Global Value Chain and Effects of Trade Policy Instruments—A Case of India

  • Chandrima SikdarEmail author
Part of the Springer Proceedings in Business and Economics book series (SPBE)


GVCs have led to greater integration among economies of the world with each economy often specializing in specific activities and stages of value chains, rather than in the entire production process. Asia, as a region, has been a major participant in GVCs. India, one of fastest growing countries of the region, has, however, had a very dismal participation in the GVCs. One of the major reasons that explains this non-participation is India’s trade-related policies and procedures. Against this backdrop, the present paper analyses the direct and indirect effects of trade policy instruments, particularly non-tariff measures (NTMs) on the country’s manufacturing sector. Using imports of processed food from China into India as a representative case, the results show that import restriction on a sector leads to both direct and indirect impacts along the value chains. The results further show that NTMs on a sector magnify these direct and indirect impacts. Further, if NTMs are measured including the trade costs at borders, then the direct and indirect trade restrictiveness indices due to import restriction on a sector are reported to be much higher. This is a very important finding of the paper as it indicates that to assess the impact of NTMs on an economy, trade costs should not be ignored. For countries like India, which have elaborated procedural and documentation requirement laid down by different regulatory bodies, ignoring such trade costs at borders may lead to substantial underestimation of the impact of a trade policy restriction.


GVC NTMs Tariff Trade restrictiveness 


  1. Baltagi, B. H., Egger, P., & Pfaffermayr, M. (2003). A generalized design for bilateral trade flow models. Economics Letters, 80(3), 391–397.CrossRefGoogle Scholar
  2. Beghin, J., Disdier, A. C., Marette, S., & Van Tongeren, F. (2012). Welfare costs and benefits of non-tariff measures in trade: a conceptual framework and application. World Trade Review, 11(03), 356–375.CrossRefGoogle Scholar
  3. Bratt, M. (2014). Estimating the bilateral impact of non-tariff measures (NTMs). No. 14011. Institut d’Economie et Econométrie. Université de Genève.Google Scholar
  4. Caves, D. W., Christensen, L. R., & Diewert, W. E. (1982). Multilateral comparisons of output, input, and productivity using superlative index numbers. The Economic Journal, 92(365), 73–86.CrossRefGoogle Scholar
  5. CEPII Database. (2017). Retrieved on Dec 10, 2016 from
  6. Cheng, K., Rehman, S., Seneviratne, D., & Zhang, S. (2015). Reaping the benefits from global value chains. IMF Working Paper WP/15/204. Retrieved on Sept 15, 2017 from
  7. de Almeida, F. M., Gomes, M. F. M., & Monteiro, O. (2012). Non-tariff measures in international coffee trade. In International Association of Agricultural Economists (IAAE) Triennial Conference. Foz do Iguaç. Brazil. 18–24 August 2012.Google Scholar
  8. Ghodsi, M. (2015). Determinants of specific trade concerns raised on technical barriers to trade. No. 115. The Vienna Institute for International Economic Studies.Google Scholar
  9. Ghodsi, M., Grübler, J., & Stehrer, R. (2015). The impact of NTMs on imports. PRONTO project.Google Scholar
  10. Ghodsi, M., & Stehrer, R. (2016). Non-tariff measures trickling through global value chains. Paper presented at 24th International Input-Output Conference & 6th Edition of the International School of I-O Analysis. 4–8 July 2016. Korea, Seoul.Google Scholar
  11. Kee, H. L., Nicita, A., & Olarreaga, M. (2008). Import demand elasticities and trade distortions. The Review of Economics and Statistics, 90(4), 666–682.CrossRefGoogle Scholar
  12. Kee, H. L., Nicita, A., & Olarreaga, M. (2009). Estimating trade restrictiveness indices. The Economic Journal, 119(534), 172–199.CrossRefGoogle Scholar
  13. Moore, M. O., & Zanardi, M. (2011). Trade liberalization and antidumping: is there a substitution effect? Review of Development Economics, 15(4), 601–619.CrossRefGoogle Scholar
  14. OECD, WTO and World Bank Group. (2014). Global value chains: challenges, opportunities and implications for policy. Report prepared for submission to the G20 Trade Ministers Meeting Sydney, Australia. 19 July 2014.Google Scholar
  15. Rosendorff, B. P. (1996). Voluntary export restraints, antidumping procedure, and domestic politics. The American Economic Review, 86(3), 544–561.Google Scholar
  16. Srivastava, A. (2016, April 16). Big missing link in ‘Make in India’: Quick export-import clearance to participate in Global Value Chains. Times of India.Google Scholar
  17. The Centre for International Data, University of California, Davis. Penn World Tables. Retrieved on Dec 20, 2016 from
  18. UN Comtrade. (2016). United Nations Commodity Trade Statistics 776 Database. Retrieved on Nov 15, 2016 from
  19. Vandenbussche, H., & Zanardi, M. (2008). What explains the proliferation of antidumping laws? Economic Policy, 23(53), 94–138.Google Scholar
  20. World Bank WITS database. (2016). Retrieved on Dec 12, 2016 from
  21. World Bank. (2016). World Development Indicators. Retrieved on Nov 15, 2016 from
  22. World Input Output Database. (2016). Retrieved on Nov 30, 2016 from
  23. WTO, I-TIP Goods: Integrated analysis and retrieval of notified non-tariff measures. Retrieved on Nov 15, 2016 from

Copyright information

© Springer Nature Singapore Pte Ltd. 2018

Authors and Affiliations

  1. 1.School of Business ManagementNarsee Monjee Institute of Management StudiesMumbaiIndia

Personalised recommendations