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Factors affecting exports of environmental goods from India

Student name: Ms Sunakshi Bhatia
Guide: Dr Nidhi Pande
Year of completion: 2014
Host Organisation: College of Vocational Studies, University of Delhi
Supervisor (Host Organisation): Dr Anu Satyal
Abstract: In the context of globalization and changing technology, policy makers all over the world have expressed a compelling need for the environmental goods industry. Currently, the developed countries have a comparative advantage in trade of these goods and services. The share of trade of developing countries, including India in environmental goods is very small but is growing significantly.

India has an extensive potential in the environmental goods sector, but its domestic environment industry is characterized by small scale industry units and is much disordered. The first objective of this study is to analyze the trends for exports of environmental goods from India for the period 1996-2012. Descriptive statistics and graphs are used to analyze the trend in exports. The second objective is to identify and analyze the major determinants of environmental goods’ exports from India. The augmented gravity model is used to analyze the major factors that affect the exports of environmental goods.

The results show that the exports of environmental goods from India are affected by the price variables. India produces standardized consumer goods similar to other developing countries and aims at lowering the product prices and transportation cost in order to perform well in highly price-competitive market. The other developing countries are seen more as India’s competitors than its trade partners. To maximize the gains from trade in environmental goods it is imperative that policy must encourage investment in research and development in environmental goods industry with appropriate support and provision of infrastructure and institutions.