RC 01 Nov 09

Centuries before Christ, India had been known to grow cotton and
convert it into fabrics. But it became commercially viable only in
1793 when the British invented the cotton ginning machine that
separated seeds from the fibre. Post industrial revolution, cotton and
its fabrics became one of the biggest industries in many developing
countries and figured prominently in the world trade. In order to
protect the textiles and apparel industries in the rich countries of
Europe and the United States of America, a system was devised in 1974
under which the export of these items from developing countries was
subjected to a ceiling through quotas which was negotiated each year
on a country to country basis. The rich countries thus distorted world
trade for their own benefit and the strategy was called the
Multi­Fibre Arrangement (MFA). This global device was identical to the
licence­permit raj that existed in India for the first 40 years of
independence. The MFA came to an end on January1, 2005. In India, the
export of these products had been controlled by two
government­sponsored organisations, viz. Cotton Textiles Export
Promotion Council (Texprocil) and the Apparel Export Promotion Council
(APEC). With the phasing out of the MFA both these organisations will
have to face emerging global challenges in an entirely different
environment. Till now these organisations had enjoyed enormous clout
and financial power by distributing/allocating MFA quotas to
exporters. In the scramble to corner the quotas there were many who
were happy to sell their quotas at a premium rather than export the
products. These councils will now shrink in size, activities and
finances. There will also be no room for two councils to promote the
same group of items. It may soon be a struggle for both the councils
to stay afloat. It is also likely that older organisations in the
private sector like the Indian Cotton Mills Federation (ICMF) and the
numerous mill owners' associations in different parts of the country
will now play a dominant role in promoting the exports of textiles and
clothing during the post­quota years. Export organisations that make
periodic reforms in tune with global changes would be able to assist
exporters better. In India such exercises are seldom undertaken. In
the late nineties one Union Minister had appointed a committee of
officials to examine the criteria to be adopted for restructuring
their activities. However, he had to leave the government shortly
afterwards due to political reasons and the committee died a natural
death. Export organisations should become the trail­blazers and
path­finders of exporters, rather than struggle with the system of
collecting and distributing public money to exporters. India's history
and growth of exports since independence demands an intense review of
its export promotion policies, which include the role, functions,
activities and finances of export organisations. Since an exporter
gets up to thirty percent of his export price as assistance from the
government, membership of an export organisation is necessary to get
their assistance from the government. A natural consequence of this
system is that the government – more precisely, a few bureaucrats with
little knowledge of export – has been freely interfering in the
working of export organisations in the country. During the last half a
century, India's merchandising exports could achieve only an annual
measly figure of $62 billion in spite of the best efforts by over 40
export organisations. This sluggish growth in exports points a
definite finger at several basic economic deficiencies such as roads,
rail, high charges and turnaround time at ports, electricity and
electricity laws, communications, water, corruption in public life,
labour laws, unhealthy trade union practices, low productivity,
antique administrative system, etc that reduce the competitive
capacity of Indian exporters, rather than a lack of export promotion
infrastructure.


1. What, according to the writer, is responsible for the lackadaisical
growth in exports?

a) Lacunae in the basic infrastructure facilities

b) Excessive bureaucratic interference

c) Ill­coordinated functions of the export promotion councils

d) Absence of adequate export promotion infrastructure

2. What is pointed out by the author, as an important malaise of the
quota regime in India?
a) Unhealthy competition among exporters

b) World trade getting distorted and favouring the rich countries.

c) The recipients trying to make money by disposing of the quotas at
premium and not actually exporting.

d) Despicable government control over exports.



3.The scrapping of Multi-Fibre Arrangement would result in all the
following consequences EXCEPT:
a)
Private mill owners' federations would come to the fore.
b)
The exports of developing nations would increase.
c)
Real competition among the exporters would emerge.
d)
Government-sponsored export promotion councils would flourish.


4.According to the passage, the real function of the export
organisations should be to
a)
collect and distribute public money.
b)
act as liaison between government and exporters.
c)
get the exporters due share for their exports.
d)
be guides to exporters in spotting and developing potential markets.