The international trade in textile and clothing sectors has been an exception to the most favored nation principle of GATT and since the early 1960s, has been a case of managed trade through forced consensus. However, the WTO Agreement on Textile and Clothing (ATC) marked a significant turnaround. The Indian textile industry had been plagued by obsolescence, labor problems, raw material vagaries and lack of modernization including that of spindles. The level of weaving technology is of lower order and knitting units do not possess capacity to perform dyeing, processing and finishing to international standards. It can be concluded that the textile sector has not developed much due to quota restrictions imposed by GATT and later by WTO till 2005.
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