India’s Optimal Trade Strategy: A General Equilibrium Analysis

Using a conventional multi-region, multi-sectoral global trade analysis project (GTAP) model, we analyze the effects of India’s trade liberalization policies on its output, trade, and welfare. We also analyze three trade policy scenarios: full trade liberalization, joint cooperative trade liberalization, and unilateral trade liberalization. India, despite some tradeoffs in the trade and agricultural sectors, primarily gains in welfare. The gains in the unilateral trade liberalization scheme, though positive, are smaller than that of the joint cooperative trade liberalization and the full trade liberalization schemes, implying some flexibility in trade negotiations.