India in the World Trading System

By Romain Wacziarg
2002| Working Paper No. 1760

This paper examines the position of India in the world trading system. It considers three separate questions: Firstly, how integrated is India in the world trade? Secondly, what gains could India reap from further trade liberalization? Thirdly, what are the best means to achieve greater trade openness? The paper argues that while Indias trade barriers have fallen since external sector reforms started in the early 1990s, they remain high relative to most developing countries, in particular China. As a result, the volume and structure of trade in India have experienced a slower evolution away from quasi-autarkic patterns than Chinas. A survey of existing estimates of the effect of trade openness on economic growth and the quality of policy and governance suggests that India would have much to gain from further integration into the world trading system. Finally, the paper assesses the scope for liberalization through unilateral, regional or multilateral means. The latter is both the most politically feasible path for further liberalization, and the most likely to deliver significant gains from trade. The extent to which India can shape upcoming multilateral negotiations, however, is unclear.