The Potential Impact of Tariff Liberalisation on India’s Automobile Industry GVC Trade: Evidence from an Economy-Wide Model

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aut.relation.journalForeign Trade Review
dc.contributor.authorNarayanan, Badri G
dc.contributor.authorSen, Rahul
dc.contributor.authorSrivastava, Sadhana
dc.date.accessioned2023-08-09T22:45:51Z
dc.date.available2023-08-09T22:45:51Z
dc.date.issued2023-07-19
dc.description.abstractThe impact of tariff barriers affecting participation in global value chain (GVC) trade has received attention in recent literature. However, the empirical evidence in the context of mega-regional trade agreements, such as the Regional Comprehensive Economic Partnership (RCEP), from which India opted out recently, remains non-existent. Our study contributes to the empirical literature by undertaking an economy-wide modelling exercise, augmenting it to the automobile sector trade in GVC goods in the Indian context. We conduct two policy simulations with an aim to analyse how India’s auto-industry and auto-parts trade, involving forward and backward linkages in GVCs, have been affected by its decision to opt out of RCEP compared to a hypothetical scenario of not doing so. Our results suggest that a potential RCEP membership would have created net trade in both the finished automobile and intermediate auto-parts sectors, although imports would exceed exports. Further, we infer that both backward linkages and forward linkages in this industry will be adversely affected by opting out of RCEP, as there is export diversion in the auto-parts sectors globally, with India facing terms of trade losses due to higher import prices. This informs policymakers that developing domestic resilience and improving productivity are critical for India to improve its long-run export competitiveness while contemplating future trade agreements, including those with RCEP members. JEL Codes: F15, F61, O53.
dc.identifier.citationForeign Trade Review, ISSN: 0015-7325 (Print); 0971-7625 (Online), SAGE Publications. doi: 10.1177/00157325231161931
dc.identifier.doi10.1177/00157325231161931
dc.identifier.issn0015-7325
dc.identifier.issn0971-7625
dc.identifier.urihttp://hdl.handle.net/10292/16526
dc.languageen
dc.publisherSAGE Publications
dc.relation.urihttps://journals.sagepub.com/doi/10.1177/00157325231161931
dc.rights.accessrightsOpenAccess
dc.rights.urihttps://creativecommons.org/licenses/by/4.0/
dc.subject4404 Development Studies
dc.subject38 Economics
dc.subject3802 Econometrics
dc.subject44 Human Society
dc.titleThe Potential Impact of Tariff Liberalisation on India’s Automobile Industry GVC Trade: Evidence from an Economy-Wide Model
dc.typeJournal Article
pubs.elements-id478179
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