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

Kaliappa Kalirajan, Ramesh Paudel

    Research output: Contribution to journalArticle

    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 languageEnglish
    Pages (from-to)485-505
    JournalGlobal Economy Journal
    Volume15
    Issue number4
    DOIs
    Publication statusPublished - 2015

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