Textile shares surge as quota regime nears end

Alok Industries has jumped 22.4 per cent in five trading sessions from Rs 60.70 on November 19. From a low of Rs 178.75 on November 11, 2004, Bombay Dyeing has jumped 19 per cent.

On Monday, Raymond, Indian Rayon, Bombay Dyeing, Garden Silk Mills, Alok Industries and Arvind Mills gained.

Investors have made a beeline for textile scrips on expectations of a surge in exports after the lifting of quotas from January 1, 2005. ‘‘Once the restrictions on exports from developing countries are lifted in 2005, global outsourcing of textiles will increase,’’ said an analyst.

Thanks to the high cost structure of locally manufactured products, major retailers in the US and Canada prefer to outsource products from cost-effective manufacturers overseas. However, due to the prevailing quota restrictions, outsourcing is fragmented to different countries.

India’s share of global trade is expected to grow the fastest in the post-Multi-Fibre Agreement (MFA) regime as its current quota allocation is among the lowest in the world. Besides expectations of a jump in exports, the fall in raw material prices, too, boosted textile counters.