Prospects and Challenges for SMEs in Textile Sector in the Post WTO Era: An Empirical Study in the Indian Context

Abstract

The Indian Textile Sector occupies an important place in the Indian Economy. This is one of the oldest and most significant industries in the country. India’s Textile Industry is an attractive sector that is poised for growth post the Multi Fibre Agreement (MFA) regime. The industry enjoys significant strengths and advantages, such as availability of raw material, labour, large domestic market and supporting Government policies to a certain extent. It provides employment opportunities to millions of people. In order to continue to play this role, Indian SMEs in Textile Sector have to be competitive and commercially viable. Industrial units will have to undertake changes, technological or other as a reaction to the developments in their business environment. The study examines the problems, strategies for investments, competency development, technological upgradation, quality improvement, Government policies, alternative sources of finance such as equity participation by MNCs and overall improvement of this sector in the post WTO regime. The study is based on data gathered from an extensive survey of Indian SMEs in the Textile Sector and from the experienced Bankers/ Officials/Policy makers of Govt. of India.

Keywords: SMEs, government policies, textile sector, globalization, technological upgradation, equity participation, performance, gross domestic product, World Trade Organisation

JEL Classification: ERPN, MRN