India: A New Player in Asian Production Networks?

image of India: A New Player in Asian Production Networks?
While the IPN phenomenon has accelerated trade and investment linkages between countries in East and South-East Asia, the remainder of the region has not matched those countries in this process. The objective of this study is to explore the reasons for this by using India’s performance in the Asian IPNs as a case study for other countries that are trailing behind in this area. The study seeks to identify the reasons why India has performed below its potential in this new form of international division of labour, even though that country possess several supportive factors including: (a) the sheer size of the economy and population; (b) a large pool of engineers; (c) relatively sound intellectual property protection; and (d) an increasingly open trade and investment climate resulting from progressive economic reforms.



Are the India’s trade agreements deep enough to support production networks?

The analysis so far recognizes the important role of regional integration and/or preferential trade agreements (PTAs) in influencing successful development of international production networks (IPNs). Intuitively, one would expect a positive impact of reciprocal trade liberalization as it should bring about a reduction of border barriers to trade, and make the flows of goods, services and resources easier and cheaper, thus allowing further fragmentation of production and efficient allocation of resources. However, it turns out that in reality PTAs are not necessarily producing these results due to at least two groups of (related) problems. One concerns a transformation of agreements’ schedules into actual free and unobstructed trade flows, as it appears that many PTAs are not satisfactorily utilized and that a significant portion of trade ends up being left out of the liberalization coverage. India only recently started to entertain the idea of “substantially all trade” when negotiating the coverage of tariff liberalization. Yet, even if all products were on the list for liberalization, there would be problems in accessing the market under these liberalized conditions. The most frequent culprit for this is found in rules of origin (RoO), so this chapter reviews the substantial empirical analyses done under ARTNeT to highlight implications in the case of India.


This is a required field
Please enter a valid email address
Approval was a Success
Invalid data
An Error Occurred
Approval was partially successful, following selected items could not be processed due to error