BILATERAL VEGETABLE TRADE BETWEEN CHINA
Anvesak Journal
Vol (45), No (2).
Jan-June, 2015
BILATERAL VEGETABLE TRADE BETWEEN CHINA AND INDIA: AN
EMPIRICAL ANALYSIS
KAPPA KONDAL1 and Prof. A. NAKULA REDDY2
ABSTRACT
The present paper is attempt to identify the factors influencing vegetable exports from and
imports to India. In order to identify the important factors influencing vegetable trade
between China and India, the multiple regression analysis has been employed. The period of
analysis has been ranged from 2001 to 2012. During the study period, the study reveals that
the growth rate of India’s vegetables exports to China increased. The R2 value is 0.93 with
respect to India’s vegetable exports to China whereas the R2 value is 0.87 with respect to
India’s vegetables imports from China, explained by production and exchange rate. There is
a significant affect of vegetable production and exchange rate on Indian vegetable exports
from and imports to India, at 5% significance level. However, there is need to enhance the
cultivation of vegetable crops area through adopting the modern technology by an innovative
way and initiate measures for the promotion of exports from India.
Keywords: India, China, Bilateral Trade, Vegetable, Production
1
Research Scholar, Rajiv Gandhi National Junior Research Fellow (RGNJRF-UGC)
Professor, both are from the Dept. of Economics, Osmania University, Hyderabad-500 007.
Telangana State, India. Email Id: kondal1988@gmail.com
2
This article has been published in ANVESAK Journal. Sardar Patel Institute of Economic and Social Research,
Ahmedabad-380 054, India. Website.spiesr.ac.in
Anvesak Journal
Vol (45), No (2).
Jan-June, 2015
BILATERAL VEGETABLE TRADE BETWEEN CHINA AND INDIA: AN
EMPIRICAL ANALYSIS
INTRODUCTION
China and India are known as fruit and vegetable baskets of the world. They produce wide
varieties of fruits and vegetable crops in the world. India occupies the second rank in fruits
and vegetable products in the world, after China in 2012-13. According to the Food and
Agriculture Organization (FAO) report, increasing fruit and vegetable consumption becomes
a global priority. It is playing its part to make sure agriculture, particularly in the developing
countries and can help meet the demand for healthy foods like fruits and vegetables because
these crops contain more vitamins and diet.
India is the second largest producer of vegetables in the world after China with the
production of 162187 (‘000MT) in 2012-13. It is estimated that requirement of vegetable in
the country would be about two to three times more than present production. The important
vegetables are potatoes, onion, green peas, cauliflower, okra, cabbage, tomatoes, eggplant,
carrots, and green chilies. At present, many technically qualified professionals have adopted
to modern methods of cultivation and mechanised farming in the rural and urban region, for
getting more production and yield. Horticulture exports play a vital role in national and the
international level. In India, slightly the percentage of its exports decreased in national
exports since 2001-12 (Kondal, 2014). And almost all the vegetable items are identified as
having good export potential in the international market. These goods are mainly onion,
potato, green vegetables (okra, bitter gourd, chilly, asparagus, celery bell pepper, sweet corn,
green and lima beans), organically grown vegetables and hybrid seeds.
This article has been published in ANVESAK Journal. Sardar Patel Institute of Economic and Social Research,
Ahmedabad-380 054, India. Website.spiesr.ac.in
Anvesak Journal
Vol (45), No (2).
Jan-June, 2015
REVIEW OF LITERATURE
Horticultural exports from the developing world have become a major growth sector in
international trade. China became a India’s largest trading pattern and bilateral trade between
two countries touched US$ 65.47 billion. China became a third largest export destination to
India (Goud, 2014). Improvement in the range and quality of exports from China and India
has the potential to create substantial welfare benefits for the world, for China and India
(Betina Dimaranan et al). India does not enjoy even one percent share in the global trade of
horticulture products. The horticultural products comprise of growing and marketing of
vegetables, fruits, flowers and ornamental shrubs. Yet India’s share in the world trade of
horticulture products is mini-scale (Thimmarayappa, 2012). India’s imports small quantities
of agricultural products and they cover nearly one percent of its total bilateral imports
(Mohanty, 2014). Israel has been dominant in the exports of fresh vegetables. India’s
comparative advantage in export of fruits and vegetables seemed to dwindle after economic
reforms. A gradual decline in India’s comparative advantage had been depicted for exports of
fruits and vegetables (Kanaka. s and m. Chinadurai). The IEA Bioenergy report states that the
China is primarily by large imports, where in India the major feature has been a rapid
increase in production and demand for the domestic market. (Vilas Khandare, 2012) states
that imports of agricultural products mainly comprise of vegetables, oil, pulses and wood &
wood products, which is below 77.71% of total agricultural imports in terms of value in
2010-11. Vertical integration is a necessary requirement to global trade. The growth rate of
Indian horticulture exports rapidly increased from 2001-02 to 2008-09 (Kondal, 2014). It is
This article has been published in ANVESAK Journal. Sardar Patel Institute of Economic and Social Research,
Ahmedabad-380 054, India. Website.spiesr.ac.in
Anvesak Journal
Vol (45), No (2).
Jan-June, 2015
clear that international trade in fresh horticultural products is increasing in scale (Watts,
1995).
NEED FOR THE STUDY
The international trade is very important for economic development to developing countries.
Mainly the profitable goods are like fruits, vegetable playing an important role in the world.
Horticulture sector is contributing to agriculture Gross Domestic Product (GDP) and over all
GDP, mostly through foreign exchange. The demand for vegetables is increasing in the
world.
In the earlier studies were not cover, which factors are affecting the vegetable exports
and imports between China and India and there is no empirical evidence on bilateral
vegetable trade between China and India. Keeping this view, there is a need to study the
bilateral vegetable trade between the China and India.
OBJECTIVES
1. To analyse the growth and performance of bilateral vegetable trade between China
and India.
2. To identify the important factors influencing vegetable trade between China and
India.
METHODOLOGY
To fulfill the objectives of the study, the secondary source of data were collected from
various sources namely - World Bank Website, Indian Horticulture Database, National
Horticulture Board, Reserve Bank of India, books and journals etc. The period of analysis has
This article has been published in ANVESAK Journal. Sardar Patel Institute of Economic and Social Research,
Ahmedabad-380 054, India. Website.spiesr.ac.in
Anvesak Journal
Vol (45), No (2).
Jan-June, 2015
been ranged from 2001 to 2012. In order to study the important factors influencing vegetable
trade between China and India, the multiple regression analysis has been employed.
Multiple Regression Equation: Y= α +β
β1X1+β
β2X2+.....+Ut
Where
Y= Horticulture Vegetable Exports/Imports
α = Intercept
β1 and β2 are coefficients
X1= Production of Vegetables
X2= Exchange Rate
Ut= Error term
FINDINGS AND ANALYSIS
Table:1 shows the growth rate of vegetables in India in terms of area, production and yield.
The growth rate of area under vegetable was 10.9 percent in the year of 2005 followed by 7
percent in 2006, 6.4 percent in 2011, 5.8 percent in 2012 and lowest recorded -1 percent in
2002 and 2003. The growth rate of vegetables production was 14.6 percent in the year of
2005 followed by 11.7 percent in 2008, 10 percent in 2006, 9.6 percent in 2011 and lowest
recorded -4.3 percent in 2002 and 2003. The growth rate of vegetables productivity was 7.9
percent in the 2007 followed by 4.3 percent in 2003, 3.6 percent in 2010, 3.4 percent in 2004
and lowest recorded -3.5 percent in 2002. However, there was positive correlation between
the growth rate of area under the cultivation of vegetables and its production but not between
growth rate of area under the cultivation of vegetables and its yield and growth rate of
vegetables production and growth rate of vegetables yield.
Table: 2 show the growth rate of India’s vegetable trade with China. During the
period of the study, the growth rate of vegetable exports to China was the highest recorded 89
percent in the 2003 and lowest recorded -12.9 percent in 2008. The growth rate of vegetable
imports from China was the highest recorded 118.9 percent in the 2002 and lowest recorded 28.1 percent in 2004. The growth rate of vegetable exports as percent of imports was the
This article has been published in ANVESAK Journal. Sardar Patel Institute of Economic and Social Research,
Ahmedabad-380 054, India. Website.spiesr.ac.in
Anvesak Journal
Vol (45), No (2).
Jan-June, 2015
highest recorded 126.7 percent in 2003 and lowest -42.6 percent in 2008. Indian vegetables
exports increased up to 2007, after that growth rate declined. The growth rate of export
vegetable product share was the highest recorded 63.2 percent in the 2011 and lowest
recorded -20.2 percent in 2004. The growth rate of import vegetable product share was the
highest recorded 97.1 percent in the 2009 and lowest recorded -57.1 percent in 2004.
However, the rate of fluctuations in exports is lesser than the fluctuations in imports from
China to India for vegetables.
China, India, Iran, Turkey and the USA are the top five countries in the world in
terms of area under the cultivation of vegetables. The China, India and Iran have occupied
1st, 2nd and 5th place respectively in terms of area and production in the world. Turkey and the
USA have occupied the 3rd and 4th respectively in terms of area and 4th and 3rd respectively in
terms of production in the world. Spain has occupied the 1st place in terms of productivity
followed by the USA, Italy, Iran and Egypt. However, the performance of China and India’s
is superior to other countries in terms of area and production but not in terms of productivity.
(Shown in Appendix:1)
In India, West Bengal occupied the 1st position in terms of area followed by Bihar,
Madhya Pradesh, Uttar Pradesh and Andhra Pradesh. In terms of production, West Bengal
state occupied the 1st place followed by Uttar Pradesh, Bihar, Madhya Pradesh and Andhra
Pradesh. Tamil Nadu state occupied the 1st position in terms of productivity of vegetable in
the country followed by Arunachal Pradesh, Kerala, Jammu & Kashmir and Uttar Pradesh.
However, West Bengal, Bihar and Uttar Pradesh are major players in the production of
vegetable crops. The performances of these states are very high in terms of area and
production but not in terms of productivity. Tamil Nadu state is the one of the best cultivators
of vegetable crops in the country. (Shown in Appendix:2)
EMPIRICAL ANALYSIS OF INDIA’S VEGETABLES TRADE WITH CHINA
This article has been published in ANVESAK Journal. Sardar Patel Institute of Economic and Social Research,
Ahmedabad-380 054, India. Website.spiesr.ac.in
Anvesak Journal
Vol (45), No (2).
Jan-June, 2015
Mainly, the area under the cultivation of vegetable crops, production, productivity, exchange
rates and other factors are influencing vegetable trade. Due to multicollinearity problem, the
study has considered the important factors like production of vegetables and exchange rate as
independent variables and vegetable exports and imports as dependent variable.
Impact of Vegetable Production and Exchange Rate on India’s Vegetable Exports to
China (Table: 3).
Y= - 2047269.61 +0.788 (X1) + 0.372(X2) + Ut
The impact of production and exchange rate on India’s vegetable exports was investigated by
using linear regression method. The estimated value of coefficients is presented in the
equation. The table:3 shows that, the value of R2, i.e, the coefficient of determination is 0.930
which implies that 93 percent of variation in India’s vegetable exports is explained by
production and exchange rate. The coefficient of vegetable production is positive and
significant at 5 percent of level of probability. The coefficient 0.788 implies that 1 unit
change in vegetables production, the India’s vegetable exports change by 0.788 units. This is
the expected result as increases in production of vegetable, shall result in increases in its
exports to China, which leads to rise in accumulation of foreign currency.
The coefficient of exchange rate is positive and significant at 5 percent level of
probability. The coefficient 0.372 indicates that 1 unit increase in exchange rate, leads to
0.372 units increase in India’s vegetable exports to China.
Impact of Vegetable Production and Exchange Rate on India’s Vegetable Imports from
China (Table: 4).
Y= - 1060643.98 +0.742(X1) +0 .396(X2)+Ut
This article has been published in ANVESAK Journal. Sardar Patel Institute of Economic and Social Research,
Ahmedabad-380 054, India. Website.spiesr.ac.in
Anvesak Journal
Vol (45), No (2).
Jan-June, 2015
The impact of production and exchange rate on India’s vegetable imports was investigated by
using linear regression method. The estimated value of coefficients is presented in the
equation. The table: 4 shows that, the value of R2, i.e, the coefficient of determination is
0.878 which implies that 87.8 percent of variation in India’s vegetable imports is explained
by production and exchange rate. The coefficient of production is positive and significant at 5
percent level of probability. The coefficient value of 0.742 implies that 1 unit change in
production, the India’s vegetable imports increases by 0.742 units. This is the unexpected
result as an increase in vegetable production must result in decrease in vegetable imports
from China, which reduces the foreign income and puts burden on balance of payments.
The coefficient of exchange rate is positive and significant at 5 percent level of
probability. The coefficient 0.396 indicates that 1 unit increases in exchange rate, leads 0.396
units increase in India’s vegetable imports from China.
CONCLUSION AND SUGGESTIONS:
The extent of vegetables processing varies from one country to another country.
Vegetable have lot of demand in international market. Its consumption is also relatively high
in the world because of vegetables contain nutritions and vitamins. Now-a-days, the
vegetable sector is growing at a faster rate. During the study period, it is revealed that the
growth rate of India’s vegetables exports to China has increased. There is a positive relation
between the growth rate of vegetables area and growth rate of vegetables production in India.
The R2 value is 0.93 with respect to India’s vegetable exports to China whereas the R2 value
is .87 with respect to India’s vegetables imports from china, explained by production and
exchange rate. There is a significant effect of vegetable production and exchange rate on
Indian vegetable exports from and imports to India, at 5% significance level. In context of
vegetable exports, India should have to concentrate on the neighbouring countries such as
This article has been published in ANVESAK Journal. Sardar Patel Institute of Economic and Social Research,
Ahmedabad-380 054, India. Website.spiesr.ac.in
Anvesak Journal
Vol (45), No (2).
Jan-June, 2015
China, Bangladesh, Sri Lanka and Pakistan which have been the traditional outlets for our
onion, potato and other vegetables. However, there is a need to enhance the cultivation of
vegetable crops area through adopting the modern technology by an innovative way and
initiate measures for the promotion of exports from India.
REFERENCES
1. Aaditya Mattoo et al. (2007). From Competition at Home to Competing Abroad- A case
study of Indian Horticulture. New Delhi: Oxford Univeristy Press.
2. Food and Agriculture Organisation.
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34 (1).
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5. Fruits and Vegetables Sector: An Overview. (2014, July 12). Hyderabad, Telangana, India.
6. Humphery, C. D. (2000). Governance and Trade in Fresh vegetables: The Impact of UK
supermarkets on the African Horticulture Industry. The Journal of Development Studies , 37
(2), 147-176.
7. Indian Horticulture Board.
8. Indian Horticulture Database-2013.
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Scientific Research , 3 (5), 1-3.
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Ahmedabad-380 054, India. Website.spiesr.ac.in
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Vol (45), No (2).
Jan-June, 2015
11. Kondal, K. (2014). Growth rate of Area, Production and Productivity of Onion Crop in
Andhra Pradesh. Indian Journal of Applied Research , 4 (3), 4-6.
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Research Thought, 3 (9), 1-5.
13. Siraj, M. (2011). A comparative analysis of their integration into the global economy.
Real World Economics Review , 57, 60-70.
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of India: http://www.rbi.org.in/scripts/PublicationsView.aspx?id=15010#441
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Performance, Destinations,Competitiveness and Determinites. Agriculture Economics
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.(http://aginnovation.org/wpcontent/themes/theme/images/Opportunities%20for%20Export%
20of%20Fruits%20and%20Vegetable%20Based%20Products%20%28summary%29.pdf).
18. singh, R. J. (2009). Trade Pattern in SAARC Countries: Emerging Trends and Issues.
Reserve Bank Occasional Paper , 30 (3).
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Marketing , XLVIII (1), 23-27.
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Exporting Horticulture Produce. Indian Streams Research Journal , 2 (6).
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Ahmedabad-380 054, India. Website.spiesr.ac.in
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Jan-June, 2015
22. Vilas Khandare, D. M. (2012). Indian Agriculture: Growth Performance and Trade
Pattern. International Journal of Humanities and Applied Science , 1 (5), 138-141.
23. Worldbank.com
Table: 1
Growth Rate of Vegetables in India (Figure in %)
Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Area
-1.0
-1.0
-0.2
10.9
7.0
5.1
3.5
1.7
0.1
6.4
5.8
Production
-4.3
-4.3
4.1
14.6
10.0
3.2
11.7
0.5
3.6
9.6
6.7
Yield
-3.5
4.3
3.4
2.7
-1.3
7.9
-1.2
3.1
3.6
0.6
1.1
(Source: Indian Horticulture Database-2013)
Table: 2
Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Growth Rates of India’s Vegetable Trade with China (Figure in %)
India’s Imports
India’s Exports
Production Share
Production Share
India's exports India's imports Exports as %
with China ♦
with China♦
to China
from China
of Imports
41.6
89
27.3
45.6
10
70
-12.9
56
62.3
56.7
30.3
118.9
-16.6
-28.1
21.6
35.3
18.1
51.6
90.3
-6.1
116.6
-8.4
-35.3
126.7
76.9
19.7
-18.7
44.0
-42.6
-18.0
72.8
-27.6
42.3
-14.8
13
-20.2
-16.9
0.7
40.3
-17.9
51.3
-3.3
63.2
47.9
65
-39.4
-57.1
-28.3
-11.6
-23.7
17.2
97.1
-31.3
63
-6.7
This article has been published in ANVESAK Journal. Sardar Patel Institute of Economic and Social Research,
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Anvesak Journal
Vol (45), No (2).
CAGR
Jan-June, 2015
40.4
26.9
9.1
10.7
-6.1
Source: World Bank Website
Note: ♦India’s vegetables exports and imports of production share out of all products.
Table: 3
Impact of Vegetable Production and Exchange Rate on India’s Vegetable Exports to
China
R2
Adjusted
R2
F
Value
DurbinWatson
VIF
Producti
on
P values
Exchange
rate
0.930
0.914
59.4
1.63
1.09
1.09
Note: * at 5% significance level.
Dependent variable: India’s Vegetable Exports to China
t-statistic
Producti
on
Exchang
e rate
Constant
Productio
n
Exchange
rate
.000*
.003*
-6.311
8.520
4.022
Table: 4
Impact of Vegetable Production and Exchange Rate on India’s Vegetable Imports from
China
R2
Adjusted
R2
0.878 0.851
F
Value
32.29
DurbinWatson
2.52
VIF
P values
Produc
tion
Exchang
e rate
Producti
on
Exchange
rate
1.09
1.09
.000*
.010*
t values
Constant
4.799
Producti
on
Exchange
rate
6.084
3.246
Note: * at 5% significance level
Dependent variable: India’s Vegetable Imports from China
This article has been published in ANVESAK Journal. Sardar Patel Institute of Economic and Social Research,
Ahmedabad-380 054, India. Website.spiesr.ac.in
Anvesak Journal
Vol (45), No (2).
Jan-June, 2015
Appendix:1
Vegetable Cultivation in Top Five Countries in the World
Year
States
Area (in 000 Hect)
Rank
China
24560900
1
India
9205186
2
2012Iran
876830
5
13
Turkey
1111702
3
USA
1104640
4
Year
States
Production (in 000 MT)
Rank
China
573935000
1
India
162186567
2
2012Iran
23485675
5
13
Turkey
27818918
4
USA
35947720
3
Year
States
Productivity (MT/HA)
Rank
Iran
26.8
4
Italy
27.3
3
2012Egypt
25.7
5
13
Spain
39
1
USA
32.5
2
(Source: Indian Horticulture Databse-2013)
Appendix:2
Vegetable Cultivation in top Five States in India
Year
2012-13
Year
2012-13
States
Andhra Pradesh
Bihar
Madhya Pradesh
Uttar Pradesh
West Bengal
States
Andhra Pradesh
Bihar
Madhya Pradesh
Uttar Pradesh
Area (in 000 Hect)
686.1
912.66
861.8
686
1347.96
Production (in 000 MT)
12104.7
16325.7
12574
19572
West Bengal
25466.81
Rank
5
2
3
4
1
Rank
5
3
4
2
1
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Anvesak Journal
Vol (45), No (2).
Year
2012-13
Jan-June, 2015
States
Arunachal Pradesh
Jammu & Kashmir
Kerala
Tamil Nadu
Uttar Pradesh
Productivity (MT/HA)
24.7
22.1
23.6
28
21.4
Rank
2
4
3
1
5
(Source: Indian Horticulture Databse-2013)
This article has been published in ANVESAK Journal. Sardar Patel Institute of Economic and Social Research,
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Vol (45), No (2).
Jan-June, 2015
BILATERAL VEGETABLE TRADE BETWEEN CHINA AND INDIA: AN
EMPIRICAL ANALYSIS
KAPPA KONDAL1 and Prof. A. NAKULA REDDY2
ABSTRACT
The present paper is attempt to identify the factors influencing vegetable exports from and
imports to India. In order to identify the important factors influencing vegetable trade
between China and India, the multiple regression analysis has been employed. The period of
analysis has been ranged from 2001 to 2012. During the study period, the study reveals that
the growth rate of India’s vegetables exports to China increased. The R2 value is 0.93 with
respect to India’s vegetable exports to China whereas the R2 value is 0.87 with respect to
India’s vegetables imports from China, explained by production and exchange rate. There is
a significant affect of vegetable production and exchange rate on Indian vegetable exports
from and imports to India, at 5% significance level. However, there is need to enhance the
cultivation of vegetable crops area through adopting the modern technology by an innovative
way and initiate measures for the promotion of exports from India.
Keywords: India, China, Bilateral Trade, Vegetable, Production
1
Research Scholar, Rajiv Gandhi National Junior Research Fellow (RGNJRF-UGC)
Professor, both are from the Dept. of Economics, Osmania University, Hyderabad-500 007.
Telangana State, India. Email Id: kondal1988@gmail.com
2
This article has been published in ANVESAK Journal. Sardar Patel Institute of Economic and Social Research,
Ahmedabad-380 054, India. Website.spiesr.ac.in
Anvesak Journal
Vol (45), No (2).
Jan-June, 2015
BILATERAL VEGETABLE TRADE BETWEEN CHINA AND INDIA: AN
EMPIRICAL ANALYSIS
INTRODUCTION
China and India are known as fruit and vegetable baskets of the world. They produce wide
varieties of fruits and vegetable crops in the world. India occupies the second rank in fruits
and vegetable products in the world, after China in 2012-13. According to the Food and
Agriculture Organization (FAO) report, increasing fruit and vegetable consumption becomes
a global priority. It is playing its part to make sure agriculture, particularly in the developing
countries and can help meet the demand for healthy foods like fruits and vegetables because
these crops contain more vitamins and diet.
India is the second largest producer of vegetables in the world after China with the
production of 162187 (‘000MT) in 2012-13. It is estimated that requirement of vegetable in
the country would be about two to three times more than present production. The important
vegetables are potatoes, onion, green peas, cauliflower, okra, cabbage, tomatoes, eggplant,
carrots, and green chilies. At present, many technically qualified professionals have adopted
to modern methods of cultivation and mechanised farming in the rural and urban region, for
getting more production and yield. Horticulture exports play a vital role in national and the
international level. In India, slightly the percentage of its exports decreased in national
exports since 2001-12 (Kondal, 2014). And almost all the vegetable items are identified as
having good export potential in the international market. These goods are mainly onion,
potato, green vegetables (okra, bitter gourd, chilly, asparagus, celery bell pepper, sweet corn,
green and lima beans), organically grown vegetables and hybrid seeds.
This article has been published in ANVESAK Journal. Sardar Patel Institute of Economic and Social Research,
Ahmedabad-380 054, India. Website.spiesr.ac.in
Anvesak Journal
Vol (45), No (2).
Jan-June, 2015
REVIEW OF LITERATURE
Horticultural exports from the developing world have become a major growth sector in
international trade. China became a India’s largest trading pattern and bilateral trade between
two countries touched US$ 65.47 billion. China became a third largest export destination to
India (Goud, 2014). Improvement in the range and quality of exports from China and India
has the potential to create substantial welfare benefits for the world, for China and India
(Betina Dimaranan et al). India does not enjoy even one percent share in the global trade of
horticulture products. The horticultural products comprise of growing and marketing of
vegetables, fruits, flowers and ornamental shrubs. Yet India’s share in the world trade of
horticulture products is mini-scale (Thimmarayappa, 2012). India’s imports small quantities
of agricultural products and they cover nearly one percent of its total bilateral imports
(Mohanty, 2014). Israel has been dominant in the exports of fresh vegetables. India’s
comparative advantage in export of fruits and vegetables seemed to dwindle after economic
reforms. A gradual decline in India’s comparative advantage had been depicted for exports of
fruits and vegetables (Kanaka. s and m. Chinadurai). The IEA Bioenergy report states that the
China is primarily by large imports, where in India the major feature has been a rapid
increase in production and demand for the domestic market. (Vilas Khandare, 2012) states
that imports of agricultural products mainly comprise of vegetables, oil, pulses and wood &
wood products, which is below 77.71% of total agricultural imports in terms of value in
2010-11. Vertical integration is a necessary requirement to global trade. The growth rate of
Indian horticulture exports rapidly increased from 2001-02 to 2008-09 (Kondal, 2014). It is
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clear that international trade in fresh horticultural products is increasing in scale (Watts,
1995).
NEED FOR THE STUDY
The international trade is very important for economic development to developing countries.
Mainly the profitable goods are like fruits, vegetable playing an important role in the world.
Horticulture sector is contributing to agriculture Gross Domestic Product (GDP) and over all
GDP, mostly through foreign exchange. The demand for vegetables is increasing in the
world.
In the earlier studies were not cover, which factors are affecting the vegetable exports
and imports between China and India and there is no empirical evidence on bilateral
vegetable trade between China and India. Keeping this view, there is a need to study the
bilateral vegetable trade between the China and India.
OBJECTIVES
1. To analyse the growth and performance of bilateral vegetable trade between China
and India.
2. To identify the important factors influencing vegetable trade between China and
India.
METHODOLOGY
To fulfill the objectives of the study, the secondary source of data were collected from
various sources namely - World Bank Website, Indian Horticulture Database, National
Horticulture Board, Reserve Bank of India, books and journals etc. The period of analysis has
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been ranged from 2001 to 2012. In order to study the important factors influencing vegetable
trade between China and India, the multiple regression analysis has been employed.
Multiple Regression Equation: Y= α +β
β1X1+β
β2X2+.....+Ut
Where
Y= Horticulture Vegetable Exports/Imports
α = Intercept
β1 and β2 are coefficients
X1= Production of Vegetables
X2= Exchange Rate
Ut= Error term
FINDINGS AND ANALYSIS
Table:1 shows the growth rate of vegetables in India in terms of area, production and yield.
The growth rate of area under vegetable was 10.9 percent in the year of 2005 followed by 7
percent in 2006, 6.4 percent in 2011, 5.8 percent in 2012 and lowest recorded -1 percent in
2002 and 2003. The growth rate of vegetables production was 14.6 percent in the year of
2005 followed by 11.7 percent in 2008, 10 percent in 2006, 9.6 percent in 2011 and lowest
recorded -4.3 percent in 2002 and 2003. The growth rate of vegetables productivity was 7.9
percent in the 2007 followed by 4.3 percent in 2003, 3.6 percent in 2010, 3.4 percent in 2004
and lowest recorded -3.5 percent in 2002. However, there was positive correlation between
the growth rate of area under the cultivation of vegetables and its production but not between
growth rate of area under the cultivation of vegetables and its yield and growth rate of
vegetables production and growth rate of vegetables yield.
Table: 2 show the growth rate of India’s vegetable trade with China. During the
period of the study, the growth rate of vegetable exports to China was the highest recorded 89
percent in the 2003 and lowest recorded -12.9 percent in 2008. The growth rate of vegetable
imports from China was the highest recorded 118.9 percent in the 2002 and lowest recorded 28.1 percent in 2004. The growth rate of vegetable exports as percent of imports was the
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highest recorded 126.7 percent in 2003 and lowest -42.6 percent in 2008. Indian vegetables
exports increased up to 2007, after that growth rate declined. The growth rate of export
vegetable product share was the highest recorded 63.2 percent in the 2011 and lowest
recorded -20.2 percent in 2004. The growth rate of import vegetable product share was the
highest recorded 97.1 percent in the 2009 and lowest recorded -57.1 percent in 2004.
However, the rate of fluctuations in exports is lesser than the fluctuations in imports from
China to India for vegetables.
China, India, Iran, Turkey and the USA are the top five countries in the world in
terms of area under the cultivation of vegetables. The China, India and Iran have occupied
1st, 2nd and 5th place respectively in terms of area and production in the world. Turkey and the
USA have occupied the 3rd and 4th respectively in terms of area and 4th and 3rd respectively in
terms of production in the world. Spain has occupied the 1st place in terms of productivity
followed by the USA, Italy, Iran and Egypt. However, the performance of China and India’s
is superior to other countries in terms of area and production but not in terms of productivity.
(Shown in Appendix:1)
In India, West Bengal occupied the 1st position in terms of area followed by Bihar,
Madhya Pradesh, Uttar Pradesh and Andhra Pradesh. In terms of production, West Bengal
state occupied the 1st place followed by Uttar Pradesh, Bihar, Madhya Pradesh and Andhra
Pradesh. Tamil Nadu state occupied the 1st position in terms of productivity of vegetable in
the country followed by Arunachal Pradesh, Kerala, Jammu & Kashmir and Uttar Pradesh.
However, West Bengal, Bihar and Uttar Pradesh are major players in the production of
vegetable crops. The performances of these states are very high in terms of area and
production but not in terms of productivity. Tamil Nadu state is the one of the best cultivators
of vegetable crops in the country. (Shown in Appendix:2)
EMPIRICAL ANALYSIS OF INDIA’S VEGETABLES TRADE WITH CHINA
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Mainly, the area under the cultivation of vegetable crops, production, productivity, exchange
rates and other factors are influencing vegetable trade. Due to multicollinearity problem, the
study has considered the important factors like production of vegetables and exchange rate as
independent variables and vegetable exports and imports as dependent variable.
Impact of Vegetable Production and Exchange Rate on India’s Vegetable Exports to
China (Table: 3).
Y= - 2047269.61 +0.788 (X1) + 0.372(X2) + Ut
The impact of production and exchange rate on India’s vegetable exports was investigated by
using linear regression method. The estimated value of coefficients is presented in the
equation. The table:3 shows that, the value of R2, i.e, the coefficient of determination is 0.930
which implies that 93 percent of variation in India’s vegetable exports is explained by
production and exchange rate. The coefficient of vegetable production is positive and
significant at 5 percent of level of probability. The coefficient 0.788 implies that 1 unit
change in vegetables production, the India’s vegetable exports change by 0.788 units. This is
the expected result as increases in production of vegetable, shall result in increases in its
exports to China, which leads to rise in accumulation of foreign currency.
The coefficient of exchange rate is positive and significant at 5 percent level of
probability. The coefficient 0.372 indicates that 1 unit increase in exchange rate, leads to
0.372 units increase in India’s vegetable exports to China.
Impact of Vegetable Production and Exchange Rate on India’s Vegetable Imports from
China (Table: 4).
Y= - 1060643.98 +0.742(X1) +0 .396(X2)+Ut
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The impact of production and exchange rate on India’s vegetable imports was investigated by
using linear regression method. The estimated value of coefficients is presented in the
equation. The table: 4 shows that, the value of R2, i.e, the coefficient of determination is
0.878 which implies that 87.8 percent of variation in India’s vegetable imports is explained
by production and exchange rate. The coefficient of production is positive and significant at 5
percent level of probability. The coefficient value of 0.742 implies that 1 unit change in
production, the India’s vegetable imports increases by 0.742 units. This is the unexpected
result as an increase in vegetable production must result in decrease in vegetable imports
from China, which reduces the foreign income and puts burden on balance of payments.
The coefficient of exchange rate is positive and significant at 5 percent level of
probability. The coefficient 0.396 indicates that 1 unit increases in exchange rate, leads 0.396
units increase in India’s vegetable imports from China.
CONCLUSION AND SUGGESTIONS:
The extent of vegetables processing varies from one country to another country.
Vegetable have lot of demand in international market. Its consumption is also relatively high
in the world because of vegetables contain nutritions and vitamins. Now-a-days, the
vegetable sector is growing at a faster rate. During the study period, it is revealed that the
growth rate of India’s vegetables exports to China has increased. There is a positive relation
between the growth rate of vegetables area and growth rate of vegetables production in India.
The R2 value is 0.93 with respect to India’s vegetable exports to China whereas the R2 value
is .87 with respect to India’s vegetables imports from china, explained by production and
exchange rate. There is a significant effect of vegetable production and exchange rate on
Indian vegetable exports from and imports to India, at 5% significance level. In context of
vegetable exports, India should have to concentrate on the neighbouring countries such as
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China, Bangladesh, Sri Lanka and Pakistan which have been the traditional outlets for our
onion, potato and other vegetables. However, there is a need to enhance the cultivation of
vegetable crops area through adopting the modern technology by an innovative way and
initiate measures for the promotion of exports from India.
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Table: 1
Growth Rate of Vegetables in India (Figure in %)
Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Area
-1.0
-1.0
-0.2
10.9
7.0
5.1
3.5
1.7
0.1
6.4
5.8
Production
-4.3
-4.3
4.1
14.6
10.0
3.2
11.7
0.5
3.6
9.6
6.7
Yield
-3.5
4.3
3.4
2.7
-1.3
7.9
-1.2
3.1
3.6
0.6
1.1
(Source: Indian Horticulture Database-2013)
Table: 2
Year
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Growth Rates of India’s Vegetable Trade with China (Figure in %)
India’s Imports
India’s Exports
Production Share
Production Share
India's exports India's imports Exports as %
with China ♦
with China♦
to China
from China
of Imports
41.6
89
27.3
45.6
10
70
-12.9
56
62.3
56.7
30.3
118.9
-16.6
-28.1
21.6
35.3
18.1
51.6
90.3
-6.1
116.6
-8.4
-35.3
126.7
76.9
19.7
-18.7
44.0
-42.6
-18.0
72.8
-27.6
42.3
-14.8
13
-20.2
-16.9
0.7
40.3
-17.9
51.3
-3.3
63.2
47.9
65
-39.4
-57.1
-28.3
-11.6
-23.7
17.2
97.1
-31.3
63
-6.7
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CAGR
Jan-June, 2015
40.4
26.9
9.1
10.7
-6.1
Source: World Bank Website
Note: ♦India’s vegetables exports and imports of production share out of all products.
Table: 3
Impact of Vegetable Production and Exchange Rate on India’s Vegetable Exports to
China
R2
Adjusted
R2
F
Value
DurbinWatson
VIF
Producti
on
P values
Exchange
rate
0.930
0.914
59.4
1.63
1.09
1.09
Note: * at 5% significance level.
Dependent variable: India’s Vegetable Exports to China
t-statistic
Producti
on
Exchang
e rate
Constant
Productio
n
Exchange
rate
.000*
.003*
-6.311
8.520
4.022
Table: 4
Impact of Vegetable Production and Exchange Rate on India’s Vegetable Imports from
China
R2
Adjusted
R2
0.878 0.851
F
Value
32.29
DurbinWatson
2.52
VIF
P values
Produc
tion
Exchang
e rate
Producti
on
Exchange
rate
1.09
1.09
.000*
.010*
t values
Constant
4.799
Producti
on
Exchange
rate
6.084
3.246
Note: * at 5% significance level
Dependent variable: India’s Vegetable Imports from China
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Appendix:1
Vegetable Cultivation in Top Five Countries in the World
Year
States
Area (in 000 Hect)
Rank
China
24560900
1
India
9205186
2
2012Iran
876830
5
13
Turkey
1111702
3
USA
1104640
4
Year
States
Production (in 000 MT)
Rank
China
573935000
1
India
162186567
2
2012Iran
23485675
5
13
Turkey
27818918
4
USA
35947720
3
Year
States
Productivity (MT/HA)
Rank
Iran
26.8
4
Italy
27.3
3
2012Egypt
25.7
5
13
Spain
39
1
USA
32.5
2
(Source: Indian Horticulture Databse-2013)
Appendix:2
Vegetable Cultivation in top Five States in India
Year
2012-13
Year
2012-13
States
Andhra Pradesh
Bihar
Madhya Pradesh
Uttar Pradesh
West Bengal
States
Andhra Pradesh
Bihar
Madhya Pradesh
Uttar Pradesh
Area (in 000 Hect)
686.1
912.66
861.8
686
1347.96
Production (in 000 MT)
12104.7
16325.7
12574
19572
West Bengal
25466.81
Rank
5
2
3
4
1
Rank
5
3
4
2
1
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Year
2012-13
Jan-June, 2015
States
Arunachal Pradesh
Jammu & Kashmir
Kerala
Tamil Nadu
Uttar Pradesh
Productivity (MT/HA)
24.7
22.1
23.6
28
21.4
Rank
2
4
3
1
5
(Source: Indian Horticulture Databse-2013)
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