The Indian textile and apparel industry urgently needs to develop new capabilities in design and product development if it is to capture billions of dollars worth of value that is being lost to other countries, a new report says.

The report, by management consulting firm Third Eyesight, highlights the immense gap between the country's current exports of around US$20bn and its vision of US$55bn.

And it says the Indian industry needs to look beyond incremental steps if it is to bridge this gap.

The report titled 'Eternal Hope to Reality: Sustained Global Competitiveness for the Indian Textile and Apparel Industry' says India compares poorly with other countries on the value captured per employee.

For instance, if the value of export generated per labour employed in the Indian textile and clothing industry were as much as Turkey, India's exports would be close to China's exports of US$161bn.

Third Eyesight's chief executive Devangshu Dutta said: "Dramatic growth cannot come through concentrating on volume alone.

"Even if the industry wishes to increase its volume of trade, ports are operating at 91-92 % of capacity utilisation. This sort of growth of exports is only possible through focusing on value addition."

The report notes India's exports are still too weighted in favour of raw materials and intermediate products, rather than finished products.

This, it says, is a major concern if for the long-term competitiveness and value-capturing capability of the industry.

According to the Third Eyesight report, apparel exports account for only 41% of India's textile exports in 2007-08.

India is neither the cheapest producing country nor the quickest in terms of delivery, but it already provides buyers with value in terms of product development and design.

According to Third Eyesight, this is the winning formula that needs much more focus.

The report describes how design, merchandising and product development capabilities can enable Indian companies to become strategic suppliers to global industry.

India's domestic industry, and its skill at understanding market needs, creating and merchandising product, can also play a valuable role in the industry's global growth.

Dutta believes now is the time for the industry and the government to emulate successes created by countries such as Italy.

"By creating an ecosystem focused on design and product development, India can create and capture the billions of dollars worth of value that is being lost to other countries," he says.