The textiles sector in India, primarily dominated by the unorganised and small players, had taken a major hit with demonetisation and the implementation of the goods and services tax (GST). The sector appears to be finally recovering, as reflected by the improvement in the Index of Industrial Production (IIP) and exports data over the last few months. The government has tried to support the domestic industry by increasing import duty on several textile items. However, there are some deep-rooted problems with the sector, and these need to be addressed to see any long-term sustainable revival in the sector. At the same time, it is also disheartening to note that the Indian textiles industry\u2014which is one of the oldest industries of the Indian economy\u2014is finding it difficult to compete with much smaller players such as Bangladesh and Vietnam. The textiles and apparels industry in India is valued at around $127 billion in size. The sector is a large foreign exchange earner, and is the second-largest employer (after the agricultural sector) in the country. In India, the sector enjoys the presence of the entire value chain\u2014from fibre, yarn, fabric and apparel\u2014apart from the availability of cheap and abundant labour. However, in spite of these benefits, India\u2019s share in the global textiles exports is just 5%, which is minuscule as compared to China\u2019s share of 38%. Much smaller players like Bangladesh and Vietnam have a share of 3% in global exports and are increasingly threatening India\u2019s exports. The exports from the sector are valued at around $37 billion, amounting to 13% of India\u2019s total exports. The share of textiles in India\u2019s total exports has fallen sharply\u2014from a high of 25% in FY02. The export growth from the textiles industry was expected to jump, with the abolition of the Multi Fibre Arrangement (MFA) in 2005-06, whereby developing countries were released from export quota requirements. However, growth did not rise sharply, as the industry faced increased competition from low-cost producers like Vietnam and Bangladesh. The rise in labour cost in China could have been the perfect opportunity for India to increase its share in the global textiles industry. But India\u2019s textiles industry has not been able to encash this opportunity, as the industry grapples with domestic issues including outdated technology, inflexible labour laws, infrastructure bottlenecks, and a fragmented nature of the industry. In midst of the existing challenges, the industry also needs to gear up for the abolition of some of the existing export subsidies. According to the World Trade Organisation\u2019s Agreement on Subsidies and Countervailing Measures, a country needs to phase out export subsidies for a product as it achieves export competitiveness, defined as 3.25% share in world trade, and the per-capita income reaches more than $1,000 per annum. As per this agreement, India is under pressure to end export subsidy for the textiles sector by 2018. This implies that the existing subsidy schemes\u2014including the Merchandise Export from India Scheme (MEIS) and the Export Promotion Capital Goods (EPCG) Scheme\u2014will get affected by the same. There are a number of factors ailing the industry and the government needs to take multiple actions to revive the industry. To begin with, the government needs to move away from export-specific subsidy, which violates WTO norms, to focus on regional and cluster subsidies, technology upgradation and skill development subsidies, which benefit all the producers. Fibre neutrality is another aspect that will give a boost to the industry. In India, cotton and manmade fibres (MMF) have differential tax treatment. It was expected that with the introduction of GST, the fibre neutrality aspect will be looked into, but the differential tax treatment continues, with cotton taxed at 5% and manmade fibres at 12%. Globally, manmade textiles and garments are in high demand, with the ratio of cotton-to-manmade-fibre consumption at 30:70. India, despite being the second-largest textiles exporter in the world, lags in this category because of unavailability of manmade fibres at competitive prices. In fact, of the total textiles and clothing exports from India, cotton accounts for around 75%. There is a need to align our production with the global consumption patterns. While India has abundant supply of labour, flexibility in labour laws and adequate skilling will give a big boost to the textiles industry. For instance, women should be allowed to work in all three shifts, after taking into account adequate safeguard measures. This will enable the industry to employ more female workforce. The textiles industry in India is mainly dominated by small scale and unorganised players\u2014small and medium-sized enterprises (SMEs) make up around 80% of the industry. These SMEs find it difficult to manage the latest technology. It is here that technology upgradation schemes will help Indian players to increase both their productivity and competitiveness. In addition, the government needs to carefully evaluate the various trade agreement opportunities\u2014Bangladesh and Vietnam benefit from favourable access to some of the big apparel markets. Lastly, the Indian textiles industry needs to move up the value chain. India has a high share in global export market in upstream products, such as fibre and yarn (14% each). However, India has a low share in value-added downstream segments. India\u2019s exports of apparels and fabrics have a share of around 3.5% each in world trade. Compare this to China\u2019s share of 40% in the apparels segment, and even smaller players like Bangladesh and Vietnam have a higher share of 5.6% and 4.2%, respectively, in global apparels exports. The textiles industry is important not just for labour absorption and as a source of foreign exchange, but also as a symbol of India\u2019s rich heritage. We have the required ingredients in the form of raw material availability and abundant labour to make the industry a success story. There is a need to work on correcting the challenges in the form of outdated technology, inflexible labour laws and infrastructure bottlenecks. The government also needs to re-look at fibre neutrality and evaluate various trade agreement opportunities, while domestically focusing more on technology upgradation and skill development.