Abstract
<p>No country in the world is self-sufficient. Therefore, there is need to trade with others. Economy was protected from external competition due to licensing system and high level of tariff.</p><p>In early 1990's with the birth of World Trade Organization (WTO) India started the process of liberalization of trade. WTO's objective is to ensure new open world trading system to benefit consumers. The Most Favoured Nation clause of WTO was in clash with the Multi Fibre Agreement (MFA), which placed quantitative restrictions on textile exporting countries. Hence MFA was gradually phased out by December 31, 2004.</p><p>The phasing out of Multi Fibre Agreement (MFA) was expected to result in an increase in the growth of output, efficiency, productivity and competitiveness of the textile sector.</p><p>The impact of abolition of MFA is studied with regard to export of yarn, fabric, and garments during MFA and Post MFA period. It has been concluded from the observations that the export of textile intermediates (i.e. yarn and fabric) and textiles and clothing have increased substantially after the abolition of MFA.</p>
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