http://ijopaar.org/ijopams.php/; 2018 Vol. 1(1); pp.

10-16, ISSN: 456-4516

A STUDY ON TRADE CONCENTRATION OF INDIA’S WITH

BRICS COUNTRIES: A HIRSCHMAN INDEX ANALYSIS
Vasudha Gupta
(Research Scholar)

Dayalbagh Educational Institute (Deemed University), Dayalbagh, Agra-282005

Akanksha Singh Fouzdar

(Research Scholar)

Dayalbagh Educational Institute (Deemed University), Dayalbagh, Agra-282005

ABSTRACT
The BRICS countries are most emerging economies in the world, the trade between India and BRICS
countries expanded slowly and steadily. The paper examine the trade concentration between India
and BRICS countries by employing Hirschman Index (HI) covering the period from 1997-98 to 2016-
17. Over the period of study, India’s export to BRICS countries witnessed compound annual growth
rate (CAGR) of 11.61 percent, Correspondingly, India’s import from BRICS countries recorded
compound annual growth rate (CAGR) of 20.74 percent. Hence India’s trade balance exhibited a
negative trend in every year with BRICS countries. The findings of the study reveal that the
importance of intermediate goods has been replaced by capital goods (as per WTO classification).The
results also confirm that India export to BRICS countries is less concentrated than its imports from
BRICS countries. Hence, it is inferred that trade between India and BRICS countries revolves around
narrow range of products.
Keywords: Hirschman Index, BRICS Countries, Export, Import, Trade Concentration.
JEL codes: F10, F14
1. INTRODUCTION
The BRIC countries, group of four large emerging economies i.e., Brazil, Russia, India and China.
The term BRIC was first coined by the chief economist of Goldman Sachs, in a paper entitled
“Building Better Global Economics BRIC’s”, in 2001 (Jim O’ Neill, 2001). In his paper he explained
the growth prospects of the four largest emerging economies and forecasted that by 2050, India and
China will attain first and third position as world biggest economies with Russia and Brazil will also
acquire fifth and sixth position as the world largest economies. The four members grouping of
emerging economies have expanded its membership to include South Africa because of its growing
significance in the global economy. So BRIC renamed itself as BRICS and it symbolises the
collective economic power of Brazil, Russia, India, China and South Africa.
The BRICS countries have made a significant contribution in world trade, together the five economies
contributing 37 per cent of the world GDP and nearby 17 per cent share in the global trade. India’s
two way bilateral trade with BRICS countries has shown increasing trend. Initially India‘s export to

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BRICS countries was highest to Russia followed by China and South Africa then the entire scenario
has changed. India‘s highest export was to China followed by South Africa. Over the year, export
from India counted from US$ 1874.64 million in 1997-98 to US$ 16854.6 million in 2016-17
(Directorate General of Commercial Intelligence & Statistics). Over the year, India’s export to BRICS
recorded compound annual growth rate (CAGR) of 11.61 percent and India’s imports from BRICS
extended to US$ 76245.91 million in 2016-17 from merely US$ 1758.42 million in 1997-98. Over the
year India’s import from BRICS countries witnessed compound annual growth rate (CAGR) of 20.74
percent (www.commerce.nic.in). It shows that India’s export and import both have an increasing trend
but the growth rate of import is more than exports.
2. PRESENT STATE OF KNOWLEDGE
Vadra (2011) studied importance of the BRICS countries in the world economy during 1999-00 to
2009-10. He found that in 1999-00 India export to BRICS was highest to Russia followed by China
and South Africa but in 2009-10 the entire scenario has changed India’s highest export to China
followed by Brazil and South Africa.
Burange and Karnik (2014) used Hirschman Index (HI) to assess bilateral merchandise trade
concentration between India and SAARC countries during the period from 1991-2014. In order to
examine whether the nature of bilateral trade is inter-industry or intra-industry, the researchers used
Trade Overlap Index (TOI) and Grubel and Lloyd Index (GLI). The results revealed that product
concentration is high in India’s imports than export from SAARC.
Chatterjee et al. (2014) studied the trends in trade and competitiveness between the BRICS countries
as well as in India by calculating revealed Comparative Advantage (RCA) over a period from 2009-
2013. They stated that India has competing in many product categories with other BRICS countries
and India has also enjoying comparative advantages in some products.
Yu and Qi (2015) analysed trade complementarily and comparative advantages between China and
five Central and Eastern European countries namely Poland, Romania, Czech Republic, Lithuania and
Bulgaria. They stated that agricultural product has highly complementarily and great potential for
trade between China and selected CEE countries. Researchers also observed that to bring out their
comparative advantages, China and CEE countries should further adjust their product structure of
exports for achieving mutual benefit and win-win result of bilateral trade.
3. OBJECTIVE OF THE STUDY
The objective of this study is to examine the trade concentration of India’s with BRICS countries.
4. RESEARCH METHODOLOGY
The present study analyse the trade concentration of India’s with BRCS countries i.e. Brazil, Russia,
China, and South Africa by using Hirschman Index (HI) over the period 1997-98 to 2016-17.For this
purpose secondary data is collected from various sources like Journals, Working papers, Website of
Ministry of Commerce, Export-Import data bank and Statistical data base of BRICS countries.
5. DATA ANALYSIS AND INTERPRETATIONS
Hirschman Index (HI)
This index was first developed and used by Albert O. Hirschman in his study, where the square roots
of the sum of the squared market shares of products are calculated. This index is widely used to
measure the trade concentration.
Hj = sqrt [sum (xi/Xt)2]* 100
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Where, Hj is the Hirschman Index for country j, xi is country j’s exports of product and Xt is country
j’s total exports. The index ranges from 0 to 100 if it is multiplied by 100; lower values indicate less
concentrated trade structure.
6. PRODUCT CONCENTRATION IN INDIA’s EXPORT TO BRICS COUNTRIES
In the year 1997-1998, the share of top 10 products was 63 percent of total export of India to BRICS
(Table 1). Surprisingly, the contribution of top 10 products during 2016-17 was same as in 1997-98
(Table 2). Over the years it is observed, the importance of intermediate goods in top 10 products has
been replaced by capital goods (as per WTO classification).

Table-1: Top Ten Indian Export to BRICS, 1997-98

HS Code Commodities Share (%)
10 Cereals 9
23 Residues and waste from the food industries; prepared animal 9
52 fodder.
Cotton 8
9 Coffee, tea, mate and spices 7
26 Ores, slag and ash 7
30 Pharmaceutical products 7
29 Organic chemicals 4
62 Articles of apparel and clothing accessories not knitted crocheted. 4
72 Iron and steel 4
2 Meat and edible meat offal 4
Total 63

Table-2: Top Ten Indian Export to BRICS, 2016-17

HS Code Commodities Share (%)
27 Mineral fuels, mineral oils and mineral waxes 11
52 Cotton 10
29 Organic chemicals 8
30 Pharmaceutical products 7
74 Copper and articles thereof. 7
87 Vehicles other than railway and parts and accessories thereof. 6
85 Electrical machinery and equipment and parts thereof. 5
25 Salt; sulphur; earths and stone; lime and cement 3
26 Ores, slag and ash 3
84 Nuclear reactors, boilers, mechanical appliances; parts thereof. 3
Total 63

It is clearly seems from Table 3 that the share of top 10 products fluctuated in both the direction. In
the year 2005-06, 2007-08 and 2008-09, it attained a peak and reached to 16.42, 12.54 and 19.13

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respectively. However, more share doesn’t means higher product concentration. Though, it was
reduced to 74 percent in 2009 and 2010. Afterwards, it remained within the range of 75 to 60 percent.
To find product concentration in India’s total export to BRICS countries, the Hirschman Index is
calculated. HI showed that level of product concentration highly increased during 1997-98 to 2016-
17, it altered roughly within range 4 to 16 percent with an exception of 2008-09 (Table 3). It can be
seen from Table 3 that HI registered highest product concentration in 2008-09 because the share of
ores, slag and ash (C 26) and Mineral fuels, mineral oils and mineral waxes (C 27) shown a higher
concentration of 36 percent and 16 percent respectively. As India was exported a giant share of C-26
U$ 6187.48 million to China and C-27 U$ 1399.15 million, U$ 161.85 million and U$ 1127.39
million to Brazil, China and South Africa respectively. Therefore, in 2008-09 it resulted in increasing
product concentration in the export basket of India to BRICS countries. Hence, the HI index reached
to 19.13 in 2008-09. Thus it is evidenced that India’s export basket did not show a sign of
diversification and largely concentrated in few products. After 2008-09, the product concentration
was reduced and India tries to expand its exports range. To conclude this with the help of HI Index we
can say export basket of India is concentrated in few products.

TABLE-3: PRODUCT CONCENTRATION IN INDIA’S EXPORT TO BRICS

Year % Share of Top 10 products HI
1997-98 63 4.74
1998-99 64 5
1999-00 66 5.56
2000-01 65 4.96
2001-02 64 4.84
2002-03 65 5.28
2003-04 70 6.58
2004-05 70 8.3
2005-06 78 16.42
2006-07 77 14.3
2007-08 78 12.54
2008-09 78 19.13
2009-10 74 13.18
2010-11 74 13.58
2011-12 75 8.98
2012-13 76 9.96
2013-14 73 8.2
2014-15 71 8.1
2015-16 69 8.76
2016-17 63 5.08

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7. PRODUCT CONCENTRATION IN INDIA’s IMPORTS FROM BRICS COUNTRIES

As per WTO classification initially India mainly imports intermediate goods from BRICS. Over the
year, intermediate as well as capital goods also imports by India from BRICS countries. At HS-02
digit classification, following Table 4 and Table 5 enlist share of top ten products of India’s import
from BRICS. In the year 1997-98, top ten products considerably fell to almost 73 percent of India’s
imports from BRICS countries.
In the year 2016-17, contribution of top ten products accounted more than 74 percent. Table 5
confirms that Electrical machinery and equipment and parts thereof (C 85) replaced organic
chemicals (C 29) by contributing major share in the imports basket of India from BRICS countries.

Table-4:Top Ten Imports From BRICS, 1997-98

HS Code Commodities Share (%)
29 Organic chemicals 15
72 Iron and steel 10
27 Mineral fuels, mineral oils and mineral waxes 10
28 Inorganic chemicals; organic or inorganic compounds 7
76 Aluminium and articles thereof 7
84 Nuclear reactors, boilers, mech. appliances; parts thereof. 6
74 Copper and article intermediate s thereof 6
48 Paper and paperboard; articles of paper pulp 5
85 Electrical machinery and equipment and parts thereof 4
50 Silk 3
Total 73

Table-5: Top Ten Imports from BRICS, 2016-17

HS Code Commodities Share (%)
85 Electrical machinery and equipment and parts thereof 26
84 Nuclear reactors, boilers, mech. appliances; parts thereof. 14
29 Organic chemicals 8
27 Mineral fuels, mineral oils and mineral waxes 6
31 Fertilisers 5
71 Natural/cultured pearls, clad with pre.metal and artcls thereof 5
72 Iron and steel 4
39 Plastic and articles thereof 2
89 ships, boats and floating structures 2
90 Optical, cinematographic measuring and accessories thereof. 2
Total 74

Table 6 affirms that over the period, the share of top ten products in India’s total import from BRICS
countries highly consistent within the range of 70-80 percent. Table 6 clearly displays HI from 1997-
98 to 2016-17. HI recorded highest product concentration in 2003-04 because natural or cultured

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pearls, precious or semiprecious stones, pre-metals, clad with pre-metal and articles thereof; imit.
jewellery; coin (C 71) and electrical machinery and equipment and parts thereof; sound recorders and
reproducers, television image and sound recorders and reproducers and parts (C 85) highly imported
by India. South Africa and China exported U$ 1715.94 million and U$ 136.35 million respectively to
India. Hence, the HI reached to 14.62 percent in 2003-04. It can be seen from Table 6 that the HI
showed the level of product concentration from 1997-98 to 2016-17; it hovering around within the
range 6 to 15 percent. HI is shown fall in concentration from 2004-05 to 2007-08. After that HI index
is improved. With the following result it is conclude that BRICS countries highly cater the demand of
India. Similarly, India also tries to fulfil the demand of BRICS countries.

TABLE-6: PRODUCT CONCENTRATION IN INDIA'S IMPORTS FROM BRICS

Year % Share of Top 10 products HI
1997-98 73 6.72
1998-99 70 6.44
1999-00 79 14.42
2000-01 76 13.42
2001-02 76 8.78
2002-03 76 10.72
2003-04 79 14.62
2004-05 75 10.58
2005-06 75 8.66
2006-07 75 8.46
2007-08 73 8.22
2008-09 77 10.08
2009-10 78 9.8
2010-11 77 9.84
2011-12 78 9.42
2012-13 79 9.3
2013-14 77 9.16
2014-15 75 9.7
2015-16 75 9.48
2016-17 74 10.76

8. CONCLUSION
BRICS is the largest growing economies in the world. Together they contribute a large share in the
world economy. India’s role in BRICS nation is significant. India’s export and import both shows an
increasing trend but the growth rate of import is more than exports. Hence, India’s trade balance with
BRICS countries exhibited a negative trend. The commodity basket of India shows a compositional
change in its bilateral trade structure. It initially focuses on raw material and intermediate goods, now
capital goods also contributed a lion share in India’s exports-imports with BRICS countries. As
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Hirschman index result confirms that India export to BRICS countries is less concentrated than its
imports from BRICS countries. During 2016-17, chapter 27 and 52 covers 21 percent of share in
India’s export to BRICS. Similarly, chapter 27 and 52 cover 40 percent of share in India’s imports
from BRICS. So it is concluded that India’s import and export both are concentrated in nature but in
comparison to export India’s import shows a sign of more concentration with BRICS countries.
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