Economic growth and development of a country rely on trade as it serves as a driving force with efficient utilization of factor of endowments. Several commodities are traded world-wide, among them spices which has a long history of being one of the highly traded commodity. Developing countries including India are the leading producer and exporter of spices in the world. The demand for Indian spices has gone up in the United States of America, Vietnam, United Arab Emirates, United Kingdom, etc. The study assess the comparative advantage of major spices exporting countries for pepper, cardamom and turmeric-based on data available in International Trade Centre. To analyse the effect of trade liberalisation, a simulation model (SMART) developed by UNCTAD was used to estimate trade creation, diversion and revenue effect on importing and exporting countries. The result shows that India has a comparative advantage in the export of Turmeric, Guatemala in Cardamom and Vietnam in Pepper. The impact of tariff relief on India has greater advantage, which has trade creation in the export of cardamom and turmeric. Whereas in pepper, comparatively, trade diversion is higher than trade creation, indicating that less efficient countries are given a chance to export to the top importing countries due to a reduction in tariff. Indian spice exporters should focus on promoting or exporting spices to countries like Netherlands, United States, United Kingdom, and Germany.
Comparative advantage, Spice, Trade, Tariff
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