India's Trade Potential and Prospects with Common Market of South America (Mercosur)

The present study attempted to analyze India's trade potential and prospects with Mercosur and it employed revealed comparative advantage (RCA) and trade intensity index (TII) for the purpose. In South America, India signed its first preferential trade agreement (PTA) with Common Market of South America (Mercosur) bloc in 2004 that came into effect in 2009. India's trade with this bloc continued to increase. Results of comparative advantage showed that India has trade specialization in the export of agricultural products like silk, cotton, carpets, bird skin, feathers, artificial flowers, human hair, glass and glassware, pharmaceutical products, essential oils, perfumes, cosmetics, etc. to Mercosur and imports products such as coffee, sugars, leather products, tea-mate and spices, silk, wool, animal hair, horsehair yarn, pearls, precious stones, metals, etc. from it. This comparative advantage helps not only to diversify product baskets, but also leads to an increase in volume of trade. The study found that intensity of total trade of India with Mercosur, exports from India to it, and imports from it is greater than 1, which showed that India has sustainable and strong trade potential and prospects with this bloc.