India now follows on from China as the second-most-preferred textiles sourcing destination after global quotas governing trade expired in January 2005, according to a study by the Confederation of Indian Industry (CII).

CII's study said India is now a "one-stop shop" for companies that want a reliable sourcing destination and has the potential to take over from China as industry leader.

India, the study points out, already has the advantage in terms of raw material availability and spinning, weaving and garmenting capacity.

The country must now focus on enhancing its economic and infrastructural capabilities, the report said, and also needs to work on improving its labour laws.

South Asia currently holds a 14 per cent and 9 per cent share in the US and European textile markets respectively.

Although China has been increasing its domination over the textiles market since quotas ended, its fraught trade relations with the US and Europe mean buyers are not convinced about its reliability as a one-stop sourcing choice, the study argued.