An industry group claims that speeding up the pace of reforms in India's textile industry could help the sector grow by 22% by 2010, encourage investments of US$55bn, and create jobs for at least 65.4m workers.

However, The Associated Chambers of Commerce and Industry of India (ASSOCHAM) also warns that unless existing problems are tackled soon, investment over the next three years could fall to US$16bn, with job prospects remaining at 19m.

A new ASSOCHAM study on 'Indian Textile: Weaving a Global Spin,' also fears growth predictions would slip to 6% unless vigorous efforts are made to reform the textile sector.

India's textile industry attracted investment of INR33,000 crore during fiscal 2006-07, up 51% from INR21850 crore in the previous year, the report says. The total size of the textile sector is $47bn, with the domestic market accounting for $30bn and exports for the remaining $17bn.

But ASSOCHAM president, Mr Venugopal N Dhoot, says the rising rupee has already lowered margins and made it more difficult for companies to compete internationally.

He is calling on the government to realign duty rates across different segments of the industry, cut customs duties on raw materials and textile machinery.

At present, excise duty on finished man-made fabric is 8% while that on its raw material is 16%. 

Dhoot also says a 4% customs duty levied on textiles and clothing should be refunded to exporters.

"The textile industry is in the dire need of fresh investment in capacity expansion, modern technology and machine installation," the report concludes.

It says global manufacturers and private equity funds should be encouraged to invest in small scale manufacturers, and that India's stringent labour laws need urgent reform.