Published : 2020-12-28

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

Swetha Loganathan



Joshy Joseph Karakunnel



Vijay Victor



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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