition policy, and trade and investment, the United States- in conjunction with the EU, Japan and Canada- has also proposed discussion of an interim arrangement (outside of the existing plurilateral agreements on government procurement) ) on transparency, openness and due process in government procurement .

WTO benefits to the US Economy

By reducing barriers to global commerce, the agreement establishing the WTO trade opportunities and increase US economic competitiveness and thus can help generate higher real wages and living standards for Americans. Exports, Export of goods and services have been steadily rising as a share of the US economys total output. An increase in US export opportunities helps stimulate greater capital investment, technological innovation, higher productivity, job growth and rising living standards. Export growth is important not only for US export producers but also for US industries which provide the intermediate and capital goods use by producers of exports as well as the US firms and workers supporting. Export growth is important not only for US export producers but also for US industries which provide the intermediate and capital goods used by producers of exports as well as the US firms and workers supporting the export process. A large and growing share of the US work force depends on US exports for employment. By the end of 1995, the job of 11 million US workers were supported by US exports an increase of 53% from 7.2 million in 1990, jobs in export related industries pay wage that average 15% higher than the average non-trade wage. Imports. The substantial reductions in the trade barriers negotiated in the Uruguay Round will result in lower prices for imported intermediate and final products and a greater variety of gods for American consumers.

Competition in the US market from increased imports stimulates US industries to improve their productivity, quality and technology; this can benefits both the producing firms and US consumers who buy their goods at reduced prices. At the same tie; WTO rules permit the US to remedy situations where unfairly traded imports have harmed competing US industries.

FACTORS RESPONSIBLE FOR THE EXPORTS GROWTH OF THIS SECTOR The Indian garment export sector has maintained a pattern of study growth over the years. A number of reasons have been mentioned for the escalating exports from this industry. i) Rising Labour - Cost in Developed markets :- Studies conducted by various research agencies in the past had found that man of the developed markets found it difficult to maintain their garment manufacturing operations due top rising labour costs. In facr many of these nations found it more economical and cost-effective to import their requirements of clothing from the developing countries where there was relative abundance of labour whose were also far lower. ii) Shift to Technology :The 1970s was also the period when

many developed nations shifted their focus to the creation and strengthening of some of the hi-tech industries like computer hardware & software , electronics ship building etc. Certain industries which were basically ;labour- oriented and pollution pron liked textiles clothing and leather industry were progressively deemphazied since theses did not basically fit

into the economic profile of many of the developed countries. Developing nations like India stepped in to fill the vacuum so created iii) Special appeal of Indian Fabrics :- Indian made fabrics created considerable impact on foreign buyers particularly the Western designers by virtue of their rich colours and design variations. In fact it was the Indian handloom fabrics which triggered the garments export boom in the early 1970's Two well known handloom fabrics of that time - " Madras checks " and Cannanore crepes " captured the imagination of the western designers and clothing made out of these time became extremely popular in Europe . though the phenomena was short lived it did reveal to potential exporters in India the opportunities abroad in the garment export trade and they did capitalize on this discovery during the subsequent years. iv) Swing towards natural fibres :- There had been a

gradual swing towards natural fibers & blends thereof as opposed to synthetics ( nylons etc.) initially due to the oil crisis and the rising cost of petro- chemical based items in the mid- 1970's and later on owing to factors like comfort in wearing apparel and health / environmental reasons. Cotton

apparel derived a define advantage from such swings in consumer preferences and Indian exporters also availed of opportunities thrown open. v) Ability to cater to small orders :- Import orders for garments emanate not only from the large importers and department stored abroad but also from s ethnic shops and small boutiques. Despite the fact that the individual orders emanating from such be small collectively they account for a bulk of the import orders for clothing. The type of orders from the larger stores in the fact they hey indent for a variety of designs and colour combinations. The Indian garment sector being small in size and decentralized in extremely flexible and in an ideal. Most of our competitors who have set up composite clothing units with assembly line operations find such small orders for varied designs and colour combination unviable. vi) Improved publicity and Promotional Campaigns :-

Having realized the potential of garment exports Government of India has also stepped up its publicity and promotional efforts to popularize India made garment among importers and prospective overseas markets. India has been fairly regular participant in several of the specialized clothing

exhibitions abroad. Organizations like the Apparel Export Promotion Council which has been set up by the Government to direct exclusive attention to the cause of export promotion of garments and the Clothing Manufacturers Association have been holding periodic buyer- seller meets in the important production centres and conclusive business deals have been arrived at in such venues. vii) International Travel and Personal Contacts :the

relative ease and volume of international travel in the recent years have also bridged the North-South divide and brought prospective seller and buyers closer together. There is also a greater realization of Indian capabilities in certain fabric design and variety of clothing especially summer wear. It has also been pointed out that the garment export sector rose to prominence entirely due to private initiative i.e. the direct inter-face between the Indian entrepreneur and the overseas importer. Government assistance and incentive came later once the industry established itself to some extent. viii) Wage-cost push in competing countries:- In the early nineties and immediately thereafter the rising labour costs in some of the competing countries like Hong Kong, Taiwan and South Korea made exports of certain labour intensive goods

like clothing unattractive for its exports. Some of these countries had also shifted emphasis to technology intensive industries like electronics and automobiles and the accompanying spurt in their economy and exports had resulted in a sharp appreciation of their currencies. Indian exports of clothing therefore become relatively more competitive. It is evident from the preceding facts that there is no single factor but a cumulative set of factors which have led to led to the boom trade in garment. However when we consider the fact that India as yet accounts for only around 3% of the international trade in garments it points to some inherent weakness in the industry as also the scope for expending our share in international trade of such item. The reasons for India's small share in the international trade in kgarments is not far to seek. Would trade in clothing is largely in terms of polyester / cotton blends where as India's exports is virtually confined to cotton based clothing. Secondly the export sector of the garment industry in India is dominated by merchant-exporters and small size units who have shown not much of an inclination to diversify their product range. Thirdly the cut throat competition from the powerloom sector and the fear of imposition of additional quotas seem to have acted as deterrent

for many of the large scale units particularity in the Indian mill sector from entering the export garment trade.

SUGGESTION FOR IMPROVEMENT

1)

Human Resource Development : There is a need for stepping up training institutions to impart training to the personnel from the shop floor level in the operational form the latest state of the art high speed production machines.

There are already some such institutions both in private and government sector. There is a huge gap in demand for well trained skilled operators for high speed production oriented machines. It is therefore suggested that the present polytechnics which are spread throughout the country, may be upgraded to provide training in Garment Design and Garment Manufacture with the use of state of the art machines and equipments.
2)

Technology : The technology presently followed by a large number of small units, which cater to both domestic and export market is very traditional and does not meet the needs of the industry. The average speed of the indigenous sewing machine is about 800-1000 stitches per minute and are not heavy duty. The average speed of an imported heavy duty production oriented sewing machine ranges between 2800-4000 stitches per

minute. These imported machines also have provision for a number of attachments which speeds up the production. A worker in Indias most efficient factory stitches 14 to 16 shirts per day, compared to 25 shirts in china per day per worker. A large number of subcontractors have installed 30 to 50 indigenous machines which cannot cater to the needs of the export market. A minimum of 150 to 200 machines would be ideal to get orders on regular basis. Most of the subcontractors nearly 50% provide stitch to finish operations. The rest provide only finishing operations / services. It is better to upgrade the skill and technology of the 50% of the subcontractors who provide cut to finish stage and bring them on par with the International standards to meet International Export obligations.
3)

Fabrics : At present a large portion of our exports consists of garments made from natural cotton about which 80% is of cotton and 20% is of manmade fibres. But the International market require garments made of 20% cotton and 80% manmade fabrics. The country does not have textile processing units to manufacture fine fabrics required for exports mills need to be modernized to produce such fabrics of international quality and needed by the exporters i.e.

upgradation liberal import of high quality fabrics would be permitted.

4)

Finance : In 1994, there were about 1117 exporting units registered with AEPC of which only 255 were manufacturer exporters. The situations has not changed much since the merchant export gets the L/C in his name, and subsequently

gets the order executed from the sub-contractors, the benefits of L/C and confessional finance goes largely to the merchant exporter, as the banker finance the unit who possess the L/C. There is therefore a need to open inland letter of credit in favour of the fabricators/ subcontractors of the garments on the strength of the original L/C, thus enabling the banker to provide cheaper credit to small fabricators / subcontractors who actually execute the order.
5)

Integration With It Industry : The apparel and textile industry occupies a pre-eminent position in Indias economy

and accounts for about 20% of industrial production and one thried of the total foreign exchange earnings, India exports apparel to more than 100 countries. Traditionally, Indias competitive market, low coasts cannot be the only advantage. Today, the customers demand for better quality, greater variety, better value for money and a shorter response time.

Retailers require their suppliers to produce their merchandise quickly to market trends. Information Technology is one way in which more flexible and quicker response to market demand can be achieve. Since the last decade, the apparel industry has been trying to covert itself from a mechanical oriented industry into a computer driven one. A few large exporters have made an attempt to use extensively the IT Industry to create market oriented designs and to make patterns for the same and get the quick approval from the importers at the shortest possible time. This has enabled them to produce and ship the garments within the stipulated time, taking care of the quality aspects. There is a need for a grater interaction with IT industry. Since the investment involved is heavy and technology is sophisticated, is suggested that a Common Facility approach may be adopted with the Government and the industry contributing towards the cost of establishment. Conclusion The readymade garment industry is a Rising Sun Industry providing employment to a large number of persons especially women; It is a industry which in turn is the non population

oriented & a leading foreign exchange earner for the country. The demand for garments will never come down as long as there is an increase in population, and purchasing power of the people is on the increase. It is therefore, necessary to upgrade the manufacturing technology by introducing more and more State of the-art machinery and equipments. It is also of immediate need to understand and appreciate the personnel need of the industry at various level of production and management, so that these units could be professionally managed. For this purpose, a chain of training institutions to train the persons from shop floor level tot he executive level should be established. The possibility of upgrading the existing facilities in the polytechnic Institutions should be explored to provide the necessary training to the personnel from the Garment Industry. The government should organize in co-operation with the industry, trade fairs and fashion shows, buyer/seller meet for machinery and technology, so that a large number of garment manufacturers can take advantage of the same to meet the needs of the foreign buyers.

SEVEN STEPS FOR SUCCESSFUL GARMENT EXPORT MARKETING

7 Continuous market exposures and synergistic marketing 6 Market own designs and Brands / Strategic Alliances

5 Merchandising Buyers Brands / Store brads

4 Project Own Manufacturing Facilities and design / delivery capabilities 3 Focus on strengths of Garment Export Industry 2 Emphasise fabric Production and sourcing 1 Market Self

THREE Qs IN GARMENT INDUSTRY In garment parlance, the three Qs have a special significance. They stand for 1)Quota 2)Quality 3)Quantity Apart from quantity and quality the quota factor is also very important of Indias exports of garments is to countries with which India has entered into bilateral agreements under an arrangement known as Multi Fibre Arrangement or MFA. The current pattern is that 75-80% of our garment export are to the countries under MFA while the remainder that is 20-25% are made to countries out side the bilateral agreements. Our Bulk of MFA exports are made to the EU and the USA while the non- MFA importing countries include Soviet Union. Switzerland. Australia, Newzealand etc. Even in the case EU and USA free export are allowed for categories/ items not mentioned in the agreement. With a view to distribute the quantities allotted under the bilateral agreement, the government of India has laid down a quota policy. The enables the exporters to know exactly how much

quota items they can export to a particular quota country. Since the MFA and quota system are essential elements of garment exports. It is necessary for an exporter to understand these two terms properly. The quantities allotted category wise, are not negotiated and finalized with the importing countries under the bilateral agreements. In order to allotted and distribute these quantities amongst different exporters, the government lays down a quota policy. This policy. This policy is enumerated and interpreted by the Textile Commissioners office and administered by the Apparel Export Promotion Council (AEPC). From time to time, the quota policy has been modified keeping the following objectives in the view. Maximisation of net foreign exchange earnings. A higher unit value realization. Fuller quota realization Optimum development of trade and industry.

IMPACT OF ATC AND DISMANTING OF QUOTAS

Creates Standards, But No Guarantees: The ATC offers a combination of quota increase and changes in the rules that are intended to slowly liberalize the current system of quotas. In brief, the ATC will allow: 1. Pre-existing MFA quotas will be removed for some product during the ten year transition period. This is known as "integration". 2. The growth rates for items still under MFA quotas will be increased by a special acceleration clause, this is known as "growth on growth". 3. A special system will be set up for the application of transitional safeguard measures, i.e., quotas. While new quotas will remain discriminatory and will have the ability to disrupt sourcing programs, each separate action can only remain in place for three years.

4. A mandatory review will be made be the Textiles Monitoring Body (TMB) to ensure that all actions are consistent with the new international rules applicable to textile and apparel trade. U.S. Retailer and Importer Concerns Even with the cautious negotiations and the stated objectives of the ATC, there remain some major concerns for US retailers and importers. Foremost among these concerns are: Implementation of the product integration schedule; Growth-on-growth provision; Transitional safeguard mechnism; Harmonization of the Rules of Origin; and Use of administrative barriers to control trade. Product Integration Has Not Included Any Quota Products:

The integration plans put forward by the United States leave much to be desired. Within the context of the ATC, integration is supposed to move products to normal GATT rules through a, three stage process. However, the US has already set in stone a system that leaves 89 percentage of the integration of clothing postponed to the end of the ten year transition. Under the first state of integration, which went into effect on January 1, 1999, not one product subject to quota under the MFA was integrated into normal GATT rules. The US was able to avoid integrating any quota products because the ATC expanded the scope of products subject to its terms. Thus, the first stage of integration, which ostensibly accounted for 16 percent of the trade covered by the ATC, included only products that has been outside the quota program prior to 1995. So far as we known, these products were never likely to have been considered sensitive or vulnerable to the imposition of quotas. The US

scheduled integration on Stages Two, which begins on January 1, 2000, which will cover another 17 percent of the trade within the scope of the ATC. However, only 6.8 percent of the products integrated in 1998 were subject to quotes under the MFA and / or the ATC. This means that during the first seven years of this ten year transition, fully 93 percent of the trade in textile and apparel will remain restricted. Despite the language of the ATC, the business reality is that 89 percent of the quotes on clothing will remain in place until January 1, 2002. Eighty-nine percent actually underestimates the amount of trade still under quota in December 31, 2002. Clearly, this is not a gradual or progressive schedule. It is a schedule that appears intended to avoid the liberalization envisioned by the drafters of the ATC. There Are Minister Growth Rate Increases:

Although the integration process was intended to be the main mechanism for quota liberalization, the increase in growth rates are the only ATC provision so far that has expanded trade. This makes the growthon-growth provisions all the more important to US importers. But unfortunately, this provision is a poor substitute for true integration or quota-free status. Most US quotas that were notified to the WTO under Articles 2 will remain in effect for the full ten-year transition. And while some suppliers may appear to benefit from increased growth, this provision is mainly illusory. The ATC growth rates are based on whatever growth was allowed under the 1999 textile agreement for each country. In advance of the ATC going into effect, the US government anticipated the implementation of the growth-on-growth rates, and dedicated significant efforts to negotiate lower base growth rates. Since major suppliers such a Hong Kong and Korea now have

average growth rates that are less than one percent, the actual increase in their growth rate will have a minimal impact on quota. The biggest gain will be for those countries which will have six percent growth rate for many categories. Countries that are "small suppliers" will get special treatment. Their growth rates will automatically jump to Stage Two, with a twenty-five percent increase in the rate. That said, the effect of the growth-on-growth provisions is not large, as shown in table . 1999 to 2000 1% 6% 7% Average for all Apparels 3.5% 3.65% 4.56% 5.79% 1.16% 6.96% 8.12% 2000 to 2001 1.45% 8.70% 10.15% 2001 to 2002 1.84% 11.05% 12.89%

The chart shows that there is very little benefit to the "growth-to-growth" provisions until the year 2000. As you can see, the average growth rate for all imports remains well below the six percent growth factor that was envisioned as the minimum in the original MFA. U.S. Safeguard Actions: Abuse of the Transitional Safeguard Mechanism Although companies may have assumed that during the "gradual" transition to a new type of agreement regulating trade in textile and apparel, there would be a decrease in the number of quotas actually in place, the opposite has been true. This is another major disruption to business since it continues the uncertainty of possible bilateral action by the governments of importing countries. Obviously, this is a concern to US retailers and importers. The implementation of new quotas by US officials does not allow for input from importers in advance of the decision to impose quotas. This means that sourcing

project in new supplier countries, or even the development of new products for exports, can be stopped by the sudden imposition of a new quota.

Under the terms of the ATC, safeguard actions were supposed to be initiated "as sparingly as possible". Instead, in the United States at least, calls for consultations to establish quotas under the ATC have continued at levels almost comparable with those under the MFA. Since the ATC went into effect the US has sought to establish thrity-three new quotas, of which 26 were aimed at the trade of WTO members. While more than half of these quotas ultimately were dropped by the US., the process has been extremely disruptive and clearly contrary to spirit of the ATC. An examination of the safeguard provisions and how to ensure more appropriate, sparing use in the future is essential.

Export Performance of Indian Garments AEPCAdministering the export entitlement policy

The Government of India has entrusted the responsibility of administering its Export Entitlement Policy with AEPC ever since its inception. And the Council has been administering this policy, both in letter and spirit. AEPC has also been authorized to allot Quota under different systems to exporters and issue both Certificates of Origin and Export Certificate Visa. Which are crucial for international trade in textiles. The Council also monitors the export of all garments (excluding leather, jute and hemp), by effectively maintaining accurate statistics. It has computerized all its crucial department to make a quick analysis of exports. This in turn enables the Government to formulate strategies for the complete utilization of quota and earn maximum foreign exchange. The Council plays a major role in advising the Government of the formulation of policies with regard to the garment export industry. The Governments support has been sought through various forums as well as through direct representations. There is no doubt that Government has played and instrumental role in the phenomenal success of readymade garments exports but certain major issues represented to the government by us are still under consideration and these issues would ultimately be the deciding factors for our success in the face of tough competition in the near future.

15 X 15 MATRIX STRATEGY
Objective of strategy The objective of the 15x15 strategy was to examine market diversification and commodity diversification The 15 Commodities/15 Countries Matrix exercise was undertaken in 1995 using the data of mid nineties that indicated the restricted commodity/country basket for Indias exports. It was observed

that 15 countries and 15 commodities accounted for around 75%-80% of Indias exports and a presentation was made to trade and industry to set up trade acilitators for achieving increased exports in the 15 products and 15 markets. However, the exercise of the trade facilitation did not get enough support and response(2). The focus on 15/15 matrix based on past performance data was an useful exercise as it helped to focus on the importance of a few commodities and a few destinations in our export performance. Two new products appeared for the first time in 1995-96 in the list of Indias top 15 export products. However, the importance oproducts and countries continuously change and it is interesting to see the dynamics of markets and products in Indias export when the 15/15 matrix is updated. At present, the 15 X 15 Matrix for the year 2000-01 has been compared with that of 1996-97. Table 2.5 and 2.6 give Indias First 15 Product Groups and First 15 Countries Matrix of Exports for the year 2000-01. Effectiveness of the strategy The 15x15 Matrix taken up for analysis covers about 70% of all products exported by India and over 67% of Indias export markets in value terms in 2000-01. Overall, the analysis of commodities shows a trend towards diversification across additional markets. The share of the total top 15 product groups exported to top 15 market destinations in the total export of top 15 product groups decreased from 71% in 1996-97 to 66% in 2000-01 indicating market diversification of these product groups. However some items within the top 15 commodities have changed thus altering the composition of the top 15 commodities basket significantly.

Items like Oil Meals, Dyes and Intermediates, and Rice (excl. Basmati) which were in the top 15 product groups in 1996-97 were replaced by Plastic & Linoleum products, Petroleum and other Liquefied fuel products, and RMG Manmade Fibres in 2000-01. The top three items of Indias exports contained in the Matrix of 9697continue to remain the same during 2000-01 i.e. Gems and Jewellery, and RMG Cotton including Accessories, Cotton Yarn, Fabrics and Made Ups. (2) Ministry of Commerce (1997) Medium Term Export Strategy.

Apparel Exports from India Evaluation & comparison of 2002 03 Vs 2001-02 fig. in mill. US $
Exports of quota and non-quota markets

70 60 50 40 30 20 10

34

20 29.2
2002-03 2001-02

3.45
0
USA EU CANADA OBA

The breakup of the figures of exports to quota and non-quota countries are:

2002-03 Mn. Rs Export of quota items to Quota Countries % of total 60511.55

2001-02 Mn. Rs. 40719.56

2000-01 Mn. Rs. 35976.10

42.03 Exports of Non-Quota items to Quota Countries % of Total 7.96 Exports to Non-quota Countries % to Total 50.01 72010.89 11460.83

31.04 9533.25

30.35 35976.10

7.27 80918.70

30.35 74914.79

61.69

63.20

Exports of quota items to quota markets during the year under review amounted to Rs. 60511.55 million representing an increase of 48.61% over the previous year against growth rate of 13.18% in the earlier year. Exports of on quota items to quota countries at Rs. 11460.83 million registered a growth rate of 20.22% as compared to the growth rate of 24.85% achieved during the earlier year. The exports of non-quota items to quota countries and exports to non-quota countries together constituted 57.97% of the total exports of Rs. 143983.27 million during 200203 as compared to 68.96% during 2001-02 reflecting the impact of the South East Asian Crisis on our exports.

EXPORT OF GARMENTS FROM INDIA

1. Indian Exports of Garments

6000 5269.4 5000 4762.2 4463.5 4910.3

Million pieces. US $
5525.4

4000

3000

2000 1098.2 1000 1204.2 1314.2

1390.2

1441.3

0 1998-99 1999-00 2000-01 2001-02 2002-03

II. Region Wise Export in percentage (Qty wise)

2001-02
1.83 28.77 1.89 1.66 47.13 28.38 2.2

2002-03
2.17 1.64 46.48

4.91 4.65 12.05

West Europe East Europe East Asia Others West Asia & North Africa Am erica Africa
West Europe East Europe East Asia Others

30.78
West Asia & North Africa America Africa

III. Region wise Exports in percentage Value wise (US$)

2001-02
2 37.45 1.89 1.5

2002-03
2.1 1.83 1.42 53.75

36.2

34.32

5.56
West Europe East Europe East Asia Others

14.43
West Asia & North Africa Am erica Africa
West Europe East Europe East Asia Others

6.71

40.85

West Asia & North Africa America Africa

SHARE OF MARKET SGEMENTS IN INDIAN EXPORT (In terms of value in US $)

2001-02 31.23% 30.86%

3.95% 33.96% USA EU Canada N.Q.C.

1999-2000 32.21% 30.62%

4.88% 32.30% USA EU Canada N.Q.C.

MARKET-WISE ANALYSIS 2001-02 USA EU Canada N.Q.C. Total 2903 6281 637 4087 13908 2002-03 2807 6333 754 4519 14413 2001-02 162.62 17897 2080 16454 52693 2002-03 17006 17933 2432 17883 55254

OVERALL UNIT VALUE REAISATION FROM DIFFERENT MARKET SEGMENTS 2001-02 USA EU Canada N.Q.C. Total 5.60 2.85 3.27 4.03 3.79 2002-03 6.06 2.83 3.23 3.96 3.83 %CHANGE +82 -2 -4 -1.74 +1.06

Graphical presentation COUNTRY WISE EXPORTS OF INDIA (2001-02)

35 30 25 20 15 10 5 0
A US G y an m er e nc ra Fr UK E UA US x ele en B a ad an C ly Ita it Sw d lan er z

Qty wise Value in US $

COUNTRY WISE EXPORTS OF INDIA (1999-2000)

35 30 25 20 15 10 5 0
A US G y an m er e nc ra Fr UK E UA US lex ne Be a ad an C ly Ita Sw nd rla ze it

Qty wise Value in US $

EXPORT ACCORDING TO CONSUMER GROUPS

8.00% 19.00% 43.00%

30.00% Ladies wear Men's wear Kids wear Others

MAJOR VARIETAL CONTRIBUTION ALONG WITH THEIR UVR

Variety 1998 per cent share in total exports (volume) 1998 U.V.R. ($/Piece) 1998 UVR % Difference from average of $ 3.77

T-shirts Blouses Under pants/briefs Shirts Trousers/shorts (of which woven 4.9, ktd 2.5)

17.0 13.8 10.0 9.8 7.4

3.24 4.31 0.63 5.61 4.07 (of which woven 5.28 knitted 1.66)

-14 +14 -83 +49 +8

Dresses Skirts Jerseys & pullovers Babies garments Ankle socks Bath robes Total

5.2 4.0 3.9 3.7 3.5 2.9 87.5

6.97 5.32 4.37 2.44 0.66 3.75 All varieties average 3.77

+85 +41 +16 -35 -82 -1 -

VARIETIES WHICH CONTRIBUTE A SMALL SHARE IN THE VOLUME OF EXPORTS BUT WHICH COMMAND A HIGH UNIT VALUE Variety Anoraks Coats (M,B) Gowns (dressing) Industrial/occupational gmts. 2001% share (volume) 0.38 0.01 0.88 0.62 Unit value ($/pc) 12.79 10.63 7.30 3.31

Co-ordinate suits Suits (knitted and woven) Track suits Total

0.77 1.22 0.43 4.31

6.63 4.50 5.56 -

THE PROJECTIONS OF INDIAN RMG EXPORTS Year 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2008-2009 Projected exports (Value in US$ million) 7.5 8.6 10.3 12.3 15.4 20.5 25.4 35.9 %age growth projected 15% 15% 20% 20% 20% 20% 15% 30%

STATEMENT SHOWING REGIONWISE GARMENT EXPORTS DURING JANUARYMARCH 2002-2003 Qty in lakh PCS. Value in lakh US $ & Rs.
Religion Year Restrained Countries (Value) Countries OBA (Value) Total (Value) Qty DELHI 1999 % 2000 % MUMBAI 1999 % 2000 % CALCUTTA 1999 % 2000 % CHENNAI 1999 % 2000 % BANGALORE 1999 % 2000 % JAIPUR 1999 % 887 27.29 1013 29.86 741 22.80 698 20.58 46 1.42 55 1.62 287 8.83 295 8.70 164 5.05 187 5.51 52 1.60 US$ 4354 38.67 5155 41.19 2457 21.82 2490 19.90 78 0.69 82 0.66 12312 10.93 1283 10.25 940 8.35 1143 9.13 195 1.73 Rs. 184.17 38.68 224810 41.19 104282 21.82 108625 19.90 3310 0.69 3559 0.65 52235 10.93 55963 10.25 39887 8.35 49856 9.13 8267 1.73 Qty 278 24.54 312 22.94 433 38.22 511 37.57 31 2.74 46 3.38 97 8.56 108 7.94 18 1.59 26 1.91 31 2.74 US$ 1612 34.88 1680 31.19 1884 40.76 2267 42.08 124 2.68 171 3.17 286 6.19 361 6.70 87 1.88 131 2.43 87 1.99 Rs. 68379 34.86 73308 31.20 79965 40.77 98868 42.08 5256 2.67 7473 3.18 12154 6.19 15757 6.71 3714 1.89 5703 2.43 3714 1.99 Qty 1165 26.58 1325 27.88 1174 26.79 1209 25.44 77 1.76 101 2.13 384 6.20 403 8.48 182 4.15 213 4.48 182 1.89 US$ 5966 37.57 6835 38.18 4341 27.34 4757 26.57 202 1.27 253 1.41 1517 8.76 1644 9.18 1027 6.47 1274 7.12 1027 1.81 Rs. 253196 37.57 298118 38.18 184247 27.34 207493 26.57 8566 1.27 11032 1.41 64389 9.55 71720 9.19 43601 6.47 55559 7.12 43601 1.81

2000 % TIRUPUR 1999 % 2000 % LUDHIANA 1999 % 2000 % COCHIN 1999 % 2000 % HYDERABAD 1999 % 2000 % TOTAL 1999

40 1.18 1017 31.29 1031 30.40 49 1.51 66 1.95 7 0.22 7 0.21 3250

166 1.33 1824 16.20 1917 15.32 169 1.50 262 2.09 10 0.09 17 0.14 11258

7251 1.33 77398 16.20 83599 15.32 7179 1.50 11445 2.10 438 0.09 746 0.14 477813

740 2.94 210 18.53 263 19.334 17 1.50 27 1.99 18 1.59 27 1.99 NEG. NEG NEG NEG 1133

138 2.56 3393 8.50 458 8.50 70 1.51 128 2.38 74 1.60 52 0.97 NEG. NEG 1 0.02 4622

6019 2.56 16667 8.80 19971 8.50 2978 1.52 5553 2.36 3145 1.60 2266 0.96 2 NEG 25 0.01 196159

80 1.68 1227 27.99 1294 27.23 66 1.51 93 1.96 25 0.57 34 0.72 NEG NEG NEG NEG 4383

304 1.70 2217 13..96 2375 13.27 239 1.51 390 2.118 84 0.53 69 0.39 NEG NEG 1 0.01 15880

13270 1.70 94065 13.96 103570 13.26 10157 1.51 16998 2.18 3583 0.53 3012 0.39 2 NEG 25 NEG 673972

2000 %

3392 100.0

12515 100.0

545854 100.0

1360 100.0

5387 100.0

234942 100.0

4752 100.0

17902 100.0

780796 100.0

LEADING EXPORTERS OF GARMENT, 2001 Exporters China Hong Kong, China Domestic exports Re exports Italy United States Germany Turkey Mexico France United Kingdom Republic of Korea India Belgium Luxembourg Thailand Portugal Taipei, Chinese Above 15 Value 1998 30.05 22.16 9.67 12.50 14.74 8.79 7.68 7.06 6.60 5.75 4.92 4.65 4.34 4.04 3.56 3.46 3.17 118.49 Share in worlds exports 1998 16.7 5.4 8.2 4.9 4.3 3.9 3.7 3.2 2.7 2.6 2.4 2.3 2.0 1.9 1.8 659

LEADING IMPORTERS OF GARMENTS, 2001 Importers United States Germany Japan Hong Kong, China Retained imports United Kingdom France Italy Belgium- Luxembourg The Netherlands Mexico Switzerland Canada Spain Austria Russia Fed. Above 15 Value 1998 55.72 22.35 14.72 14.30 1.80 11.98 11.64 5.86 5.30 5.24 3.75 3.53 3.26 3.15 2.97 2.49 153.70 Share in worlds exports 2001 15.9 19.1 3.5 0.9 6.6 6.0 1.8 4.2 6.6 0.3 0.3 1.6 0.3 2.2 72.9

INDIAS SHARE IN WORLD TRADE

SHARE IN TOTAL APPAREL EXPORTS OF TO 15 EXPORTING COUNTRIES
Rank Country 1985 World 49200 1986 63800 1987 79000 1988 86030 1989 92670 1990 10645 0 China Hong Kong Italy Germany United States Turkey France South Korea UK Thailand India Portugal Indonesia Taiwan Netherla 3.1 1.2 1.8 2.1 0.7 7.1 1.5 2.8 1.3 1.7 2.3 0.8 6.6 1.7 2.9 1.9 1.9 2.6 0.7 6.3 1.7 2.9 2.2 1.8 2.7 0.9 5.5 1.7 2.5 2.6 2.1 2.8 1.2 5.1 1.7 2.8 2.6 2.4 3.3 1.5 3.7 2.0 2.9 3.1 2.2 3.1 1.9 3.8 2.1 2.8 2.9 2.4 3.1 2.4 3.1 2.1 2.6 3.1 2.7 3.1 2.6 2.8 1.9 2.4 3.9 9.0 1.9 3.9 8.6 2.8 3.9 9.5 2.7 3.8 10.1 2.9 3.9 9.8 3.1 4.4 7.4 2.9 4.0 6.3 3.2 4.0 5.2 3.3 3.4 4.6 10.8 5.8 1.5 11.8 6.3 1.5 11.4 6.3 1.5 10.5 6.2 1.9 10.2 6.1 2.4 11.1 6.6 2.4 10.1 6.6 2.8 9.4 6.6 3.2 8.9 5.1 3.7 4.9 13.6 6.3 13.2 7.3 13.5 8.1 13.7 8.8 15.1 9.1 14.5 1991 11583 0 10.4 15.4 1992 13148 0 12.8 15.3 1993 13296 0 13.9 15.8

nds

Sources : WTO From this it will be apparent China Major empire in 16.1% where as India minimum 2.6% after 1.8 so the it is very normal. There is cost of scope for comparison.

FUTURE MARKETING STRATEGY AND TRENDS Market News Express

Indian garment exporters cut prices, in battle for market share Adapted Indian styles a major trend.

With tension in South Asia, quite a number of international buyers preferred not to attend the India International Garment Fair for Autumn/Winter 2002-2003 collections in New Delhi in January 2002. So, they missed an opportunity to view the benefits and understand the problems of the Indian garment exporting sector.

But, besides a few hundred mostly small North American, European, Asian and Australian retailers specialising in South Asian garments, the 118 exhibitors at the Fair at least welcomed some big sourcers . They included Giordano Fashions, Unlimited, Itochu, Karstadt Quelle Neckermann, Carrefour, Benetton, Littlewoods and Adolfo Dominguez. Indeed, on the surface, India has tremendous benefits for such players: the country has available, top-end cotton, plus skilled workers commanding modest wages, plus all types of embroidery and hand work, with many thousands of fashion designers to knit

those elements together. Added to which, there are several strong regional production clusters, English-speaking staff to develop sales, as well as gifted software engineers.
Orient Craft: standing out in the sector.

Yet still, the country supplies less than 3% of the world's apparel market. Indeed, the first visual impression a visitor gets is that the Indian garment export sector, which is estimated to be worth 30% of total production, is stuck in a mainly logistical and technical backwater. It is hard to escape the conclusion that the Indian export industry has not adapted as quickly and radically to foreign demand as many of its competitors. On the other hand, that may not be true of the entire sector. Really big international Indian exporters, such as Orient Craft, cater to the likes of renowned names like Tommy Hilfiger, Gap, Next and Oasis. Also, many exhibitors at the Fair certainly showed they have skilfully adapted the design of their garments to Western tastes, coming up with sleeveless dresses, deep neck cuts and reversible construction, for example.

Dynamic Designs' knitted cotton and chiffon top.

Another factor was the evidence of a dazzling diversity of regional looks. Differences in design, raw material use, processing and finishing techniques, can often be explained, indeed, by specific regional cluster-strengths. Therein lies perhaps both a benefit and a handicap. Companies sourcing from India have to know that the subcontinent has at least eight different sourcing centres, and it is important to know which to approach. New Delhi provides possibly the most familiar model to foreign buyers, with annual exports worth US$2 billion, from a total production valued at less than US$6 billion a year. The capital's big suppliers produce sophisticated women's and children's wear and a flexible production infrastructure allows for reasonably fast turnarounds.

Basic shirts by Opera Clothing.

Mumbai is another major centre, responsible for 27% of the country's apparel exports. Large mills offer cottons, rayon and

synthetics, with a balance of men's, women's and children's wear. Buyers say Mumbai is quite responsive. The largest centre for knitted garments and fabrics is Tiruppur, in Tamil Nadu state, while Chennai (formerly Madras) is an important centre for men's wear, especially woven shirts. In fact, Tamil Nadu is the venue for an emerging centre around the town of Salem, becoming well known for its yarn-dyed woven fabrics. Bangalore is India's most significant centre for outerwear exports, as well as men's shirts and shorts. And Ludhiana, in the Punjab, has an increasing reputation for producing woollen and blended knitwear. Last but not least is Jaipur, famous for its prints, using unique hand printing techniques and vegetable dyes. Price battles pick up pace

Uppal (left) and Rana: discussing complaints.

What wasn't visible at the India International Garment Fair, but often arose in conversations with apparel exporters, is the enormous competitive handicap they suffer. Exporters' main

comparative disadvantage, as they see it: India is still not a free economy, with a complex regulatory framework. During the opening ceremony at the Fair, minister of textiles Kashiram Rana patiently listened to a long list of complaints about 'red tape', fiscal anomalies and a continuing lack of access to the US and EU markets. Many of those complaints came from Virender Uppal, chairman of the Apparel Export Promotion Council (AEPC). In 2000, when ready made garment exports reached US$5.8 billion, India ambitiously planned a big leap forward, with the goal of hitting an export figure of US$25 billion by 2010. However, in 2001, exports tumbled 16% in value to US$4.5 billion. One of the messages these figures contain is that in 2001, Indian firms went all out to gain advantages through price cutting, only to show less for their efforts, industry analysts said.

Maharana's US$10 georgette dress.

At the Fair, most exporters commented that the market situation remains very tough, so they try to coax foreign buyers with the lowest possible FOB prices. So, for example, Maharana Exports of

Delhi was offering polyester georgette dresses for between US$6 and US$10. From the same city, Dutt & Arya Impex was prepared to sell hand-embroidered cotton dresses at US$7, while Opera Clothing of Mumbai was selling men's cotton/polyester/viscose shirts at between US$3 and US$5. Interest in partnerships with Hong Kong Vijay Mathur, director of AEPC, declared that Indian apparel exporters would be very interested to co-operate with Hong Kong partners for penetrating the Chinese mainland. Mathur claimed he was baffled by the way Chinese mainland factories could produce apparel at cheaper prices than their Indian competitors. Still, many Indian exporters are looking on the bright side for 2002 and 2003, believing that market conditions will improve as the world moves to abolish quotas on textiles and garments in 2005.

Indian garments market open.

Quota prices - presently at around US$1.2 per piece, for trousers, for example - certainly have discouraged Indian export efforts. On the other hand, the spectacular decline of Indian garment

exports to non-quota countries in 2001 (down 58% in value terms), inevitably raises the question of whether India is well enough prepared to face 2005. Rohini Suri, President of the Association of Buying Agents is optimistic. The Association's 40 members handle US$3 billion in apparel exports, working with buyers like Marks & Spencer, Next, J.C. Penny and Gap. Suri points out that since 2001, India has been opening up its market. In Delhi, Mumbai, and other regional apparel production centres, the number of importers of fabrics and many kinds of accessories is steadily increasing. According to AEPC director Mathur, business is speeding up, with foreign contractors indicating that fabrics will increasingly be sourced from Greater China, Korea and Indonesia. These are certainly mixed opinions ahead of the planned Apparel Trade Mart near Delhi Airport, expected to be operational by the end of 2003. The US$12 million project, financed by the Textiles Ministry, will offer air conditioned space to 250 permanent exhibitors, of whom 80 are said to have already booked space.

SWOT ANALYSIS OF INDIAN READYMADE GARMENTS

STRENGTHS
i) Strong Cotton Base - India has a very strong cotton base. The country has one of the largest
areas under cotton cultivation in the worls today placed at over 7.5 million hectares and this area is expanding. Cotton also accounts for 75^% of the textile fabric consumption in this country and cotton garments already account for about 65 percent of our total trade in garment assortments. The world demand for cotton fabrics and clothing is expected to be fairly stable.

ii) Abundant and Low cost manpower resources - Indian labour is plentiful and it is also
reported to be one of the cheapest in the world today. This fact need no reiteration.

iii)

A large and Diversified Textiles Industry :- Indian is perhaps the opnly nation in the

worls where all the three textile sectors namely handloom, powerloom and the mill industry co-exits. The fact does provide the country some advantage in producing a wider variety of designs and colour combinations in its textiles to satisfy the more discerning foreign buyers.

iv)

Creativity of Indian craftsmen / weavers and entrepreneurs - the creativity of India

weaves particularity in the handloom and decentralized powerloom sectors has obtained the admiration of detailed specifications. Many of the larger departmental stores abroad are know oto have got some of their garment fabrication done in India although they may ultimately give their own labels to the clothing so manufactured.

v) Ability to Cater to Small Orders- This aspect of the Indian garment sector has already been
mentioned earlier. It refers to the flexible structure of this industry which enables it to

secure smaller order from overseas importers for varied assortments and designs- a proposition which many of the large scale units find totally unviable.

vi)

Liberalized policies of the Government of India:- Having realized the case export

potential of this sector the government has liberalized the imports of wide range of modern garment manufacturing machinery including high-speed machines. Similarly imports of essential items like zip fasteners trimmings and embellishments have also be liberalized. Import duties on several of these item have also been substantially reduced. Such measure should help to develop the production bases of this industry, a process which has already started.

Weakness
The industry suffer from certain inherent weaknesses which has been responsible for its apparent inability to capitalize on may of its advantage. These are as following.

i) Decentralized Structure of Industry - The industry is highly decentralized. At the top of the
exporting chain is the merchant- exporter who canvasses for and finally executes the import orders. The production operations however are carried out by independent & individual fabricating units who are sometimes assisted by button-holing in its and other small processing units. Although this factor gives the industry some degree of operational flexibility. It can cause hardships if the merchant-exporter has not control or little control over the fabricators leading to delayed shipments and needless trade disputes.

ii) Old & outdated machinery - Compared to most of the other exporting nations of the world.
The Indian garment sector is equipped with obsolete machinery -- in many cases with simple pedal operated machines with hardly any productivity. This problem is only now being addressed with a liberalized import policy.

iii)

Shortage of trained manpower- Although labour in India is plentiful the garment sector has been experiencing a shortage of skilled labour force -- like expert cutters, machineoperator, designers and so on in the different manufacturing centres. The is also a problem of migrant labour force which have no stakes in the industry particularly in a place like Delhi which a has often posed a problem to entrepreneurs.

iv)

Restricted fabric base - While acknowledging the fact that Indian has vast and variegated textile industry it has been recognized that the production of specialized and heavier varieties of fabrics like drills twills, gabardines corduroys velvets and denims etc is generally of very poor quality of grossly inadequate for the requirements of the Indian garment sector. This has preclude the garment sector from producing heavier garments for winter wear or the finer varieties for sport wear and so on.

v) Restricted export ranges- the limitations experienced by the Indian garment sector in regard
to fabrics has had its impact in the export sector also. Currently India's apparel exports are more ore less confined to light weight cotton garments made form the pwerloom sector mainly fir summer wear. These items are also used as casual wear. There is huge international demand for standard garments like formal wear shirts & trousers besides children's garments made out of polyester/ cotton blends besides children/s garments made out of polyesters cotton blends besides clothing and industrials clothing in which India has currently little or no representation.

From analysis of India s strengths and weakness in the garment industry it emerges that on the balance the strengths in the industry are more pronounced. Also many of the weakness mentioned are now being suitably addressed by the Government of Indian. For instance the establishment of the institute of Fashion Technology by the Ministry of Textiles should overcome

the problem of obtaining skilled technicians and designers for the industry. The industry on its part has also result in the induction of modern and update machines into this sector which will improve its productivity. The industry is also going in for marketing tie-ups with some of the reputed international brand leaders of specific varieties of garments like jeans and sportswear which augurs well for quality and variety of garment to be manufactured in the country in the future.

Opportunities
With each product category opportunities exist because products in which Indian exports have minimal share have bee showing a substantial g growth rate. India needs to expend its potential in these markets. Indian also has to sustain its product categories where to demand for imports as are showing a declining trend. Opportunities also exist in product diversification into new products categories of formal knitwear which fashion forecasts predict as a booming industry all over the world. Indian exporters should improve their manufacturing system quality speed and efficiency in order to effectively enter markets which will yield great value realization and more value added profit margins. India's exports readymade garment's mill it badly most of the would wants to import trade

sanction against the country for conducting there nuclear sanction have came at a time when India's garments exports hence started picking of the period of stagnation which determined at for India's garment export back. THREAT There is little evidenf4e that the average Indian garment exports has full grasped the full implication of the phasing out of the quota regime for textiles and garments in the foreseeable

future under the historic Uruguay Round Accord signed in December 1994 when the protected market access provide by the cocoon of quotas disappear completely in the not too distant future there will be vitally a free for all situation and only those countries with established market reputations for quality diversified range and prompt delivers will be able to survive the acid test of competitions. Indian exporters have to refurbish their image in the interim period and evolve from being branded as suppler of low budget item who often lag behind in adhering to delivery schedules to high profile suppliers of quality garments Another factor of considerable significance is the emergence of new garment supplier to would markets, which included countries like China Thailand . Sri Lanka Bangladesh and Pakistan etc. some of these nations have not only a v viable cotton base but also have low cost labour, which could pose a greater threat to Indian interest as compared to the earlier competitors like Hong Kong and Korea who were supplying a different assortment of item. India is threatened by fresh compotes from is Us and EU other of which have resoled to souring fabric supplies frame nearby countries and covering them into ready made garments.

SWOT ANALYSIS ON USA READYMADE GARMENTS

INDIAS STRENGTHS AND WEAKNESSES
Hand crafted details are very good from India, Madras checks is an item in high demand and has become a classic and improvement in the basic fabric can strengthen Indias position. Dobby weaves, basket weaves, etc. have an endearing quality and this needs to be further strengthened. Lkats, unique weaves, etc. provide a great creative edge to Indian and this needs to be put to good use. Rayon quality from India is acceptable. India has tremendous strengths in developing samples, and this can be used as substantial extra selling proposition. Printing is extremely good and if basic fabrics and dyes are improved this can be of considerable importance, Casual shirts are of high quality from India. In fashion, price spectrum, India enjoys

considerable strength. With creative and innovative fabrics and ideas, India is a major inspiration base for designers. Wovens are another strong area for India. Suppliers, sourcing and product development capabilities are major strengths. Made in India label has a positive image in the minds of the customers related to casual fashions. Sewing and workmanship are considered acceptable for most of the goods. Indias have an urge to do business and they are aggressive marketers. India has some visible strengths in youngmens fashion. India is good in generating ideas. To be right the first time and every time is a critical question and here India falters. Response time and quality issue along with delivery from the critical components of fashion business and India is far from satisfactory in these areas. In India, fabric- related problems cause the maximum hurdles owing to weaving defects, less roll length, width variations etc. total inspection required of garments is more from India. There is a dearth of aggressive and dedicated agents. The agents do no generally look at market opportunities and are stuck with the same type of garment. Flexibility of Indian production has considerably reduced. Costs are going up and in basic garments like shirts, orders are moving to other countries like China and Bangladesh. The attitude of Indian exporters is another problem as they are interested to get the shipment out in any manner. The art of giving a straight answer to a straight question is missing in India, The diminishing uniqueness of fabrics and mass production of garments make Indian basic garments look like any other countrys , thereby killing the unique identity. Vendors in India have an unreliable image. The factories and exporters do not take pride in their work. The need for economies of scale for large factories is pushing India to ask for more quantities and this is resulting in lesser flexibility and commoditisation, exerting pressure on price situation. Deliver and communication, which are essential to success in exports, are given scant attention. Unless the importer works on a whole package programme for India, attractiveness of India as a sourcing base in lost. CMTICMP operations are not feasible as there are too many hassles. Indian machinery is outdated and lack of technological upgradation is stalling

the progress. India has not reduced its fabric production time which affects the overall production cycle. Daling with India requires heavy expenditure on quality control and travel, compared to other countries. A sense of urgency is lacking in India exporters and quality orientation is not sufficient.

COMPETITORS STRENGTHS AND WEAKNESSES

Hong Kong is flexible for xie packs in dress shirts. Chinese sewing quality is extremely good. In counties like China, Indonesia, etc., defective areas in a fabric can be replaced panel wise before it goes to sewing room. In basic garment pricing, Bangladesh is very strong. In cleanliness compared to India, Philippines, Malaysia is Indonesia are very good. In quality price equation Indonesia is strong. Malaysia is emerging as a quality garment maker especially in knit area, along with Thailand. They are also good in shirt manufacturing. Philippines is labour intensive and is good in cotton and rayon. Sea shipment is convenient in Philippines. Bangladesh and Indonesia are not a above delivery problems. Bangladesh and Hong Kong have inflexibility in Production systems. Bangladesh and Indonesia are just manufacturing sources and there is no differentiation or creative scope. Bangladesh is fast till approval stage but production can be slow if not followed up,. As piece goods have to be imported, the time can be long. Hong Kong is expensive in product development. Indonesia is burning out faster with increasing prices and less differentiation.

OPPORTUNITIES
India can be a major supplier of fabrics to several garment manufacturing countries if the fabric quality can be improved. If the agents are good and are able to portray correct information, there can be substantial improvement. There are many products which start in the Fashion area and become updated basics. Here India has a great chance as these are must have categories in the stock. Wovens are becoming important for the budget market and this opens up many new opportunities. Elasticity of product bias is high in the case of basics and lower in the case of

fashions,. Fashion price spectrum if worked, on, offers possibility of sustained growth. India has, developed versatility in mixing ethnic, European and American fashions and this expertise should be effectively used. The Indian label has the potential to be promoted as a fashion label, especially for diffusion lines and better affordable designer wear. Companies want two deliveries in Spring, one two deliveries in Fall and one- two deliveries in holidays season, etc. this brings into focus the need for flexibility, speed and creativity. India has a chance in this scenario. Today, value for money is a very important motivation for several consumers groups. 100% cotton knits offer a very attractive product area. In knits, Jacquard designs and fancy knits have a great potential. Clean fashion has tremendous scope in the times to come- neat, elegant and simple. 100% cotton/ Linen orientation with detail and natural and Eco- friendly look have a considerable potential in world markets, especially in the USA and Germany. In small minimums and short lead times india has opportunities, but counties like Philippines are cutting into this market.

FINDINGS AND CONCLUSION

FINDINGS
Indian manufacture have made a very big growth in export but shown interest in going or creating the new markets as they are quite comfortable with the quota cushion and these are the company who can venture into new areas and new items of the apparel but they do not take active interest in new market of quota free areas. The significant structural changes one in process & ongoing in todays Indian garment industry: The garment sector which has shown a continued growth and the years. It is observed that the products in demand in are mostly are cotton and knits. The owing to Indias predominant image as a country specializing in manufacturing summer apparels or better as good market for cotton. However world over the synthetic market is much bigger and there is a major share of international market, our export industry is missing out on. Exports are mainly directed to the developed mkt. Like USA, EU. & Japan which account for approximately 20%. USA alone accounted for 30 % - 40%. It is one of the biggest importer of garments & it ll continue to be the largest importer. Also it is second largest market for export of readymade garment with against share of 30% , first being the EU with a share of 33-37%. A small category is kidswear in Indian export baskits. As a recent trends in international market, the focus is shifting towards apparels for the little frames, as children become more fashion and brand conscious, making kids fashion another big booking business. The hottest designer brands are making waves in junior fashion and focus strongly on childrenwear. Active (Nike, Reebock & Adidas) resort (Quicksilver, Instinct, Stossy, Billbong, Kangol)

and classic (Calvin Klein, Jeans Kids, Orhkosh B Gosh DKIYY Danner Karn) are brand

names which are increasingly gaining popularity among little boys and girls. This trend is has not yet awakened the Indian exporters Presently India is not in a position to Increase its exports to USA substantially. Unless it makes a cost of improvements in this industry by way of modernisation, improving labour producing of skills/ suitable branding policies of forgiving marketing linkages with foreign suppliers.

CONCLUSION
India is uniquely endowed with all kinds of garment raw materials and has sound physical and technical infrastructure for the garment industry. The entrepreneurial class has the resilience and versatility to operate at any scale of economy and in any part of country. the progress of trade liberalization and impeding quota free regime provide the opportunity to achieve substantial and sustained grower in export of readymade garment. But as a home work the industry should be well equipped with technique manpower to face challenge in post MFA period. There is a need of diversification in products and in market of readymade garment quality, fabric design and delivery will be the are for increasing export sin Post MFA period. It is essential that an export climate is created where the polices and procedures are made pragmatic and the exporter are also to produce and export quality goods of international standards with least of procedural and policy regulations. It is abundantly clear from the rules of the game that it is going to be the survival of the fittest, and hence any country whose garment industry is in a position to supply garments of Internationally acceptable quality, supported by quality assurance and consistency in its quality out and that too within the confines of the time span contractually agreed up on will stand a chance to survive the competition, secure a market share and stand to benefit with increasing orders. It is time that garment industry realizes with a sense of urgency that to achieve this objective, it has necessarily go to improve its functioning and it quality, identify and improve upon its short comings and also identify and harness the advantages its strength to its benefit, hence it is said that " quality cannot the inspired into product it has to be built in to it.

BIBLIOGRAPHY
1. 2. Apparel Export Promotion Council, Garment Export - A report Apparel Export Promotion Council, Apparel Fortinigkhly 3. 4. 5. Confederation of Indian Industries, CMIE report

Apparel Exports promotion Council, Handbook of Export Statistics Apparel Export Promotion Council, Garment Export Entitlement Policy 6. Quality Control of apparel ( ITC)

7. 8.

Indian Institute of Foreign Trade, Indian garments Industry in the Post-MFA Period. Indian Institute of foreign Trade, Indias Competitiveness in Export of Garments in the MFA Phase-out and Post MFA Phase out periods

9. 10.

Indian Institute on Foreign Trade Indian Garments industry in the Post-MFA Period. Indian Institute of foreign Trade, India's Competitiveness in Export of Garments in the MFA Phase-out and Post MFA Phase out period

11. 12.

Real challenge for exporters lies after 2005 federation of Indian hosiery exporters

Export and Import policy book latest issue (1st April 1999 31st March 2002) By Ministry of Commerce Govt. of India. 13. 14. Exporters manual and documentation Also reference books of garment exports

CURRENT SCENARIO
The export of readymade garments, which was to the tune of 253.6 million pieces (valued at US$ 826.5 million) during January-February 2002 has increase in quantitative terms to 306.1 million pieces (valued at US$ 1137.9 million) up by 20.07% in quantity and by 37.68% in value terms during January-February 2003 when compared with the same period last year.

Source: AEPC

Overall Unit Value Realisation (UVR)

UVR has increased by 14.11% from US$ 3.26 to US$ 3.72. The major gain is in the EU market segment that has increased by 17.94 %. While there is an increase of 4.02% in the unit value realisation of our exports to US, in Non-Quota Countries there is a increase of 16.93% and Canada shows an

increase of 7.47% during the January-February 2003 when compared to corresponding figures last year.

Source: AEPC
Therefore, the Indian readymade garment exports have shown an increase over the last year, according to the latest figures of the APEC. Two major Mumbai - based Companies, Mandhana Industries and Challenge have infact projected bigger figures this year, Mandhana at 3 million pieces as against last years two million pieces and Challenge at 1,00,000 trousers as against last years 80,000 trousers. Not only this but with India having being declared as SARS free by WHO, it hopes to woo more foreign buyers especially from Far East and Southeast Asian countries who have been regularly loosing out on them. It has estimated that nearly $8 billion worth of orders have been diverted to India as a result of this dreaded disease affecting countries in other parts of Asia. At the same time, exports from countries such as China are now as high as $50 billion annually in apparel alone. For the last two months, however, there had been negligible flow of buyers into that country because of SARS scare.

Marketwise Analysis

Exports to USA have gone up significantly by 41.15% in quantity terms and by 46.92% in value terms. EU has seen an increase of 41.17% in terms of value and in quantitative terms, there is an increase of 20.17%. Canada has registered an increase of 7.59% in terms of quantity and of 15.44% in terms of value. Non-Quota Countries have registered a decline of (-) 30.46% in quantity terms and of (-) 18.63% in value terms.

The share of major market segments during the January-

February 2003 in the total exports of garments (in terms of value) is given below: -

Export Trends in the past 10-12 Years

Indian Garment exports have shown continuous progress since the 1970s. The boom in garment exports during 1980s and 1990s led to a sharp increase in their share in the total Indian export from 2% in 1970-71 to about 15% in 1990-2000. However, despite this tremendous progress, Indias share in the world apparel trade is a minuscule 2.8%.

Details of Export,Target & A chievem ent

Value in lakh US$ 80000 70000 60000 50000 40000 30000 20000 10000 0
19 92 -1 19 9 93 93 -1 99 19 4 94 -1 19 9 95 95 -1 19 9 96 96 -1 99 19 7 97 -1 19 9 98 98 -1 99 19 9 99 -2 20 0 00 00 -2 20 0 01 01 -2 00 2

Target fixed Achievement

Year

The graph given shows the export trends for the period 19922003. Source: Handbook of Export Statistics, AEPC The rising demand for international garments leads one to wonder as to why does India hold such a miniscule share of the entire global market. Primary reason for this could be the step motherly treatment meted out to the Industry by the Indian Government. This is quite unlike its foreign counterparts in countries like China and Bangladesh, which receive the full support of their respective governments. Lack of proper governmental support prevents the garment industry in India from developing the much required competitive edge to emerge

as an internationally cost and quality competitive supplier. Demands have been raised for an equal footing for the Indian garment industry and a more proactive approach by the Indian Trade negotiators while setting up trade deals with other countries to ensure that Indian exporters do not lose out on their export business.

SHARE IN TOTAL APPAREL EXPORTSD OF TOP 15 EXPORTING COUNTRIES

RANK 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. COUNTRY CHINA HONG KONG ITALY GERMANY UNITED STATES TURKEY FRANCE SOUTH KOREA U.K. THAILAND INDIA PORTUGAL INDONESIA TAIWAN NETHERLANDS 1998 9.1 14.5 11.11 6.6 2.4 3.1 4.4 7.4 2.8 2.6 2.4 3.3 1.5 3.7 2.0 1999 2000 2001 2002 10.4 15.4 10.1 6.4 2.8 2.9 4.0 6.3 2.9 3.1 2.2 3.1 1.9 3.8 2.1 12.8 15.3 9.4 6.4 3.2 3.2 4.0 5.2 2.8 2.9 2.4 3.1 2.4 3.1 2.1 13.9 15.8 8.9 5.1 3.7 3.3 3.4 4.6 2.6 3.1 2.7 3.1 2.6 2.8 1.9 16.9 15.2 8.9 4.8 4.0 3.3 3.5 4.0 2.9 3.2 2.6 2.3 2.2 2.5 1.9 2003 15.2 13.4 8.9 4.7 4.2 3.9 3.6 3.1 2.9 2.9 2.7 2.3 2.1 2.1 1.8

GARMENT EXPORTS WORTH RS. 1700 CRORES IN JEOPARDY

After emerging as one of the most promising segments of Indias textile exports, garment export has come under considerable pressure for the last 10 years. Witnessing a rising trend, year after year by 20.30% exports of garments from India have slowed down since 1998. In 1996 also the increase has been only marginal being just about 9% in rupee value term. In addition the major cause of concern has come in the form of a dramatic decline in unit value realization (UVR) from US $ 4.23 in 1995 to 3.95 in 1999. For the second consecutive year 1999-2000 realized a growth rates less than 5%, while the volume of exports has come down trickle by 1999, the value of exports has infact turned negative leading to the obvious conclusion that the unit value of exports has fallen from $ 3.80 per piece in 1992 to $ 3.75 per piece in 1999. Exports of ready-made garment in April-June 2002 declined that by 8.3% in value but rose by 1.11% in quantity term compared with the same period last year.

In the 1996-97 exports at $ 4.76 billion were only marginally higher than the target, but the growth rates posed was no more than 7%. Exports in January 2000 dropped by 1.74% in quantity and by 1.24% in value compared to the same month last year. During January 2001, 1297 lakh pieces of garment valued at $ 1698 million were exported. The data show that during April- January 2002, total quantities of 10593 lakh pieces valued at $ 4013.3 million were exported. This indicated an increase of 10% in quantity and 2.47% in value compared to the previous corresponding period.