For T.R. Vijaya Kumar, this is the right time for India to take on Bangladesh, Vietnam and even China for leadership in the global apparel industry. Kumar is a second-generation manufacturer and his export company now 1,700 people and has ambitions to double its sales by 2020having started off as a small family undershirt business in his hometown of Tiruppur in southern India.

By now tripling exports and adding 500,000 jobs, Tiruppur is often referred to as the knitwear capital of India.

“The next China will be Tiruppur,” Kumar says. “The cost of production has gone up in China, they are phasing out textile. Opportunities will go to other countries, so we are to grasp it,” he says describing the kind of opportunity that he and other manufacturers have.

However other Asian nations are way ahead in the race. India’s 3.7 percent global market share lagged behind Vietnam’s 5.1 percent and the $17 billion exports of apparel were about half as much as Bangladesh’s last year.

Being a labor-intensive industry, apparel has historically helped developing economies transition out of agriculture and hence closing the gap is crucial.

To keep up with its fast growing young population, the Indian economy needs to generate 80 million new jobs by 2025.

“The window of opportunity is narrowing and India needs to act fast if it is to regain competitiveness and market share in apparels,” Arvind Subramanian, the Finance Ministry’s chief economic adviser.

When last month, Target Corp. terminated $90 million of business with Welspun India Ltd. for labeling cheaper bedsheets as premium Egyptian cotton, the textile industry suffered a reputation blow which has added to the challenge.

Worker productivity, which is almost three times lower than in China, is a key weakness of the sector. According to a study to be published next year by the Asian Economic Policy Review, a biannual journal from the Japan Center for Economic Research, the use of modern production technologies and the capacity to take on large orders is limited in part because Indian apparel manufacturers tend to be unregistered and smaller than in competing countries.

And as foreign garment and textile producers continue to embrace automation, that gap could widen.

“India needs to start climbing the ladder fast to take advantage of its young population. Automation is making the ladder shorter and shorter over time,” said Russell Green, an international economics fellow at Rice University’s Baker Institute for Public Policy in Texas.

According to Subramanian¸ compared with just 15 percent in China, about 78 percent of Indian companies employ less than 50 workers. Known by economists as the “informal” economy, it also means a lot of them remain below the threshold of government taxes and regulation.

Kumar recommends building 100,000 houses and dormitories for 300,000 people and point out that the shortage of skilled labor is “the single major threat to the growth of textile industry.”

According to the World Bank report, while buyers perceive the country as slower and less reliable than China or Vietnam, afocus on cotton garments limits its access to the winter clothes market.

“With the duty preference for Bangladesh, it becomes very difficult for Indian companies to compete,” despite India’s large cotton production, said Anil Gupta, an analyst with ICRA. He added that business is helped to stay profitable and continue hiring on government incentives.

“To compete, we have to bring new startups in India, we have to reduce our costs of operation,” Kumar said. “That’s why we are asking our Prime Minister to have a meeting in Delhi — like Tiruppur clusters, we have to make more clusters in India.”

(Adapted from Bloomberg)