Exports of cotton textiles and clothing were valued at 7.5 billion US dollars in 1997 compared with only 0.23 billion US dollars in 1972. The government's efforts to restructure and modernize the textile industry have been pivotal to the recent surge in exports of cotton textiles. Exports of cotton from India are currently under government control. The stated objective of the policy was to strike a balance between the interests of the cotton growers on the one hand and textile mills and the decentralised handloom and powerloom weavers on the other. Another aim of the country's cotton export policy was to ensure India's continued presence in the international market.
Export quotas are determined and announced by the government at the beginning of the cotton season.
On the other hand, since liberalization in 1994, no licence is required for imports of cotton, which are not subject to any customs duty or other restrictions. Several developments may encourage India to become more active in the world trade in cotton in the next few years, in particular in imports. India has aggressively expanded its presence and market share in the world textile market over the past few years and extended its penetration into the cotton yarn, fabric and clothing markets. In 1996, about 50 percent of its cotton yarn was exported to countries in Southeast Asia, with additional quantities going to other Asian textile exporting countries, such as Bangladesh. The removal of quotas on India's textile exports to the EC and the United States by 2005 would induce a direct increase in exports of textiles and clothing.