International Trade Potential of Indian Onion: An Analysis of Competitive Advantage and Direction of Trade

Abstract

Agriculture being the backbone of Indian economy supports the country to be in international trade domain with a great position. This is observed by looking at the share of food grains and some horticultural produce especially onion in international trade. This paper made an attempt to analyze the international trade potential of Indian onion with an emphasis on examination of the drivers of change in onion production through Hazell's decomposition analysis. It also focused on identifying the direction of onion exports by using stationary form of the first order Markov chain model and suggested a diversification of trade markets. In addition to finding out the direction of trade, the study also informs about whether India has a comparative advantage in onion exports or not with the price competitiveness by using Revealed comparative advantage (RCA) index and Nominal protection coefficient (NPC) respectively.