Indian textile sector has become a decisive part of the Indian economy with large and diversified segments that give a wide variety of products. Its unique capabilities to maintain and manufacture high quality products on demand have given it an aura of invincibility. Following the phasing out of the quota regime from the beginning of 2005, the success story of the textile industry turned upbeat. The flow of export orders escalated and it attracted huge investments in different segments of the industry. It has grown phenomenally with an immense manufacturing base. It is the second-largest employer after agriculture, directly providing a livelihood to 35 million people. The indirect employment is estimated at around 50 million. It accounts for about 11% of the country's exports and 4% of GDP. The immense raw material base in India keeps on gathering strength with growing productivity and production of cotton and man-made fibres.
Amidst the booming global demand for Indian textiles, the past several years have proved to be a defining phase for the industry. However, time has taken an unusual turn in the last several months. The sector was cursed by the adverse impact of the rupee appreciation against the greenback over the course of last year, and it is now facing another blow from the ongoing global financial meltdown and a weaker US demand. The sector seems to be in a static mode, and the textile exporters have been finding it difficult to continue with their financial losses, even after several sops have been announced by the government to redress their woes. At the same time, the sector is plagued by low competitive position pertaining to the non-availability of good quality raw materials, low level of technology, poor automation and, to top it all, lack of integrated supply chain.
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