The effects of MFA quota elimination on Indian fibre markets




Pan, Suwen
Misra, Sukant K.
Mohanty, Samarendu
Chaudhary, Jagadanand

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Applied Economics


This article examines the effects of multi-fibre arrangement (MFA) quota elimination on Indian fibre market. The partial equilibrium Indian fibre model was developed using a theoretically consistent framework and Page I of 14 Incorporated regional supply response, substitutability between cotton and man-made fibres, and appropriate linkage between cotton and texUJe sectors. Baseline projections were developed for supply, demand and prices of cotton, man~made fibres and textiles under a set of exogenous assumptions. The effects of MFA textile quota eliminations were introduced into the model by conducting three scenarios, I.e. increasing textile exports by 10, 20 and 30% from the baseline ievel. The results suggest that on an average, cotton imports rise by 4-8% annually, while the man~made fibre exports from india decline with the opening of textlle markets in the developed countries. The higher domestic cotton prices encourage acreage expansion In cotton in ali the three regions In India, but not enough to meet rising mill demand under the scenarios of higher texUle exports. The rise in cotton Imports from India has little effect on world cotton prices.




Chaudhary, J., S. Mohanty, S. Misra, S. Pan. "The Effects of MFA Quota Elimination on Indian Fibre Markets." Applied Economics, August 2007.