"With the credit card-authorisation expected to come into operation within a year's time in India, e-commerce in textiles will take off which will in turn make the sector a `pull' system," said Prodipto Roy, a consultant with KSA Technopak, a leading US-based consultancy firm dwelling on textiles in an exclusive interview with The Financial Express. E-procurement and e-auctioning will emerge as the leading Internet-based solutions that will save time and money while conducting business-to-business (B2B) transactions between each member of the entire chain.

A central institution will be created under the RBI guidelines to coordinate with the subordinate banks to accept online payments. "Once the credit card authorisation is in place, the consumer's first click on the demand order would lead to a host of quick response activating operations for the entire chain linkage, which include spinners, weavers, processors, garmenting, retailers and the customers," said Roy.

Starting at the top of the link - customer - the consultancy firm says that with the constantly shifting consumer preferences, the manufacturers on one hand try to maintain their margins, at the same time keep in mind the high expectations of quality and competitive retail prices. With this, there were always risks of lower revenues, higher cycles times and lower cash flows, apart from high inventory levels, lower return on assets, high non value-adding costs which adds up to a high operating costs.

"A simple product like a shirt, for instance, would involve 40 or more business operations," said Roy. The idle time, from the fibre stage till the product reaches completion, is estimated to be almost 90 per cent. This can be brought down to zero and leading to enormous savings in costs, lower inventories and a lower asset base (improved return on assets).

The firm said that the Indian textiles sector is a highly fragmented example in the networked world. "This is quite unlike the situation prevailing in highly-developed countries. In the developed world, the entire textile supply chain is `retailer-driven' or even customer-driven. In the Indian context, it is spinner-drive," said Roy.

Here the lowest in the supply chain rung, the spinner, pushes the business and this has to change to the retailer-driven model, said a KSA Technopak study. With the use of IT tools in the textile sector, particularly in the supply chain management, there would be increased revenues through increased customer satisfaction and hence access to newer markets, added the study.