The Role of Technology in Increasing Competitiveness: An Examination of the Indian Garment Clusters

In this article, we examine the Indian garment industry to examine the effect of clusters on the sales of this industry. The data has been collected through a primary survey in five garments clusters in India. The variable that is significant in explaining sales in most equations is technology proxied by imported machinery. It has been argued that inter-firm linkages and linkages between firms, service providers and institutions are crucial for competitiveness and this is best achieved through a cluster. Studies on clusters have shown that some clusters have been able to deepen their inter-firm division of labour, raise their competitiveness and break into international markets. The development of the cluster in India has followed the ‘top-down’ approach and the natural process through which linkages are developed are yet to occur in most clusters. JEL Codes: F14, L67, L23