India's Trade Deficit with China: Will Free Trade Agreement (FTA) Work for India

Kaliappa Kalirajan; Ramesh Paudel

doi:10.1515/gej-2015-0011

India's Trade Deficit with China: Will Free Trade Agreement (FTA) Work for India

Kaliappa Kalirajan^*, Ramesh Paudel

^*Corresponding author for this work

Indonesia Project

Research output: Contribution to journal › Article › peer-review

8 Citations (Scopus)

Abstract

Trade between India and China has been rising exponentially with a widening trade deficit for India, which has raised alarm by businesses, and some Indian parliamentarians have started accusing China for unfair trade practices. Nevertheless, both countries intend to negotiate for free trade arrangements between them based on complementarity. This study examines how much reduction in trade deficit due to different preferential trading arrangements is feasible under hypothetical full export potential scenarios using a stochastic frontier gravity model. The empirical analysis shows that India's potential gain is high when the influence of India's existing "behind the border" constraints are eliminated.

Original language	English
Pages (from-to)	485-505
Number of pages	21
Journal	Global Economy Journal
Volume	15
Issue number	4
DOIs	https://doi.org/10.1515/gej-2015-0011
Publication status	Published - 1 Dec 2015

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AB - Trade between India and China has been rising exponentially with a widening trade deficit for India, which has raised alarm by businesses, and some Indian parliamentarians have started accusing China for unfair trade practices. Nevertheless, both countries intend to negotiate for free trade arrangements between them based on complementarity. This study examines how much reduction in trade deficit due to different preferential trading arrangements is feasible under hypothetical full export potential scenarios using a stochastic frontier gravity model. The empirical analysis shows that India's potential gain is high when the influence of India's existing "behind the border" constraints are eliminated.

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India's Trade Deficit with China: Will Free Trade Agreement (FTA) Work for India

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