Even as the stock market continues to give a thumbs down to the textile sector, and the textile ministry continuing to believe in the ultra-ambitious export target of $50 billion by 2012 instead of the earlier projected 2010, the reality is somewhere in between.

On the basis of fundamentals, the prospects for the Indian textile industry have never looked brighter in the last 15 years. The global textile and clothing trade environment is as close to free trade as it can be, notwithstanding the duty-free access some least developed countries enjoy in select developed markets.

This situation is on account of the fact that almost all developed countries, including the US, the UK, Germany and Japan, have all but accepted the reality that it is no longer commercially viable for them to have thriving textile and clothing manufacturing industries and hence imports are the only feasible solution to meet their needs.

China has been and continues to be the world's largest manufacturer and exporter of textile and clothing products but finally the Chinese export juggernaut is coming to an unmistakable slowdown on account of various internal factors in the Chinese economy and with that, an increase in its domestic demand, rising labour rates, and steadily appreciating currency. Notwithstanding India's appalling physical infrastructure and less-than-inspirational political environment, India continues to shine in the minds of global businesses including the buyers (retailers and brands) of textile and clothing products and the suppliers (textile and clothing products producers looking to identify new, promising manufacturing locations).

India's raw material base continues to gather strength with rising productivity and production of cotton and man-made fibres. The domestic market continues to grow handsomely in volume and value and is poised to exceed $50 billion by 2014, up from the current $35 billion or so.

And finally, and very encouragingly, the central and state governments and the textile ministry are very supportive of the sector and is willing to walk a fair distance provided the industry is willing to pick up the gauntlet and commit itself to investing intelligently but aggressively. Overall, the sector offers incremental revenue potential of no less than $50 billion (over Rs 200,000 crore) by 2014 and over $125 billion by 2020, far exceeding the incremental revenue potential in the same period from the consumer durables and electronics, automobile, media and entertainment, civil aviation, pharmaceutical, healthcare services, or insurance services.

In this background, it is surprising and certainly disappointing that the major Indian industrial houses as well as new big-ticket entrepreneurs have, by and large, chosen to ignore the potential of this very promising and strategically defensible sector. Alas, against the investment absorption capacity of almost $10 billion or more per year for many years to come, the total investment in the sector during the last five years has probably been less than $10 billion.

In the last 15 years, less than $1 billion has come in as FDI, an abysmal performance by any yardstick.The reason for this lack of enthusiasm probably lies in the fact that while the textile sector helped in laying the foundation of industrialisation of India post independence and certainly was the foundation for many major industrial houses of

India in the early post-independence decades, various factors including regressive government policies of the 80s and 90s led to a steady decimation and decline of the organised textile industry. While some industrial houses went into decline accordingly, many others like the Birla Group and Reliance Industries [Get Quote] moved on to greener pastures with textiles and clothing parts of their businesses occupying only a minuscule share of their overall management attention and resources.

It is difficult to suggest specific steps for bringing textile and clothing manufacturing on the radar of the current titans of Indian industry and enthuse them to announce mega investments in this sector too, even as they demonstrate unprecedented hubris and conviction to plan multi-billion dollar investments in media and entertainment, energy, telecom, retail, real estate, infrastructure and other sectors that are indeed promising but come with higher risk and many more challenges.

However, there could be a learning for the government and the Planning Commission from the bold response to the "fab policy" (semiconductors) that has elicited multi-billion dollar investment commitments from diverse business houses such as Reliance, Videocon [Get Quote], and Moser Baer [Get Quote] among many others. Probably the textile ministry has to work out a new, bold policy beyond the very successful "Textile Upgradation Fund Scheme" (TUFS) specifically targeted towards encouraging mega (at least $250 million or more each) Greenfield investments in specified manufactured products in the textile sector (apparel and technical textiles, apparel and made-ups, textile and apparel production machinery).

The sector has the best potential for employment generation (besides retail and healthcare) and hence garnering the support from the state governments for land and other infrastructural support should be easier. There is also encouraging appetite still from large private equity funds and many major global investors to look at investing in the Indian textile sector. Hopefully, great Indian textile opportunity will not go begging!