India could emerge as hub for apparel outsourcing but will have to undertake reforms in key areas like labour apart from entering into bilateral trade agreements with the United States and European Union to become more competitive, according to global consultancy firm McKinsey.

"India could be the next biggest winner after China...it could grow exports at 15 to 18 per cent and reach $25-30 billion by 2013 if reforms are implemented. While some progress has been made, key reforms are required and attracting more foreign direct investment would require changing labour laws," McKinsey said in a report on Indian textile and apparel sector.

Pointing that quota restrictions on apparel exports under the existing multi fibre agreement will end in 2005, the reports suggested signing of bilateral trade agreements with US and EU under the quota free regime to be competitive against other low cost producers such as Sri Lanka.

The report has emphasised on investments in technology and relationships with the right customers, improvement in organisation, addressing supply-chain needs.

Highlighting the need for creation of level-playing field at domestic level, the report commissioned by logistics company DHL has suggested extending dereservation to remaining knitwear segment like hosiery and cloth and reduction in import duties on apparel, textiles and machinery.