Trade policy and global value chain participation: evidence from Indian food processing industry

The food processing industry is a vital sector for India to gain from trade due to its immense potential in the form of strong agriculture base and geographical proximity to numerous food importing nations. It is therefore important to analyse the performance of India in this sector and to understand how trade and investment policies have an effect on performance of the sector. However, the emergence of global value chains (GVCs) in the food processing industry necessitates a shift from traditional trade and also the way trade and investment policies are framed. Therefore, the study decomposes trade data into value-added terms to measure the GVC participation of India in comparison with its competitors and find that the country's integration into these production networks in the sector is meagre. The impact of policy factors, both trade and investment, was found to be significant. Thus, India needs to tailor its policies to enhance the GVC participation in the sector.