India's competitive edge in global cotton trade: An analysis of comparative advantage and gravity model determinants

Cotton is one of the major cash crops of India and a major agricultural export of the country. In view of the economic importance of the crop as a key driver of rural livelihoods, this paper aims to assess competitiveness of India in global cotton trade by analysing its Revealed Comparative Advantage (RCA) and Lafay Index (LFI) for cotton exports. The study also attempts to determine the factors that influence the export of Indian Cotton to major importing countries using economic estimation of the Gravity model. The results of the RCA and LFI analysis reveal that India has a comparative advantage in cotton exports with respect to other major cotton exporters such as USA, Brazil, etc. Although USA is the largest cotton exporter, India has a better comparative advantage and specialisation, which indicates that there is much room for growth in cotton exports. The LFI further confirms India's export specialisation. The Gravity model estimation results highlight that cotton exports from India are determined by GDP of partner countries, GDP of India, physical distance and exchange rate.