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: smaller players—who form clusters in Tirupur, Ludhiana or, for that matter in Kolkata—that are not only surviving, but appear to be thriving?
The smaller players who form clusters in Tirupur, Ludhiana etc are mainly suppliers to international brands and retailers. They do not have much of a presence in the domestic market. Dollar’s depreciation against the rupee has had a negative impact on them. They have to either find other overseas markets for themselves or look at the domestic market, which a handful are doing.
Small units have managed to be competitive in the past. Does this not defeat the argument that we need scale to compete with the inflow of cheaper (say Chinese) products?
Smaller units can be competitive if they are highly productive. This can offset, to some extent, the loss on savings—a direct fallout of not having scale in purchasing raw materials.
In the domestic scenario, small units can still compete against the inflow of cheaper Chinese textile products provided they find their niche in the market and run an efficient operation. It can also help small units if they go up the product value chain. This way they can operate in a higher margin business....
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