Are exporting firms more productive in the Indian textile industry?

Purpose – This paper aims to study whether exporting enterprises are more productive in export-intensive industries. It also aims to identify the action area and policy direction for enhancing productivity in Indian textile manufacturing. Global integration has increased the volume of international trade. It is crucial for countries to have competitive enterprises to capture a larger share of the global economy. Improvement in productivity performance not only enhances competitiveness but also promotes growth in an economy. Design/methodology/approach – A productivity analysis for the Indian textile manufacturing industry using firm-level panel data is conducted. The data are collected for 160 firms relevant to the period from 2007-2008 to 2012-2013 from Ace Equity database. Using the technique of data envelopment analysis, the output oriented Malmquist productivity index is computed and the sources of productivity change are identified. Also, a comparison between the productivity performance of the exporting and non-exporting firms has been made. Findings – The results suggest that exporting firms are exhibiting better productivity performance and resource utilisation during the study period. Technology change and scale efficiency seem to be the major sources of productivity gain for exporting firms. Research limitations/implications – The research is limited to a single industry, reference database and methodology. There is scope for further in-depth, micro-level research to analyze the differences in drivers of productivity for exporting and non-exporting firms. Originality/value – This paper provides validation to export promotional policies in the Indian textile industry by establishing better productivity performance of exporting firms. It also provides direction for managerial action by identifying efficiency component as the factor pulling down productivity.