Comparative advantage and export performance of India’s rubber sector: an exploratory analysis

Abstract

During the last 21 year period from 1996–2016, the total value of imports of rubber and rubber products grew at a rate of 17.66% compared to 14.18% growth rate in the value of exports. As a result of higher growth in imports and lower growth in exports, in the last 10 years, external trade in this segment had shown negative balance of trade consistently. In 2016–2017, the country had a negative balance of trade of US$ 414.76 million dollars. The broad objective of the present study is to identify products groups with comparative advantages in the global market. The study used methods such as Revealed Comparative Advantage, Revealed Symmetric Comparative Advantage and concentration ratio to analyse the comparative advantage of all the 17 rubber and rubber product groups (four digit level) under chapter 40 of the harmonised system nomenclature. Data from world integrated trade solution (WITS) during the period 1996–2016 are used for the analysis. Our results showed that despite a comparative disadvantage of the rubber sector at the aggregate level in the world market, the three product groups, viz, reclaimed rubber (HS 4003), inner tubes, of rubber (HS 4013), and hygienic or pharmaceutical articles (including teats) (HS 4014), exhibited comparative advantage consistently throughout the 21 year period. The two major product groups, viz., new pneumatic tyres of rubber (HS 4011) and other articles of vulcanised rubber other than hard rubber (HS 4016), which accounted for 68.68% of the total value of exports from the sector showed varied trends.