Non-Tariff Measures in Indian Context and the European Union

Indian economy is one of the fastest growing economies in the world today. In line with global trade trends, Indian export sector has been growing and contributing significantly to the economy. Given its exports structure, India is well positioned to benefit from the structural changes in technology and emerging forces of globalization. Indian economy has shown remarkable progress in terms of foreign trade after the introduction of economic reforms in 1991. The European Union (EU) is a very important trading partner of India. The trade volumes between India and EU have shown remarkable improvement in last one and a half decade. After starting out at a relatively low level in the 1990¡¯s, the trade volumes, both with respect to Indian exports to the EU as well as with respect to Indian imports from the EU, started to increase most noticeably after the year 2001.Use of non-tariff measures (NTMs) as means of protection has captured a lot of focus after reduction of tariffs in the world trade. India even after being a strategic partner for European Union (EU) has to face lot of NTMs on its exports. Based on studies in the past, link between the incidence of NTMs imposed by the home country and the income level of the foreign country has been established. The interplay of incidence of NTMs and the GDP remains largely unexplored in the context of India-EU trade relationship. This paper tries to fill this gap and show the importance of the study in policy decisions. Authors have used UNCTAD¡¯s NTM data and Spearman¡¯s correlation coefficient to measure the strength and direction of the relationship between incidence of NTM with per capita GDP of the exporting country (India). The authors have used different permutations of data from the main data set (1994-95 to 2016-17) for analysis and have concluded that incidence of NTMs on Indian exports to EU is positively co-related to the per capita GDP of India.