wl-7467-Trade Liberalisation, Export Margins, and Competitiveness of the Indian Manufacturing Sector

This study examines India’s post-liberalisation trade performance, with a focus on export margins and competitiveness in the organised manufacturing sector. As trade integration deepens, manufacturers are expected to specialise, broadening their product range and enhancing international competitiveness. Analysis of detailed merchandise trade data shows significant growth in both exports and imports, with a notable shift in the composition of exports towards modern, technology-intensive products, indicating a move towards higher value-added exports. Using the Hummels and Klenow methodology, our analysis underscores the importance of extensive and intensive margins in driving export growth. While India's extensive margin, particularly in bilateral trade with the USA, has been robust, intensive margins show limited improvement, especially in exports to China. RCA analysis reveals mixed trends across technology categories and industrial sectors, with low-tech segments sustaining competitiveness while high-tech industries were unable to improve competitiveness and global market share. The study concludes by suggesting targeted policy interventions to strengthen competitiveness in specific industries, leveraging trade liberalization for sustained growth.