The Multi Fibre Agreement (MFA) and the system of bilateral quotas that had governed the global trade in textiles and apparel for the past forty years came to an end and were replaced by the Agreement on Textiles and Clothing (ATC) on Jan 1, 2005. The dismantling of quota restrictions had brought about a significant change in the structure of worldwide trade in textiles as there are no quota barriers for the export of textiles and apparels and the hitherto protected textile industry would be exposed to international competition. The withdrawal of the MFA had brought back the comparative advantages of developing economies to large labour surplus economies such as China and India. Since India has a natural comparative advantage in cotton and cotton-based fibres, abolition of the MFA had an implicit potential to benefit India's cotton industry as well as cotton based textiles and clothing sectors. Compared to the competitors India enjoys certain advantage in the production of textiles and clothing. At the same time, Indian textile industry is also facing many challenges in the domestic and export front in the changed scenario. In the given context, the present study attempts to analyse the export performance of Indian textiles in the post quota era. Export performance has been analysed in terms of change in the composition and destination of Indian textile exports in the post MFA period. The period of study is from 1990-2012. In order to examine the impact of quota removal (MFA), the study period have been sub-divided into Pre-MFA (1990-2004) and post MFA (20052012) The study is based on secondary data drawn from Ministry of Textiles, RBI and WTO. The study found that Compound Annual Growth Rate (CAGR) of Indian textile exports were low during the post MFA period compared to pre MFA. If we compare the average export value during the study period, it can be seen that the mean value of textile exports are higher during the post MFA compared to pre MFA period. Among the different sub sectors highest mean value was recorded in readymade garments followed by cotton textiles and manmade textiles during the post MFA period. Analysis of percentage share of different subsectors during the study period show that readymade garments still constitute the largest share in terms of overall textile exports followed by cotton textiles and manmade textiles. As far as the destination of exports are concerned, USA could maintain its position as the largest destination for Indian textile exports in the segment of textiles, readymade garments, coir and carpets even during the post MFA period. Emergence of UAE as the single largest destination for cotton textile exports in the post MFA period is noteworthy. It can also be seen the emergence of new trading partners like Turkey (jute textiles and manmade textiles), Egypt (cotton textiles) and UAE (cotton textiles and readymade garments) in the post MFA period.
