An empirical analysis of India’s trade in goods with BRICS

Abstract

The purpose of this paper is to examine the empirically the trade flows between India and BRICS. The bilateral revealed comparative advantage index (BRCA) is computed for the assessment of comparative advantages of exports by India to BRICS countries for period 2001–2015. In addition, the trade complementarity index (TCI) between India and remaining BRICS countries is examined. The study has employed the gravity model of trade to find the role of selected variables on promoting India’s trade with BRICS countries. The findings of BRCA concluded that India holds a comparative advantage predominantly in agricultural and allied products followed by manufacturing and man-made products. BRCA analysis indicated minor structural changes between the years 2001 and 2015 for India’s export basket with BRICS countries. The higher TCI values suggested the scope of trade potential between India and BRICS countries. The results of panel gravity model for exports, imports and trade showed that most of the variables have the expected sign and are statistically significant. Results suggested that among the other variables, GDPs of trading countries and population can explain export, import and total trade flows. One of the major findings of the gravity analysis confirmed that distance acts negative, as a major constraint in increasing the trade flows of India with BRICS.