As one of India's 35 million garment and textile workers on the frontlines of competition with China, 21-year old Gangakrishna faces increasing pressure on her assembly line in Bangalore.

Time engineers have decreed new hourly targets but she can't quite keep up. Chatter is discouraged.

"If I turn and smile at someone, the supervisor puts extra work on my table,'' she says.

Life has grown more hectic for both workers and employers as India scrambles to offset diminishing margins brought by the end of the global quota system for clothing and textiles.

Since January 1, Indian manu-facturers say that wholesale prices have dropped anywhere from 8 percent to 20 percent as buyers pick and choose freely among suppliers in 130 countries.

While India still holds an advantage over most other nations due to its ready supply of cotton and man-made fibers and long-established relationships with major retailers in the United States and Europe, many factors still hobble its competitiveness - including higher input costs, labor policies and less productive workers compared with those in China.

Such inefficiencies help explain why analysts remain divided over India's potential to capitalize on the May 13 decision by the United States to impose fresh quotas on China's cotton trousers, knit shirts and underwear.

For such items, rivals like Vietnam and Cambodia can still offer lower prices than India.

In a broader sense, however, the US move emphasizes the risks of sourcing exclusively from China and the benefits of spreading orders to other major apparel suppliers like India.

"With [this] decision by the US, India may see an even bigger jump in business this year,'' says Julia Hughes, vice-president of the US Association of Importers of Textiles and Apparel.

Overall, veterans of India's rag trade view 2005 as a year of mixed blessings. Relief - and even exhilaration - has accompanied the abolition of the cumbersome and corrupt quota distribution system.

"Bureaucrats were throttling the industry. You can't imagine the number of tears that have rolled down the faces of exporters,'' recalls Satish Mahajan, chairman of the Karnataka region chapter of the Clothing Manufacturers' Association of India.

Now, says Mahajan, "we are totally free, like bonded labor that suddenly landed in a bed of roses.''

India's textile exports to the United States rose 22 percent in the first quarter of 2005. Yet as export volumes swell, profits are sliding and the industry is braced for a shakeout. Already, some smaller factories in Bangalore and elsewhere have shut down, while bigger players are opening new factories and buying more sophisticated machinery in a bid to fill larger orders from prime customers such as Gap and Target.

Some Indian-owned garment factories in the Middle East are being relocated to India to get a bigger piece of the action.

Manpower issues loom large as India gears up for this new era. Rather than worry about job losses as they have hit Bangladesh and Mexico, India wants to make its existing workforce more efficient - while grappling with a severe shortage of trained workers.

That may sound odd for a country with a billion-plus people and pervasive under-employment in both urban and rural areas. But the reality is that India came to the end of the quota regime poorly prepared for a surge of new orders from overseas buyers.

Even a spurt in construction of factory zones known as "apparel parks'' is only belatedly being followed by efforts to train workers in surrounding areas.

While the US$14 billion (HK$109.2 billion) textile and clothing industry is the country's second-largest employer after agriculture and contributes 35 percent of the country's foreign exchange, it has far greater potential to absorb idle labor, analysts say.

"There is an acute shortage of trained manpower and that is retarding our growth,'' says Madhu Kapoor, managing director of Bangalore-based Apparel & Leather Technics, which supplies machinery to Indian manu-facturers.

Hoping to enhance sales and encourage use of high-tech machinery, Kapoor's company established a training college in Bangalore in 1991, which now churns out roughly 1,200 graduates per year. The institution offers everything from one-month courses for sewing-machine operators to four-year degrees for factory man-agers.

Twelve more colleges are planned in the next two years.

Kapoor is also hatching a Web-based scheme along the lines of "Adopt-A-Garment-Worker''.

In exchange for contributing 1,000 rupees (HK$179) to train one woman worker, an Indian donor will receive details on the factory where she ultimately gets a job and how she's doing there.

Confident about future employment, some women are scraping up the cash on their own.

In Bangalore, Nimalakashi, a 23-year-old mother of two, comes to class clad in a maroon sari and green bangles. Previously, she toiled on construction sites for 60 rupees a day.

In March, she borrowed 1,100 rupees from her brother to enroll in a sewing course and looks forward to a new monthly salary of 2,500 rupees and a job shielded from the blazing South Indian sun.

"I'm sure I will get work,'' she says. Her husband, who once ran a small eatery, has also jumped on the bandwagon, earning 1,500 rupees monthly as a trainee at a Bangalore garment factory.

Musing over the reasons why India remains far behind China's powerhouse garment industry, Kapoor points out that the Chinese government has systematically required employers to invest 5 percent of their annual capital in training and thus built up an impressive bank of workers.

No similar policy emerged to cover India's 8,500 clothing enterprises.

Even now, he says, manufacturers are not rushing to dispatch employees for additional outside training. Chalk it up to those diminishing margins.

"Frankly, they are also afraid. They tell me, `if you train our workers and managers, we will have to pay higher, or another factory will take them away,''' Kapoor explains.

Instead, some employers are turning to in-house programs to raise productivity.

According to a study by Indian consultancy KSA-Technopak, India's garment and textile factories only run at an average 41 percent efficiency.

Basic moves include eliminating coffee and tea breaks, stirring shame among tardy workers by announcing their names over factory microphones, and adopting stricter leave policies.

More sophisticated measures involve increased mechanization, re-cruiting industrial engineers (including European expatriates) and applying new software to figure out the ideal times for garment assembly.

Take K Mohan & Company, a Bangalore-based group of six garment factories that employ 10,000 workers - 30 percent more now than last year - and recorded US$60 million in sales in 2004, with customers including The Gap stores.

In February, K Mohan began using a software program from the United Kingdom that analyzes garments down to the last buttonhole.

For example, a pair of green corduroy pants destined for Banana Republic should only take 31 minutes to assemble. Now managers are trying to cut down on the actual time of production, which is 44 minutes.

K Mohan is also one of the few companies to have inaugurated a "second shift'' from 2pm to 10pm, aiming to boost productivity with the same fixed assets.

Previously, the Indian government required manufacturers to end shifts by 6pm, with a maximum two hours for overtime.

But so far, the results are dis-appointing, says K Mohan director Raju Mahtaney. The second shift has turned out to be 20-30 percent less productive than the first shift, and the company's transport costs have doubled due to the buses provided to deposit workers near their homes at night.

"It's giving me more quantity, but economically it's not producing any benefits,'' says Mahtaney.

The next session of parliament will decide whether women garment and textile workers will be allowed to work overnight shifts - from 10pm to 6am - as recommended by India's cabinet in March. Some employers see the change as essential to boost productivity.

The move remains controversial. Labor activists argue that women need guarantees on safe transport and adequate childcare before night shifts can be fairly implemented.

The controversy highlights another essential difference between India and China.

In China, enormous dormitories adjacent to factories house unmarried migrant labor.

But in India, particularly in the booming south, most women workers live at home and are expected to care for husbands and children between shifts. So far, only a trickle of migrant workers have arrived from the north.

Another Bangalore textile company, Fibres & Fabrics International, recently held group meetings with husbands to try to persuade them to accept their wives' new schedules.

"The husbands didn't really accept the wives working at night. Convincing them is difficult, but not impossible,'' says Tautik Das, a senior consultant in Bangalore for KSA-Technopak.

Citing social traditions, even some manufacturers are taking a stand against night shifts.

"I feel that ladies don't like to work the night shift,'' says Rajendra Hinduja, executive director for finance at Gokaldas Exports, one of India's top 10 garment exporters. "I'd rather put in an additional factory, and put on an extra day shift.''

For workers, though, financial incentives could be persuasive.

"If they give me extra payment, I will work the night shift,'' says Gangakrishna, the 21-year-old worker in Bangalore.

For real efficiency levels to increase, employers argue that it is essential to change the country's rigid labor laws.

At companies with more than 100 workers, no one can be fired without government permission.

"You can't sack workers unless they rob and pilfer or do something very bad,'' complains Hinduja.

Why obsess about lay-offs at a time when the industry is desperate to hire more workers? It's all about motivation. To enforce higher targets, employers believe they need the freedom to fire at will.

Not surprisingly, India's powerful communist political leaders see the picture a bit differently. As partners in the country's coalition government, they are determined to block any reforms that involve relaxing restrictions on lay-offs.

"The law is already too liberal. It needs to be more stringent,'' says Meenakshi Sundaram, General Secretary for the Bangalore District Committee of the Centre of Indian Trade Unions, which is affiliated with the Communist Party of India (Marxist).

"Our productivity should increase through improved technology, not by extracting more manual labor through inhuman exploitation,'' says Sundaram.

Some industry leaders think that India's communists could benefit from a hefty dose of reality.

"We have proposed to take them to China, and see how labor operates in a communist country,'' says Premal Udani, president of the Clothing Manufacturers' Association of India. "But they have refused.''