ICS Occasional Papers

Trade between China and India had always been predominated by geopolitical concerns and mounting trade deficits. As India has been heavily dependent on China on many of its domestic requirements as well as intermediary products, what often get sidelined or what often deserves more meritorious discussion are the behind the border measures and procedural obstacles. These are hardly debated in the context of growing trade between the two countries and this paper intends to fulfil this gap to some measure. Non-Tariff Measures (NTMs) are seen in an evolving regulatory context which have a potential to put more costs than tariffs. More challenging part of NTMs are institutional and regulatory shortcomings in some countries which result in NTMs becoming barriers to trade. A major difficulty in the case of NTMs is to quantify the affected trade since some of the clearly defined regulations might enhance trade. Though almost all products are covered under NTMs in both countries, in this paper we look into how many of them turn out to be burdensome from the regulatory and transaction costs point of view. We also look into the issue of absence of information related to borer rejections, consignment destructions, etc. to examine the real incidence of issues of NTMs turning out to be barriers to trade. However, the larger prevalence of export related NTMs indicate there is more procedural obstacles within the country and only supporting policy measures and a better regulatory environment can make India reap the trade potential with China on a variety of products.