A Panel Gravity Model Analysis of India's Export to Gulf Cooperation Council (GCC) Countries

Exports have played a very crucial role in an economy and in the last decade India's trade with GCC countries have been in deficit. So, in this context, present paper has investigated determinants of India-GCC export fl ow with the help of augmented gravity model. Panel data has been used for the period 2001 to 2015. Further with the help of coefficient value of trade flow determinants, India's trade potential with all six GCC countries has been calculated for the latest year i.e., 2015. In the last section, tariff simulation has also been done. Results show that India-GCC bilateral export is positively determined by size of economies, trade openness and two binary variables namely common colony and Diaspora, while it is negatively determined by distance between them and tariff imposed by importing country. Result of export potential shows that India has significant export potential with all six countries. Further, results of tariff simulation suggest that tariff reduction will improve India's export potential with all GCC countries. At the end, paper concluded that proposed India-GCC free trade agreement (FTA) will be win-win situation for both side