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Impact of Liberalization on Indian Firms—Some Issues

In: The Indian Textile and Clothing Industry

Author

Listed:
  • Mausumi Kar

    (Women’s Christian College, University of Calcutta)

Abstract

This chapter incorporates the resultant implications of the withdrawal of MFA quota on the firm level activity and the industry level output and employment in addition to describing the significant changes brought about in the structure of the textile and clothing Industry of India. The first section, with the help of an analytical structure and its supporting empirical observations, shows the importance of expenditure on sales promotion and marketing activities in enhancing the penetration capacity of the domestic industry in the unleashed global market. The second section of the chapter shows that the industry, since the withdrawal of quota, has witnessed unprecedented concentration of firm level activities not only by size of operation but also by specific regions or states within the country, thereby creating some sort of inequality. Relating trade and labor market outcomes, the firm-level empirical estimates show that the export-oriented firms in India were not affected adversely and that the aggregate wage bill also rose during this period. The firm-level panel is supplemented by a state-level panel to capture the more aggregative impact of the withdrawal of MFA on the level of labor earnings in various regions of India. It is inferred that the aggregate state level wage bill falls as the profit level rises for the industry. The results also show that regional wage disparity has strong relation with regional disparity in firm-concentration at the level of the industry.

Suggested Citation

  • Mausumi Kar, 2015. "Impact of Liberalization on Indian Firms—Some Issues," SpringerBriefs in Economics, in: The Indian Textile and Clothing Industry, edition 127, chapter 0, pages 35-68, Springer.
    • Handle: RePEc:spr:spbchp:978-81-322-2370-2_3
    DOI: 10.1007/978-81-322-2370-2_3
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