Globalization and Its Impacts on the Textile Industry of India - Coursework Example

Globalization and its impacts on the textile industry of India Globalization and Its Impacts on the Textile Industry of India Introduction Globalization is the integration from the interchange of world’s views, ideas, products, and other aspects of culture. It is the integration of people, companies and even governments from different nations, driven by the international trade and investment, which are highly aided by information technology. It may also be defined as the integration of the markets in the global economy, examples of markets being capital markets, money, credit and commodity markets. It is normally propelled by increased trade and investment. Globalization enhances interaction across borders and brings together people from different cultural backgrounds. Impacts of globalization on the textile industry of India may be on culture, environment, and country boundaries whereby exchange of goods and services may take place with reduced barriers and increased speed (Bhagwati, 2008). Industry and Analysis Indian Textile Industry Indian textile industry is among the largest textile industries globally and earns around 27 per cent of foreign exchange from exports of textiles and related products. The entire Indian industry is composed of: man made fiber, filament yam sub industry, cotton textile sub industry, jute sub industry, silk and silk textile sub industry, wool and woolen sub industry, and power loam sector. The growth of the industry has been largely contributed by economic liberalization that has resulted to a considerable growth of the industry and economy of India. The development and globalization of the industry took place simultaneously in 1990s. Globalization of the textile industry in India has enabled the country to generally increase its exportation and participation in the foreign market and generally has positively contributed to the economy of the entire country (Philip, 2010). Changing or Evolving Patterns of the Indian Textile Industry and How They Reflect Globalization Indian textile industry has since globalization, achieved a great contribution to the general economic growth of the entire Indian economy. The industry is continuously acquiring new ways of economically reforming and liberalizing the textile market. Trade is a great manifestation to this, whereby; it has become more extensive with involvement of more countries and regions making the country felt in the global market. It therefore has a potential of positively influencing the economic performance of the global economy in the coming years (Chaudhary, 2011). The industry has acquired patterns to match its growing commodity market. Viswaprakash (2012) argued that the changing or evolving patterns are that the industry has diversified the production strategies so as to be able to meet external demands, whereby the firms in this industry are coming out, from use of the traditional normal methods, and further finding and adopting new production methods and techniques in a way that they can meet the demands of the domestic market, for instance for garments that are designed as per the Indian culture as well as the external demands to regions that require a different design. It has also developed ways of cost minimization as a result of globalization whereby for instance it can outsource services like manufacturing, marketing, and other back end tasks to and from other countries. Foreign direct investment is steadily increasing, as well as creation of better and borderless markets for produced textiles. Communication and cultural barriers as well are getting minimized as well as political regulations (Chaudhary, 2011). Further, the Cultural diversity is being matched by the diversity in industrial capability. The industry has also welcomed changes from the long held traditional changes that have been in practice since independence and causing backwardness. Further, links have grown between nations, as well as improvement in transportation and infrastructure so as to improve cross border transactions. Opportunities and Difficulties for the Indian Textile Industry As A Result Of Globalization By weighing the opportunities and difficulties accruing to the Indian textile industry from globalization, it is evident that the opportunities outweigh the difficulties. Nevertheless, the difficulties should also be assessed to ensure that ways of minimizing them are determined so as to ensure that the industry achieves the best result from globalization. The opportunities that the Indian textile industries get as a result of globalization are: gaining competitive advantage, whereby the firms in the industry can specialize and benefit from the manufacture and exportation of textiles, in a way more advanced than that of industries from other nations. Secondly, the firms in the industry have an opportunity to economies of scale and thus the industry is able to serve a large market, satisfying high demands at minimal production cost. In addition, globalization gives the industry an opportunity of being cost effective, thus can acquire inputs or raw materials at cheap prices (Jindal, 2013). The industry also earns a foreign exchange out of globalization whereby it is able to earn a great percentage out of the export of textiles and other related products. There is also a chance to contribute towards the gross domestic product of the country. The industry also gets an opportunity to interact with people from other nations and learn about other cultures and also have the opportunity to break the political structures that prevent the trading with other nations. It also gets an opportunity to better access to external borrowing, and also is ensured of an increased movement of material goods. Conversely, the Indian textile industry encounters some difficulties out of globalization. These difficulties include: huge imports into the country of cheap textiles from other Asian neighbors. The industry also faces a higher production cost compared to other Asian competitors. There is also a difficulty of use of an outdated manufacturing technology in the manufacture of textiles. In addition, there is a difficulty of poor supply chain management and huge transit cost (Chaudhary, 2011). The industry still face cultural barriers from other ethnic groups in the market and also at times faces strict inter border restrictions while exporting and importing to foreign markets. Implications and Recommendations of Globalizations for Firms in the Textile Industry of India Implications of globalization are both to the firms in the industry as well as to the economy of the country at large. Among the implications to the country’s economy are among them benefiting the country from foreign exchange, attracting foreign investors who get interested in investing into the country, creating employment for the citizens of the country and also contributing to the GDP of the country which has been estimated to be about 3 per cent from the textile industry. The implications of globalization on firms in the textile industries are both beneficial and negative. In essence, the beneficial implications are highly regarded than the negative implications. The beneficial implications thus include avoidance of regulation, whereby firms can produce in countries with less regulation. Another beneficial implication is that the foreign companies in more developed countries bring in advanced technology that makes the firms in the textile industry to be more technologically advanced (Jindal, 2013). Among the negative implications of globalization on the firms in the textile industry are that it exposes the firms to competition from other foreign companies, with the foreign textiles appearing to be better to the Indian consumers than the domestic textiles. The firms also face overstandardisation of products through global branding, diseconomies of scale to large multinational companies, loss of stability in profits due to availability of a lot of choices for textile to consumers, difficulties of dealing with unpredictable demand in the international market (Jindal, 2013). Recommendations for the negative implications of globalization is that the government should come up with regulatory policies to protect the domestic firms in the Indian textile industry, and further develop an open market policy that will help to curb the negative implications. The firms in the industry should also join together to find ways of protecting the industry against vices that they face as a result of globalization, for instance the competition from foreign competitors and further develop an open market policy that will help to curb the negative implications. Conclusion The research is meant to analyze the implications of globalization, which is brought out as the integration of people, ideas and views, products and markets in the global economy is both advantageous and also disadvantageous to the involved economies, with the advantages outdoing the disadvantages. However as analyzed in the case of the Indian textile industry, the advantages accrue to the firms in the industry and the Indian economy at large. The firms in the industry benefit from competitive advantage, economies of scale, cost competitiveness, avoidance of regulation, and a wider market for their products. Economy at large benefits from increased flow of inward investment, foreign exchange, creation of more employment. The disadvantages on the other hand are summarized to be overstandardisation of products as a result of global branding, diseconomies of scales to large multinational companies, increased power and influence, potential loss of jobs in domestic market, increased pace of deindustrialization, increased interdependence of economies. In this regard, the impact of globalization is far much positive and beneficial to the firms operating in the Indian textile industry as well as to the Indian economy and country at large. References: Bhagwati J. (2008). Termites in trading systems. New York: oxford university press. Chaudhary, A. (2011). Changing Structure of Indian Textiles Industry after MFA (Multi Fiber Agreement) Phase out: A Global Perspective. Far East Journal of Psychology and Business, 2 (2), 1-3. Jindal, J. (2013). Globalization- It’s Socio-Economic Impact in India. International Journal of Emerging Research in Management &Technology, 2 (12), 41-43. Philip, G. ( 2010). Rethinking world. Oxford: Oxford university press. Viswaprakash, V. (2012). Globalization & trade in textile industry. International Journal of Marketing and Technology, 2 (5), 202-209. Read More