With the changes in trade policy, the export competitiveness of Indian textile firms increased:Study

Press Release (ePRNews.com) - NOIDA, India - Mar 11, 2017 - “With the changes in trade policy, the export competitiveness of Indian textile firms increased which led to increase in the profitability of firms in the Pre-Agreement on Textiles and Clothing (ATC) period and this factor, in turn resulted to decrease the dependence on debt financing of these firms” reveals a study titled “Effects of the Trade Policy Changes on Capital Structure of Textile Industry in India : An Empirical Investigation” co-authored by Mr. Abhinab Ghosh and Prof. Indrani Chakraborty from Institute of Development Studies, Kolkata has been published in the latest issue of Finance India – Quarterly Journal of Indian Institute of Finance, Vol. XXX No. 4, December 2016 issue released recently.

In the research paper, the effects of trade policy changes on capital structure of Indian Textile industry are studied. India became one of the leading exporters of textile and clothing in the world due to the implementation of the Agreement on Textiles and Clothing (ATC) since 2005.

In the post ATC period though the profits seem to have not kept the pace and thereby a preference towards debt for financing has been observed where new firms found it more feasible to go for debt based instruments and retained earnings as possible lower cost of capital with these avenues have lured them. Thus there has been a tendency for the textile and clothing firms in India to have been more inclined towards the pecking order financing pattern.


Source : Indian Institute of Finance
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