India's Export of Textile and Clothing to USA vis-à-vis NAFTA

After the formation of NAFTA (North American Free Trade Agreement) in 1994,USA's imports of textiles and clothing items have clearly shown a trend in favor of the Latin American suppliers, particularly Mexico, which is a member of NAFTA. Though India maintains a very low share in the global textiles trade (3%), it is one of the major items in India's export basket. However, India's position as a major supplier of textiles and clothing items to USA market has been sliding since 1994. It was at 7th position in 1995 and came down to 11th position in 2001. On the other hand, Mexico has improved its position from 7th in 1993 to 2nd just after China, in 2001. The direction of trade reveals that India has been losing much of its share due to USA's specific arrangements with countries under CBI (Caribbean Basin Initiative) and NAFTA. The decline of exports to USA is a warning signal of increasing competition from NAFTA-empowered Mexico. There are particularly two categories, i.e., cotton yarn and woven apparel group, where India has been affected, and this may be a result of the trade diversionary effects due to Mexico.