Author(s): Mohd Kashif, Hafiz Wasim Akram
This paper has examined the Trade Creation (TC), Trade Diversion (TD) and Consumer Surplus (CS) in India as a result of tariff liberalization or tariff reduction under the ASEAN-India Free Trade Agreement (AIFTA) for India's special categories of products, namely tea and coffee using Single Market Partial Equilibrium Approach. Software for Market Analysis and Restrictions on Trade (SMART) model of WITS database of the World Bank has been used to analyse trade creation, trade diversion, and revenue effect for the commodities mentioned above. It has been found that the tariff reduction schedule in AIFTA has created a significant trade creation in Black Tea and Coffee for India in the ASEAN region. The study also indicates that the India’s trade of coffee and tea have diverted from non-member countries to the ASEAN region and India has been one of the biggest gainers due to the tariff reduction in Black Tea and Coffee. It is also found that consumer surplus for India's market as a result of tariff reduction in Black Tea and Coffee is very perceptible.