Dynamics of Trade Specialization and Trade Performance of ASEAN–India Free Trade Agreement

Abstract

In the present era of globalization, trade is always considered as an indispensable catalyst for the growth and development of any nation. The present study examines the trade performance and degree of trade specialization of India and ASEAN members for the pre- and post-AIFTA period at Harmonized Standard (HS) 6-digit level of product classification. The study evaluates the data sources viz. United Nations Commodity Trade Statistics Database (UN COMTRADE), United Nation Conference on Trade & Development (UNCTAD) and trade map to evaluate the trade specialization of India and ASEAN members by using Lafay Index (LFi) approach. The present study found that though India experiences a shift from low specialized economy towards a more competitive and specialized one, still, it faces a competitive disadvantage from ASEAN members for distinctive industry levels. The study suggests that India should confront issues such as technological dissemination, diversification of merchandise manufactured, quality sophistication and reliability at different industry levels which constrain higher degree of trade specialization.