Cotton yarn was the main casualty as almost 50 per cent of its exports are to south-east Asian countries. As a result cotton exports which account for 35 per cent of the total exports dropped by 19 per cent in dollar terms during the first five months. However, fabric exports remained stagnant despite a stiff competition from south-east Asian countries which took advantage of their depressed currencies to cut down prices in dollar terms. In the case of made-ups, however, the country seems to have done well by maintaining 17 per cent growth in its exports during this period.

"This is quite a welcome development since there is value addition in made-ups and hence its exports should be paid more attention"says Alva. Under the duty entitlement passbook scheme (DEPB), currently, made-ups qualify for 12 per cent DEPB rate for zero duty imports. These rates should be increased as a short-term measure to help textile exports since these would allow manufacturers to import yarn, fabrics and accessories at zero duty giving them a chance to export quality textiles.

However, this would be only a short-term measure, says Alva. In the long term there is no alternative to modernise and upgrade the textile industry. "Hence we are asking the government to implement the Rs 2,500-crore Technology Upgradation Fund at internationally competitive interest rates and to provide export credit at competitive rates," says Alva.

Secondly the council is also recommending lowering the EPCG limit from the current Rs 20 crore to Rs 1 crore to enable more textile processors to avail of the scheme. At Rs 20 crore there is hardly anybody who can import capital goods at zero duty against their export obligation.

"We need an instrumentby which traders can get reimbursement of rebates on some of the indirect taxes levied" says Siddharth Rajgopal, executive director of Texprocil.

Infrastructure costs like power and water are very high in India. Exports could rise if there was some proper arrangement whereby export production took place at international costs, argues Rajgopal.

Any future export strategy, therefore, should take into account India's areas of uncompetitiveness and it is time we took the right steps because we have seen the markets collapsing.

We are facing challenges in the form of repeated antidumping charges and anti-subsidy proceedings by the European Union mainly which are restricting our exports.

Apart from taking up these issues with WTO, the government is also lobbying with the European user-industries. Latest news is that one more EU member country has come to our side. Now while seven countries are opposing the duty, five are supporting its imposition. "With this I feel the definite duty on grey unbleachedfabric is impossible now," opines Alva.