An Empirical Analysis of Sectoral Export Demand Elasticities and Trade Policies: The Case of India.

This article analyzes India's export demand elasticities by estimating price and income elasticities across five export categories: goods and services, goods, services, food, and merchandise exports, using annual data from 1994 to 2021 and the Auto-Regressive Distributed Lag (ARDL) cointegration approach. The study finds that price elasticities are generally inelastic and often statistically insignificant, indicating limited responsiveness of Indian exports to currency depreciation, while income elasticities are positive and large, showing strong sensitivity of export demand to global income changes. Sectoral differences in elasticities suggest that aggregate export data may mask important variations, underscoring the need for tailored, sector-specific trade policies. The findings imply that Indian export growth is more influenced by the economic performance of trading partners than by exchange rate adjustments, providing policymakers with insights to focus on income-driven strategies rather than relying primarily on currency depreciation.