INDIA’S EXPORT POTENTIAL WITH NON-ASEAN RCEP NATIONS-AN EMPIRICAL ESTIMATION

Abstract

In November 2019, India decided to pull out from the Regional Comprehensive Economic Partnership (RCEP), initiated in 2012 to create a common trade block comprising 10 ASEAN nations along with Australia, China, India, Japan, Korea P R, and New Zealand. India already has free trade agreement (FTA) with ASEAN nations. In this backdrop, it becomes quite interesting to know about India’s export potential with Non-ASEAN RCEP nations. Since India has significant scope in export of services, this paper aims to assess India’s merchandise export potential with Non-ASEAN RCEP countries, viz. Australia, China, Japan, Korea P R, and New Zealand. The gravity model of international trade is employed to estimate India’s merchandise export potential with these nations. Panel data on India’s merchandise exports, spanning from 2005 to 2018, have been employed and results are based on pooled effects, random effects and fixed effect methods of OLS estimation. The study shows that India seems to have merchandise export potential with China only, while no merchandise export potential seems to exist with Australia, Japan, Korea and New Zealand. The finding of this research would be useful for academics, industry experts and government policy makers. KEYWORDS: Gravity Model, Export Potential, ASEAN, RCEP, India JEL Classification: F1, F12, O24