India's garment industry faces stiffer competition from foreign imports despite "formidable" import restrictions, a report claims.

Garment imports rose by an average of 71% every year between 1996 and 2001, according to the study conducted by Professor Sriram Khanna of the Delhi School of Economics.

The level of imports is expected to continue at this or a higher rate.

"It started in 1995, at a very low rate, in some cases almost nil, worth only a few million dollars and has grown by up to 500% in some cases," Professor Sriram Khanna told the BBC's World Business Report.

India has been easing import restrictions and reducing tariffs to open its markets to foreign competition, in line with its treaty obligations as a member of the World Trade Organisation.

Barriers up

The increasing number of middle class consumers in India, which has a population of about one billion, is seen as a tempting market by foreign manufacturers.

But the opening up of India's markets still has a long way to go, the report said, with "formidable" import duties and licensing procedures as well as "fierce competition from home producers who benefit from low wage costs, cheap raw materials and government subsidies".

"[India is] very competitive, decentralised and flexible and has wage rates as low as China so I see very little real threat to the textile industry," Professor Khanna said.

"China is a threat because many Chinese companies, which are not part of the market economy, tend to ship goods at below cost prices."