Assessing the effect of INSTC on India’s trade with Eurasia: an application of gravity model

Shujaat Naeem Azmi, Kashif Hasan Khan and Halil Koch

Cogent Economics & Finance, 2024, vol. 12, issue 1, 2313899

Abstract: India’s trade with Eurasian countries has been improving steadily. India is aggressively addressing its troubles of accessibility and connectivity to the region, primarily through International North South Transport Corridor (INSTC). The present study has been undertaken to empirically examine the impact of INSTC on India’s export to its member countries. Using gravity model of international trade in a panel data framework, the findings show that both distance and if a trade partner is landlocked, effect India’s export negatively. Additionally, a positive effect of INSTC on India’s export was also discovered, elucidating the need to quickly remove the bottlenecks holding back the success of the project. Knowledge transfer and investment in infrastructure is solicited to facilitate the smooth transfer of goods, which will entail economic benefits for all members and also provide a counter narrative to China’s increasing influence in the region.Economic corridors are generally regarded as a tool for the facilitation of international trade. Therefore, an assessment of a corridor from trade perspective is essential to take corrective measures, if necessary. Our research empirically examines the International North South Transport Corridor (INSTC) for examining its effectives in stimulating exports from India to other member states. The results suggest that both distance and a trade partner being landlocked adversely effects India’s exports. The INSTC has been helpful in bridging these trade cost for India’s export to the member states. This novel work gives credence to the potential of INSTC as a source mutual benefits for the member countries. The research assumes more significance in light of the concerns surrounding supply chain disruptions for INSTC members due to Russia-Ukraine war.

Date: 2024
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DOI: 10.1080/23322039.2024.2313899

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