Impact of Tariff Reduction on Trade between India and USA

Ms. Bhawna Pandey

doi:https://doi.org/10.51768/dbr.v13i2.132201215

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Impact of Tariff Reduction on Trade between India and USA

Bhawna Pandey

https://doi.org/10.51768/dbr.v13i2.132201215

Published Online: December 06, 2012

Author Details ( * ) denotes Corresponding author

1. * Bhawna Pandey, Assistant Professor, Department of Economics, Dyal Singh (Evening) College, University of Delhi, India

The purpose of the study was to understand the trade relationship between India and USA, and to investigate how tariff can impact trade, and to what extent.

Design/Methodology/Approach: The first section of this paper introduces us with the issue, followed by literature survey in the second section, and composition of India’s trade with US in the third section. The fourth section of the paper analyses the impact of Indian tariffs on US trade, while the fifth section analyses the tariff structure of both India and USA. In the final section the paper gives us concluding remarks. A detailed methodology has been developed by conducting desk base research. A multiple regression model has also been developed to estimate the impact of US tariff on Indian trade with USA. We have estimated the model using Ordinary Least square method. For the 8 different products 8 independent regression models have been made.

Findings: The empirical findings revealed that the top exporting products of India are responsive to tariff incidence. Significant influence of tariff vis-à-vis price component for garment and diamond products was found. The empirical result shows that Indian products are largely dominated by relative price changes. It is found that tariff has a positive impact for five out of eight products were analysed. These are Organic compounds (294200), medicaments (300490), T-shirts (610910), women’s garments (620630), diamonds (710239) and pipe lines (730511). Among them, the tariff effect is significant for only T-shirts, women garments and diamond product groups.

Research Limitations/Implications: The limited availability of time series data has been one of the major limitations of the study. The tariff data for all the selected top 10 products were also not available. As a result regression analyses was conducted for 8 products only.

Practical Implications: The paper is implemented in the current Indo-US trade scenario. The paper can be a very useful material to assess the impact of US tariff on US trade with India and vice- versa. Scholars can use the paper for further research in the same area.

Originality/Value: The paper is 100 percent original form. Proper references have been cited where other research papers were used in conducting research.

Keywords

India, USA, Trade, Tariff.

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