Intra Industry Trade

BY
GROUP 3J
IIT (Intra Industry Trade)
Intra-industry trade (IIT) refers to the
simultaneous exports and imports of goods
within the same industry
Indias IIT at the multilateral level has
witnessed an increase in the 19 years
The index of intra-industry stood at 23.48 in
1987-88
Partner countries with whom Indias IIT is
highest
Partner countries with whom Indias IIT is
highest
Partner countries with whom Indias IIT is
highest

India has highest IIT

with Africa and
middle east
Commodities in which IIT is prevalent
Commodities in which IIT has
increased/decreased over the period
Petroleum oils and oils obtained from bituminous minerals, within mineral fuels (C-27),
witnessed an escalation in IIT from 2.98 in 1999-2000 to 77.50 in 2000-01
Products of chemicals and allied industries (S-6) managed an average growth of 4.78% in intra-
industry trade for the entire 19-year period.
It is primarily iron and steel (C-72), within the section that aided the growth in IIT.
Plastic and rubber articles (S-7), is yet another section, which has augmented the component of
intra-industry within its total trade, thereby enabling it to display relatively higher growth at
9.96%
Machinery and mechanical appliances (S-16), has exhibited below average growth of a mere
1.74%
Reasons why IIT is higher/lower in some
of the commodities
Vehicles and transport equipment (S-17), too has seen extremely poor growth in IIT at 1.10%
because the section could not display a higher rate of growth due to poor growth in intra-
industry trade of vehicles
The growing industrialization of the Indian economy, focus on infrastructure and modernization
of technology to augment competitiveness have led to greater imports of machinery.
The availability of polymers in abundance gave a further impetus to the plastic industry, thus
enabling greater exports for plastic
The EXIM Policy of 1997-2002 allowed for free exports of iron and steel. Coupled with this, the
deregulation of the industry in 1991 and granting it the status of high priority industry, aided
the growth in production and exports.
Suggestions
It sheds light on the expanding intra-industry scene of India.
the contribution of intra-industry trade to the changing trade flows too has displayed an
escalation and fluctuations
It is a clear reflection of Indias growing capability of producing similar goods in certain
manufactures
It also connotes lower adjustment costs in these industries, as the economy proceeds on the
path of liberalization.
The rise (yet small) in the magnitude of Indias export of high technological products can help to
shift the terms of trade in her favour by moving productive resources within the industry to
produce the high technological products
Thank you