Estimation of Technical Efficiency and Evaluation of Its Relationship with Export Performance of Organized Composite Textile Industry in India

Textile Exports from India have been growing at a marginal pace over the past few years, facing stiff competition from established players like China, Bangladesh, Vietnam as well as emerging Asian and African nations. Growth of traditional retail in the largest markets for textile exports being the US and Europe has slowed down due to the emergence of e-com and reduction of inventories across the supply chain. Indian textile exporters need to improve their export performance to outgrow the competition and assume leadership positions. This research focuses on the export performance of the Organized Composite Textile industry of India with operational performance, measured as ‘Technical Efficiency’. The study involved the estimation of Technical Efficiency using Stochastic Frontier Analysis (SFA). Technical Efficiency and Export Performance was evaluated for 52 firms of diversified size and representing all four regions in India. The firms were classified into 4 quarters according to the descending order of export revenue and comparison of their respective Technical Efficiency was carried out. It was found that firms in the top quarter (with higher export revenue) had higher Technical Efficiency and the firms with lower export revenue performed lower on Technical Efficiency. The study also revealed that Technical Efficiency, as well as Export Performance, do not differ significantly as per the size of the firms. This study provides a strong direction to the Exporters from India to focus on Operational Performance, to perform better in the Export Market.