Intra-Industry Trade Trends in India’s Manufacturing Sector: A Quantitative Analysis

Abstract

Intra-industry trade (IIT) as a concept grew in significance in the 1970s, with the introduction of the Grubel-Lloyd Index (GLI) and Paul Krugman’s new trade theory (Krugman in Am Econ Rev 70:950–959, [22]). IIT is a good indicator of a country’s growth in trade and sophistication of the manufacturing sector, which in the case of India, has been experiencing stagnant growth since 1960s. Thus, in order to systemically analyse the prospects of growth for the Indian manufacturing sector, the study categorize the manufacturing sector into 19 product groups based on HS-2022 and NIC-2008 classification. Weighted GLI values were calculated for product group-wise data and an OLS estimation of dynamic changes of WGLI of India-World trade flow was conducted. The present analysis of the OLS regression found that the pattern of IIT changes in the observed periods 2010–2020.