This paper empirically investigates the implications of unshackling of the global textile trade, following the complete phasing out of the Multi-Fibre Agreement (MFA) in 2005, on the efficiency of firms operating in the Indian textiles industry. By employing the Stochastic Coefficients Frontier Approach, it estimates the overall and input specific efficiency values for 215 sample firms during 1993-94 to 2005-06. Results of the paper show that the average efficiency declined over the years, indicating the presence of inefficiency in using inputs. We argue that the Indian textile firms failed to utilise their inputs efficiently during the phase of liberalization. Given that there is a paucity of empirical studies dealing with efficiency of the Indian textile industry in the light of phasing out of the MFA, this paper seeks to fill such gaps in the available literature.