India-ASEAN Free Trade Agreement: A Sectoral Analysis

Abstract

This study investigates the sectoral dimensions of India–ASEAN Free Trade Agreement as a result of tariff liberalization. This study reveals that both India and ASEAN gains in terms of welfare while a term of trade for India deteriorates. The present study reveals that processed food products, grain crops, textile and wearing apparel, light manufacturing and heavy manufacturing sectors are expected to be affected significantly and differently. However, results indicate a surge of ASEAN’s exports of processed food items, agricultural products and fisheries which might have adverse impact on employment and wages of Indian working class. This study also revealed that the present FTA will have adverse impact on trade balance and the revenue losses for India which might affect public health, education and government procurement holding for a significant share of national budgets having multiple development dimensions.

Keywords: Economic Integration, GTAP, SMART

JEL Classification: F1, L67, F13, G38, I3