ABSTRACT
In this chapter, the determinants of export competitiveness (EC) of the Indian textile industry, its two groups, and interrelationships among them are presented. The purpose of this is to identify key determinants of EC in order to improve the competitiveness of the industry. The variables considered under study are EC, labour productivity (LP), capital productivity (CP), unit labour cost (ULC), exchange rate (ER), and real effective exchange rate (REER). It can be concluded that the select determinants have different relationships with the EC for the textile industry and its two groups. The findings of the Granger causality test show the presence of only uni-directional causality in case of the textile industry. However, feedback effects or bi-directional relationship of ULC with EC is found in case of the ‘Textiles’ group, and only uni-directional causality is running from LP and ER to EC. In case of the ‘Textile Products’ group, there is the presence of only uni-directional causality running from LP, CP, ULC, and ER to EC. The findings of the Johansen and Juselius co-integration test reveal the long-run relationship between the select variables for the Indian textile industry and its two groups, the ‘Textiles’ group and the ‘Textile Products’ group.
