Japan's textile and clothing industry must focus more on its technical and design strengths than its production and distribution operations if it is to survive in the future, government officials have claimed.

Yarn makers should continue to develop new fibres while small and medium-sized firms will need to restructure their operations if they are to stay in business, according to a government-backed report.

The blueprint by the country's Textile Industry Sub-Committee of the Industrial Structure Council also backed the continued distribution of $25 million in annual subsidies to textile and clothing firms until at least 2009.

The report was titled "Way forward for and measures to be taken by Japan's textile industry".