Journal Press India®

Assessment of Economic Impact of the Prospective India – GCC FTA: A Partial Equilibrium Simulation Analysis

Vol 9 , Issue 1 , January - June 2022 | Pages: 1-21 | Research Paper  

Article has been added to the cart.View Cart (0)

Author Details ( * ) denotes Corresponding author

1. * Vasudha Gupta, Assistant Professor, School of Business, Galgotias University, Agra, Uttar Pradesh, India (
2. Swami Prasad Saxena, Professor, Department of Applied Business Economics, Dayalbagh Educational Institute, Agra, Uttar Pradesh, India (

This paper attempts to examine the possible impact of tariff liberalization due to the prospective India – GCC Free Trade Agreement (FTA) on revenue, welfare and potential trade flows between India and GCC by using an ex-ante equilibrium approach through the SMART model on disaggregated trade data. The ex-ante simulation results show that tariff liberalization will have a positive impact on both sides. The reduction in tariffs will lead to a significant increase in trade between India and GCC countries. The overall results suggest that for both sides, the fall in government revenue associated with tariff reduction would be greater than the net welfare gains, but these tariff revenue losses can be balanced by a significant expansion in exports. In a nutshell, both India and GCC have substantial trade potential and the proposed FTA will be mutually beneficial and welfare enhancing.


Tariff liberalization; Free trade agreement; Trade diversion; Trade creation; Ex-ante partial equilibrium; Simulation approach

  1. Ayyub, S., & Manral, P. (2017). A partial equilibrium analysis of India’s agricultural export to GCC: looking beyond the status quo (2009-2015). International Journal of Business Economics and Management Research, 8(7), 40-61.
  2. Choudhry, S., Kallummal, M., & Varma, P. (2013). Trade creation and trade diversion in the india-sri lanka free trade agreement-a sector specific analysis. Centre for WTO Studies, Indian Institute of Foreign Trade, Working Paper CWS/WP/200/11
  3. Cui, L., Sun, Y., Melnikiene, R., Song, M., & Mo, J. (2019). Exploring the impacts of Sino–US trade disruptions with a multi-regional CGE model. Economic Research-Ekonomska Istrazivanja, 32(1), 4015-4032.
  4. Dollar, D., & Kraay, A. (2004). Trade, growth, and poverty. Economic Journal, 114(493), F22-F49.
  5. Francois, J & Manchin, M. (2009). Economic impact of a potential free trade agreement (fta) between the european union and the commonwealth of independent states. Institute for International & Development Economics, IIDE Discussion Paper: 200908-05
  6. Guei, K.M.A., Mugano, G., & Le Roux, P. (2017). Revenue, welfare and trade effects of European Union free trade agreement on South Africa. South African Journal of Economic and Management Sciences, 20(1), 1-11.
  7. Herzog, B., & George, P. (2014). Econometric assessment of a european and indian free trade agreement. Journal of World Economic Research, 3(1), 8-14.
  8. Hur, J., & Park, C. (2012). Do free trade agreements increase economic growth of the member countries? World development. Retrieved from  DOI: 10.1016/j.worlddev.201 1.12.006
  9. IEA (2021). Indian Enegry  Outlook, World Energy Outlook Special Report. Retrieved from
  10. Ismail, S., & Ahmed, S. (2019). Economic effects of tariff liberalization of prospective India-GCC FTA: A computable general equilibrium analysis. Foreign Trade Review 54(3) 224–252.
  11. Jallab, M. S., Abdelmalki, L., & Sandretto, R. (2007). The free trade agreement between the United States and Morocco: The importance of a gradual and assymetric agreement. Journal of Economic Integration, 22(4), 852-887.
  12. Laird, S., & Yeats, A. (1986). The UNCTAD trade policy simulation model, a note on methodology, data and uses. UNCTAD Discussion Paper No. 19, UNCTAD. Retrieved from
  13. Lang, R. (2006). A partial-equilibrium analysis of the impact of the ECOWAS-EU economic partnership agreement, United Nations Economic Commission for Africa. Retrieved from
  14. Mugano, G., Brookes, M. and Le Roux, P. (2013), The impact of most favoured nation tariff rate on Zimbabwe, International Journal of Physical and Social Sciences, 3(7), 231-245.
  15. Plummer, M.G., Cheong, D. and Hamanaka, S. (2010), Methodology for impact assessment of free trade agreements, Asian Development Bank, Mandaluyong City, Philippines.
  16. Poczta-Wajda, A., & Sapa, A. (2017). Potential trade effects of tariff liberalization under the transatlantic trade and investment partnership (TTIP) for the EU agri-food sector. Journal of Agribusiness and Rural Development, 2(44), 421–433.
  17. Rodríguez, F., & Rodrik, D. (2000). Trade policy and economic growth: A skeptic's guide to the cross-national evidence. NBER Macroeconomics Annual, 15, 261-325. Retrieved from
  18. Sachs, J. D., & Warner, A. (1995). Economic reform and the process of global integration. Brooking papers on Economic Activity, 26(1), 1-118.
  19. Samuel, G.M. (2015). Uganda’s trade and revenue effects with the EAC countries, DRC and Sudan. Modern Economy, 6, 338-357. Retrieved from me.2015. 63031
  20. Sikdar, C & Nag, B. (2011). Impact of India-ASEAN free trade agreement: A cross-country analysis using applied general equilibrium modelling. Asia-Pacific Research and Training Network on Trade Working Paper Series, No 107.
  21. Simiyu, E.J., & Mugano, G. (2017). The influence of World Trade Organisation free trade agreement tariff rates on Kenya. International Journal of Social Science and Economic Research, 2(9), 4414-4433.
  22. Veeramani, C., & Saini, G., K. (2010). Impact of ASEAN-India preferential trade agreement on plantation commodities: A simulation analysis. national research programme on plantation development (NRPPD) Discussion Paper No. 2.
  23. Viner, J. (1950). The customs union issue. New York: Carnegie Endowment for International Peace.
  24. Vo, T. T., Le, Q. H., & Hoang, T. H. (2018). Effects of EVFTA on Vietnam’s apparel exports: An application of WITS-SMART simulation model. Journal of Asian Business and Economic Studies, 25(2), 04–28.
  25. Wacziarg, R., & Welch, K. H. (2008). Trade Liberalization and Growth. World Bank Economic Review, 22(2), 187-231.
Abstract Views: 20
PDF Views: 67

Advanced Search


PDEU: 8th Biennial I...

ABOUT THE CONFERENCE The objective of ICEIM 2022 is to present a sc...

International Resear...

ABOUT THE CONFERENCE Mimansa Research Conference endeavours to presen...

2nd International E-...

ABOUT THE CONFERENCE In the era of digitalization, the world has sh...

3rd International Co...

About the Conference At the outset, the multifarious Covid-19 pande...

International Confer...

ABOUT THE INTERNATIONAL CONFERENCE Today, the world of business is ...

Call for Reviewers

In keeping with JPI’s policy of commitment to high standards of ...

Call for papers

JPI invites original and unpublished manuscripts in the areas of comme...

By continuing to use this website, you consent to the use of cookies in accordance with our Cookie Policy.