In the liberalised era when the customer focus is on quality, India can retain its competitiveness only by adopting the latest technology. Despite the fact that China is world's largest manufacturer and exporter of textiles, old and unproductive units and a high cost structure resulted in an accumulated loss of $1.3 billion for the industry in 1997. Lack of modern machinery, rising wages, need to import raw materials and inefficient state owned enterprises are also affecting competitiveness particularly in fabric manufacturing.

But China remains highly competitive in the manufacture of garmentssince the process is labour intensive and the scope for increasing efficiency through automation is limited. Bangladesh has the lowest labour costs in Asia, which provides it with a sharp competitive edge in labour-intensive segments of the textile industry such as ready made garments. However, the industry is characterised by poor labour productivity, outdated machinery and is dependent on import of gray and processed fabric.

Although Pakistan also suffers from poor labour productivity and use of outdated machinery, an assured supply of cotton at competitive prices makes it a highly competitive exporter of cotton yarn, fabric and garment.

However, since Pakistan mainly has short staple fibre cotton, it is unable to manufacture finer yarns and its realisations are low. Its fabric exports are mainly in the form of gray cotton cloth since it has inadequate dyeing, printing and finishing facilities.

Indonesia's strength lies in polyester and viscose based products where it has the advantage of economy ofscale due to large fibre manufacturing capacity. The country does not concentrate on cotton textile as it is not a major cotton growing state and has to import 96 per cent of its cotton requirements. Due to lower labour cost, Indonesia remains a competitive textile manufacturer.

The South Korea textile industry has the advantage of abundant availability of synthetic fibres at competitive prices and units also have economies of scale. But escalating labour prices has affected the country's competitiveness. However, South Korea is still a major exporter on account of highly automated and productive operations of its textile units.

Thailand too faces a problem of rising labour prices which is eroding its competitiveness despite a well developed synthetic fibre industry which enables manufacturers to source raw materials at optimum prices. Devaluation of the Thai Baht has provided strong impeutus to exports, and growth in exports is expected to have remained strong in 1998. Japan has a large textile industry,but lack of domestic demand has affected production in the past few years. Spinning and weaving capacity have declined sharply but the synthetic fibres segment has shown good growth.

High labour cost has eroded competitiveness of Japan's textile industry and many mills have closed down in the recent years and dependence on imports has risen sharply.

The US is the single largest textile market in the world and its imports account for a major part of total consumption. Both USA and Canada are high cost textile manufacturers and are competitive only in high value-added product segments.

Mexico, on account of its low labour cost and access to the US market because of the NAFTA agreement, is continuously increasing its penetration in the US market.

The European Union (EU) has become uncompetitive in labour intensive segments like spinning, commodity yarn and weaving gray cloth due to a sharp increase in labout cost. However, design and processing capabilities in the EU are very strong making France,Germany, Italy and Belgium large clothing exporters. The findings of the study reflects the fact that India is one of the few countries which enjoys the advantage of low labour cost. But India can ensure its place in the world market only if it takes seriously the need of modernising its mills.