Trade and Distributional Impacts of Genetically Modified Crops in India: A CGE Analysis

Abstract

Against the background of declining agricultural productivity and a large population, genetically modified (GM) crops could play a key role in India. The current article uses a modified GTAP model to study empirically the overall impacts of the adoption of GM cotton, soybean, maize and rice on various sectors of the Indian economy through computable general equilibrium analysis. The impacts of a compulsory labelling policy and positive and negative preference shifts towards GM rice by Indian consumers are also analysed along with the effects on income distribution. The results indicate that productivity improvements from GM technology adoption in India have a significant positive impact on India’s production, trade and welfare. Even a possible ban on the import of GM rice from India by European Union (EU) will not have any negative welfare impact on Indian consumers, though the export of Indian rice will be much lower. JEL Classification: C68, D33, D61, F17, O11