Analysis of India’s trade patterns and trade possibilities with the European Union

Swetha  Loganathan; Joshy  Joseph Karakunnel; Vijay  Victor

doi:10.23762/FSO_VOL8_NO4_1

Published : 2020-12-28

Vol. 8 No. 4 (2020)

Analysis of India’s trade patterns and trade possibilities with the European Union

Swetha Loganathan

Joshy Joseph Karakunnel

Vijay Victor

DOI: https://doi.org/10.23762/FSO_VOL8_NO4_1

Abstract

Trade has played a crucial role in the emergence of developing economies. The global emergence of India is also linked to its role in global trade. In this context, the European Union and India initiated talks for a free trade agreement known as the Bilateral Trade and Investment Agreement (BTIA). However, this agreement has failed to materialise due to various challenges and disputes. Against this backdrop, the present study attempts to trace the existing pattern of trade relations between India and the EU and provide a preliminary analysis of the nature of trade in this proposed region. A modified gravity equation and indicators of regional trade interdependence have been estimated. The results indicate that trade within this region is in line with certain predictions of the gravity model. Additionally, it also indicates that such an agreement has little potential for expanding trade and might even result in ‘unnatural trade’. Thus, it provides evidence for the argument
that India can benefit from developing ties with similar emerging economies in the Asia-Pacific neighbourhood.

Keywords:

pattern of trade, India-EU Trade, Bilateral Trade and Investment Agreement, Gravity Model, Free Trade Agreements, Regional Trade Interdependence Indicators

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Loganathan, S. ., Joseph Karakunnel, J. ., & Victor, V. . (2020). Analysis of India’s trade patterns and trade possibilities with the European Union. Forum Scientiae Oeconomia, 8(4), 5–25. https://doi.org/10.23762/FSO_VOL8_NO4_1

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Swetha Loganathan

swetha.l@eco.christuniversity.in

Affiliation:

Christ University, Bangalore, India India

Bio Statement (e.g., department and rank)

Swetha Loganathan is a Ph.D. scholar at the Department of Economics, Christ University Bangalore. She has qualified for the Junior Research Fellowship of the University Grants Commission, Government of India. Her research interests include international trade, trade liberalisation, globalisation and its impact on vulnerable communities.

Joshy Joseph Karakunnel

joshy.kj@christuniversity.in

Affiliation:

Christ University, Bangalore, India India

Bio Statement (e.g., department and rank)

Joshy Joseph Karakunnel is an Associate Professor at the Department of Economics, Christ University, where he is the Head of the Department. His teaching interests include macroeconomics, managerial economics
and operations research. His research interests include macroeconomic issues related to economic growth, determinants of growth and aspects of international trade.

Vijay Victor

vijay.victor@christuniversity.in

Affiliation:

Christ University, Bangalore, India India

Bio Statement (e.g., department and rank)

Vijay Victor is an Assistant Professor at the Department of Economics, Christ University. He obtained his Ph.D. degree from Szent Istvan University, Hungary, under the Stipendium Hungaricum framework, a fully funded Ph.D. fellowship of the Hungarian government. His research interests include macroeconomic policies, econometrics and behavioural economics.