Trends and Patterns of Bilateral Merchandise Trade Between India and Japan

The paper tries to examine trends of merchandise bilateral trade between India and Japan during the period from 1990-91 to 2015-16, using Quantity Index and Unit Value Index. It also evaluates and compares international and bilateral competitiveness of India and Japan during 1996 to 2015. The paper examines intra-industry trade (IIT) by constructing Grubel and Lloyd (G-L) index between India and Japan. It also decomposes India’s IIT with Japan into horizontal IIT and vertical IIT and further, segregates vertical IIT into low quality and high quality IIT using Product Quality Index. India’s IIT with Japan is displaying a positive trend. However, it has been dominated by horizontally differentiated products in terms of both number and share in the value of total merchandise trade between India and Japan. High economic growth and increase in per capita income of India resulted in higher demand as well as supply for horizontally differentiated products.