Determinants of the Exports of India: Trade Blocs, Trade Theory and the Gravity Model

Abstract

The main focus of this study is to analyse the export direction of India with its top 20 trading partners for the years 1991-2017 using the gravity model of trade. The analysis mainly draws conclusion on the selected trading blocs of the partners. Another aspect called Relative factor endowment is also included in the study to check whether H-O theorem holds for India’s export with its selected export partners. Most of the export which India creates with ASEAN countries are intra industry in nature and most exports with EU countries are inter industry in nature. So, trade policies should be created in such a way that it takes into account of the trading blocs and nature of trade of that particular country with India. Also, it was observed that bilateral trade agreements (BTA) attracts less exports than multilateral trade agreements.