India has long been a textile producing nation and a major producer
of raw cotton. The position of cotton, however, changed dramatically
in the 1980s and 1990s with the growing use and falling prices of
man-made fibres on the global scene-notably polyester. These fibres
became available on the market at prices which severely challenged
the dominance of cotton, both for domestic usage and for export.
A number of factors lay behind this development. One was the
economic slump in South-East Asia, which led to currency devaluation
by a number of countries and cheaper exports of synthetic fibres.
Second, surplus production capacity throughout the region gave rise
to dumping, prompting importing countries to impose protective
tariffs. India, because of its traditional dependence on cotton, has
probably suffered more than most other Asian nations. But it has
reacted in a positive manner. Investment is taking place in larger
capital intensive plants in the form of backward integration into raw
material manufacture. As a result, a number of smaller companies
have either closed or been taken over.
India's man-made fibre industry has grown to the point where it is
larger than that of any other country in South Asia. Cotton, although
still important, has now been almost overtaken by polyester staple and
filament. Another significant development has been the widespread
replacement of rayon by nylon in tyre manufacture. | 
