After the success in information technology, India is all set to emerge as a global outsourcing destination for textiles with export potential of $10 billion in the next 2-3 years, textiles secretary S B Mahapatra said.

"We are currently exporting textiles to the tune of $5 billion. Out of this $3 billion is in the form of outsourcing by major retail chains and this can go up to $10 billion in the next 2-3 years after the quotas are phased out by the year-end," Mahapatra told PTI after releasing a McKinsey report on the sector.

Projecting good demand from global retail chains like Wal-Mart in sourcing apparel from the country, he said the supply chain management had to be made efficient coupled with cost reduction.

Overall there would be an increase of about 15 per cent in textiles exports after the multi fibre agreement comes to an end on December 31, 2004, he said.

Mahapatra also emphasised on stepping up investment in the sector to prepare for the post-quota regime.

However, he said, the industry was likely to see a major shakeout with the number of exporters coming down from 7,000 to 700.