The increase in incentives would boost the profitability of Indian textile exporters and help them compete in the international market.

The DEPB prices have been revised for 83 product lines including cotton blouses, children's sweatshirt, gents' long coats and jackets and ladies' skirts.

Value caps have been fixed for most categories, a Directorate General of Foreign Trade official said, adding they refer to items with embroidery, metalised yarn or lining.

The enhancement of DEPB rates covers synthetic, blended, woolen and silk textiles, said a statement issued by Indian Commerce Ministry here on Friday.

The increase in incentives followed representations made by the textile industry which have been backed by both Commerce Minister Kamal Nath and Textile Minister Shankersinh Vaghela.

In September this year, DEPB rates for textile products were slashed across the board by 45 percent following excise duty revamp for the cotton textile sector in last year's budget. Yesterday, the government restored half of that reduction.

Reacting to the development, Apparel Export Promotion Organisation Director V Mathur said the industry is hopeful of achieving about 15-18 per cent growth in the months to come after the dismantling of Multi-fibre agreement which came into force ten years ago.

According to a study, Indian textiles and apparel industry can reach 85 billion dollars by 2010. The industry has already witnessed investment of about Rs 50,000 crore in the last few years and has ramped up capacities to meet the challenges in the post-Multi Fibre Agreement hoping to cash in on the additional business to be generated in post-quota international textile regime.

While welcoming the revision in DEPB rates, Apparel Export Promotion Council Chairman A Shaktivel said this would help the Indian textile industry compete strongly in international market.

He, however, said, there are disappointments at the same time as cotton fabrics and garments have not been given these due benefits.

Since cotton textiles account for nearly 70 percent of India's total textiles and garments exports of over 12 billion dollars, the Council would request the Finance Ministry to consider increase in DEPB rates for cotton textiles as well, Shaktivel said.

The Indian government is looking at a target of around 50 billion dollars in the next five years even though the Indian textile industry has been facing bottlenecks like poor infrastructure, inadequate Foreign Direct Investment flows and the need for flexible labour laws.

A study conducted by the Associated Chambers of Commerce and Industries (ASSOCHAM) has cautioned that India can lose its share of the global textile and apparel market to China and Pakistan if measures are not taken for massive reforms and modernization of the domestic textile sector.

ASSOCHAM President Mahendra K Sanghi said in a statement here that China is the biggest producer of cotton and man-made fibre (25 percent of global fibre) and largest exporter of textiles (16 percent) and apparel (23 percent) and has the largest spinning, weaving capacity and largest garment factories.

He said, Pakistan with low labour costs, a raw material base in both cotton and man-made fibres and an estimated four billion dollar investment in the last four years is "another threat".

Sanghi said Thailand too could emerge as another major competitor to Indian textile industry as "there is every possibility that the proposed India-Thailand Free Trade Agreement could provide scope for dumping cheap textile goods into India from a third country."

It suggested a five-pronged strategy to improve the competitiveness of the Indian textile sector, including flexible labour laws.

China has invested 60 billion dollars in the last ten years to improve its textile sector infrastructure and Indian companies need to invest in a big way quickly to live up to tough global competition, textile industry sources say.