The threat of trade sanctions comes at a time when India's garment exports to the US have started picking up after a period of stagnation.

Exports in April, the first month of the current fiscal, posted a measly growth of 7 per cent over the same month last year, according to provisional figures available with the Apparel Export Promotion Council (AEPC).

AEPC sources say that exports to the US were more than those destined for the European Union in April. Incidentally, the EU market is larger than that of the US. Exports to the EU were due to the recession prevailing there.

The EU accounts for about 40 per cent and the US about 25-26 per cent of their garment imports from India.

In order to achieve the ambitious target of $5.9 billion set for the 1998-99 fiscal, garment exports willhave to register a growth of 20 per cent plus in the remaining period of the year.

Recession in the EU, sluggish demand in the US and the currency meltdown in South East Asia led to India's garment exports recording a growth of $4.9 billion in the 1997-98 fiscal, sharply down from the target of $5.2 billion.

Sources fear that even if the demand in the US picks up further, it may be difficult to compensate for the loss of exports to the EU. The South East Asian currency crisis has rendered a competitive edge to garment exported from the region to western markets.

Given the present situation, India has no option but to diversify into manmade and woollen apparel to meet the demand in the eight-month-long period in the western world. So far, the industry has been meeting exclusively the summer wear requirements of the western region for the past few years.

What has facilitated this is the government's recent decision revising the standard input-output norms for 28 garment export items.

Sources said thegovernment decision would "enable us to make our presence felt in the European Union, US and other western countries throughout the year". They did not rule out the possibility of the government coming out with revised norms for more such garment export items in the future.

The modified export-import policy (1992-2002) also "contains welcome provisions permitting the garment industry to import fabrics with flexible value-addition norms", sources added.