Come December, 2004 and Indian garment exporters will either have to perform or perish; margins will come down, they will have to compete for every piece of garment being sold in foreign markets and only the fittest will survive.
These are no doomsday predictions, but a scenario when quotas will be confined to history books and Indian exporters will have to compete in an open economy. With just about two years for this to happen, is the Indian industry ready for it?
"We are not in a very good position due to high costs of our product and not much of quality consciousness in the small sector though it is fast changing," says A K G Nair, an industry expert.
Bangladesh, Sri Lanka, China are already prepared to face the challenge. Their costs are less and quality wise, they are much more advanced, he says.
Though garment exports contribute almost 24 per cent annually to the national exchequer, India's share in the world market is very less - just about three per cent. Most of the products are being exported to US and EU countries, but Indian industry is also exploring Latin America, South Africa and Middle East, says Nair.
"The Indian apparel industry is slowly and painfully realising that with quantitative restrictions on their way out, it will be the survival of the fittest," he says.
"Technology is one of the important vehicles for reducing costs. We have to prepare ourselves by modernising production processes and improving quality," says P K Khanna, president, Apparel Machinery Association of India.
"The garment machinery industry is already gearing up to face the challenge and is producing international-quality components which big manufacturers are also sourcing from India. But this is just one step, we have to go much further," says Khanna.
But as of today, the industry is not very well organised, says Nair, noting it is a very personalised industry and scattered in small quarters. The success of a consignment depends on the entire supply chain and it becomes difficult to manage all its components efficiently all the time.
"Many factors are not in our hands - the erratic electric supply, customs clearences, transporter strikes all affect our exports," adds Nair.