India’s Trade Partnership with East African Community: Exploratory Results from Trade Indices

Since the initiation of economic reforms in 1991, India adopted an outward-oriented strategy for development. After inception of World Trade Organization (WTO) in 1995, the country initially relied on multilateral trade reforms for export growth, but slow progress of the Doha Round negotiations over the last decade caused it to explore the regional trade agreements (RTAs) route as well from 2003-04 onwards. While in the initial period India focused on deeper trade relationship with Asian partners, namely, Association of Southeast Asian Nations (ASEAN), Japan, South Korea etc. as preferential trade allies, the perceived need to diversify the export markets has led the country to focus on potential trade partners in Africa, Europe, North and Latin America as well in recent times. On the other hand, the economies of East Africa are also embracing the RTA route for their trade promotion and the growing Indian market offers an opportunity for them as well. The present analysis attempts to understand the trade potential between the five East African Community (EAC) countries and India in the sphere of merchandise and services trade by looking through various trade indices. The empirical results indicate that bilateral trade between the two regions have a strong potential, which can be aided further through policy reforms at both ends.