Role of Geopolitical Factors in Determining India's Trade Potentials and Directions: A Gravity Model Analysis Ahmed Faisal, Senior Lecturer, Banerjee Dilip Kumar, Professor & Director International Business & Strategy, Asia-Pacific Institute of Management, 3 & 4 Institutional Area, Jasola, New Delhi-110025. Email for correspondence: faisal@asiapacific.edu
Abstract The paper intends to ascertain the geopolitical factors influencing India's trade besides finding out India's export potential using the gravity model estimates. The study covers seventy nine countries and augments the gravity model of trade by incorporating two major geopolitical variables, namely, India's hydrocarbon imports (HCim) as explained through the impact of speculative rise of oil prices, and, Free Trade Agreement (FTA) both of which are dummies in nature. The study reveals that India has huge export potential to countries including Cape Verde (ECOWAS), Luxembourg (EU) and Lao PDR (ASEAN). Moreover, India';s export potential to other countries like Canada, Chile, Indonesia, Korea, Kuwait, Mexico, Russia and Venezuela is also moderately high and a Free Trade Agreement between India and these countries could possible help in harnessing the estimated potential. India also needs to diversify its trade portfolio with Singapore, China and UAE with whom the actual trade supersedes the estimated potential. A strong bilateral linkage between India and OPEC countries is imminent as India's energy requirement is deemed to multiply in days to come. Top Keywords Geo-Political Factors, Gravity Model, FTA. Top |