India's textile industry plans to tap newer markets to beat an economic slowdown in traditional markets: US and Europe. According to Executive Director Siddhartha Rajagopal of Texprocil, “We need to access new markets and already there is a big effort going in Japan and Australia, as textile exports in 2008-09 is estimated to have fallen to $21 billion from about $22 billion last year and attempts to reach out to new markets is still at a nascent stage.  The share of these (new) markets is limited.

About 65% of exports is to the US and EU. Despite efforts to wrest orders from other exporting countries, the US-EU share is unlikely to come down significantly. Countries like Bangladesh benefit from zero duty under the LDC (least developed countries) programme with Australia, New Zealand, Norway, Canada and EU.

While others, like Turkey and Vietnam, also have lower infrastructure, labour and cost of capital. India at present has only one trade agreement for the textile sector with SAARC, a regional bloc that includes Pakistan and Bangladesh. China has more than 1,200 textile items which are duty free. India has got over a 100 of them, which have 6% duty and tariffs are coming in the way.

The problem was compounded by the global slowdown in the West, which hurt exports for much of 2008-09 and the decline accelerated in April-June 2009.  Textile and clothing exports to US, India's largest partner, fell more than 14% in Jan-April, the sharpest among Asian peers.

Domestic demand cushioned some of the effects of the downturn. In 2008-09, the industry was estimated to be $55 billion, of which the domestic sector constitutes $34 billion.