Director at the clothing manufacturers' association of India, (CMAI), MK Panthaki said the new millennium poses challenges to the garment industry in terms of management, technology, marketing and product innovation.

``The industry must gear itself to install modern equipment and absorb technology backed by low interest funds from the recently-instituted technology upgradation fund (TUF),'' he said.

It must move away from its traditional line of manufacture to bathrobes, nightgowns, lounging suits, pyjamas, woven suits, industrial garments, garments for use in hospitals, by defence forces, police, road repair workers and school/corporate uniforms.

In the knitwear sector, Panthaki said, the industry must turn its attention to sportswear, swimwear, beachwear, socks, tights and lingerie. It must also come up withinnovative strategies to market special garments in urban areas.

The next five years will also see the end of quota regime in export markets, Panthaki said. ``This will make for severe international competition where only players that can offer impeccable quality at economic prices and can deliver garments right on schedule would survive.''

However, the ultimate quality of garments cannot be better than the quality of fabrics from which they are manufactured. Nearly 75 per cent of fabrics in India are made on powerlooms. Their modernisation must be accorded top priority, he said.

Panthaki said the industry is surviving in a high-cost economy with taxes, duties and levies at every stage which go to inflate the cost of manufacture.

The total effect of such burdens on the cost of manufacture of a garment is as high as 35 to 38 per cent. Compare this with the import duty on garments which is 40 per cent ad valorem with no countervailing duty.

``It is clear how easily the domestic garment industry can behijacked by imports from neighbouring countries which are undervalued even casually so as not to raise eyebrows of Indian custom authorities.''

Providing drawback of such imports to garment exporters is frowned upon by the European Union (EU) and the United States under the grab of subsidies. In the face of such arm-twisting tactics, Panthaki said, the only possible alternative would be to have just one level of duty, say 10 to 15 per cent, to be levied only at the point of final sale to the consumer.

``This would eliminate all intermediate stages of levies/duties and serve to bring down the cost of manufacture. Refund of this final levy against exports cannot be challenged,'' he said in an article published in the latest issue to apparel fortnightly magazine.

At the same time, entrepreneurs must absorb new technology and make serious attempts to change their product mix. ``Any pussy-footing on this score will lay the industry bare to foreign competition on its own home ground, the responsibility ofwhich will lie solely on the industry. No tears need to shed on the laggards.''

Panthaki said the rural economy has undergone a virtual revolution. Improved agricultural production, growing role of cooperatives and the effect of electronic media has changed the dressing habits of rural consumers. The industry must pursue this vital market vigorously, he said.