Implications of non‐tariff measures on international business operations: a case of India's textiles and clothing firms

Abstract

PurposeThis paper attempts to examine the implications of non‐tariff measures (NTMs) on firms' international business operations through a survey of India's textiles and clothing exporting firms. The main objectives of the study are to identify and assess the impact of NTMs, and analyze the cost incurred in complying with them.Design/methodology/approachThis paper is based on the survey which was jointly undertaken with the Market Research Division of Textiles Committee, Mumbai.FindingsThe results reveal that the EU and USA‐based buyers are more restrictive with significantly higher NTM incidences. The technical barriers, product and production process standards, and conformity assessment requirement for technical barriers are the widely used NTM categories. The compliance expenditure may vary according to firm size, and an inverse relation is revealed by this study. The larger and smaller firms demonstrate important differences in compliance due to their varying resource endowments. Further, the regression results suggest that the US and EU markets and firms' product profile/type are an important determinant of compliance cost.Originality/valueThis study contributes to the understanding about the implications of NTMs on Indian firms, and the inferences may be tested in other similar Asian markets. However, a further empirical validation of the issues such as NTMs as promotion and marketing tools is warranted.