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India's Informal Trade with Sri Lanka and Nepal: An Estimation


  • Nisha Taneja

    (Indian Council for Research on International Economic Relations, New Delhi. India)

  • Muttukrishna Sarvananthan

    (International Centre for Ethnic Studies, Colombo, Sri Lanka)

  • Binod K. Karmacharya

    (Nepal Council for Development Research, Kathmandu, Nepal)

  • Sanjib Pohit

    (National Council for Applied Economic Research, New Delhi, India)


India has signed bilateral free trade agreements (FTAs) with both Sri Lanka and Nepal. Despite such agreements, informal trade continues to thrive in the South Asian region. Not much empirical evidence seems to exist on the magnitude and composition of such trade. Using the Delphi technique, the study makes an attempt to estimate India's informal trade with Sri Lanka and Nepal through an extensive primary survey conducted in the three countries, covering several cities. Corresponding country estimates of Indo-Sri Lanka and Indo-Nepal informal trade, provide a possible range within which the estimates are likely to lie. The study shows that total two-way informal trade between India and Sri Lanka is almost a third of formal trade, while that between India and Nepal is almost as large as formal trade. The study also points out the lacunae in the Indo-Sri Lanka and Indo-Nepal FTAs and suggests how they can be addressed so that informal trade can be brought within the ambit of formal trade.

Suggested Citation

  • Nisha Taneja & Muttukrishna Sarvananthan & Binod K. Karmacharya & Sanjib Pohit, 2004. "India's Informal Trade with Sri Lanka and Nepal: An Estimation," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 5(1), pages 27-54, March.
  • Handle: RePEc:sae:soueco:v:5:y:2004:i:1:p:27-54
    DOI: 10.1177/139156140400500102

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    Cited by:

    1. Selim Raihan, 2015. "South Asian Economic Union," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 16(2_suppl), pages 3-18, September.

    More about this item


    (JEL: F10; F14; C80) Keywords: Free Trade Agreements; Informal Trade; Formal Trade.;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade


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