Impact of nontariff measures on the exports of the beverage sector in India

Abstract

In the recent past, agricultural exports, especially plantation crops, which are the backbone of India, have been subjected to many nontariff measures. Since the liberalisation of trade has led to the integration of global commodity markets, developing countries are significantly affected by these trade barriers, which indirectly hurt millions of plantation community. Traditionally, India is well known for its exports of beverages and stringent maximum residual limits, traceability issues, and food safety standards are complex issues surmounting trade in the plantation sector around the world. Hence, the present research study attempts to find the shock of nontariff measures on the prices of both export and domestic beverages and the hammering in returns to the Indian beverage industry by the partial equilibrium method. This model directly measures the simulation effect of nontariff measures by imposing NTM on tea and coffee sector. It is obvious that as the NTM percent increases from 10 percent to 25 percent on tea sector, the loss in export quantity was more from 22.24 million kg to 55.61 million kg and loss of revenue was from Rs. 2997 million to Rs. 7492 million for the corresponding NTMs. Likewise the loss in export quantity (62.85 million kg) and loss in revenue (Rs. 9412 million) were high in 25 per cent of NTM. The present study shows how to allow for market imperfections and trade facilitating effects of nontariff measures in the beverage sector.