India-China Agricultural Trade Based on Virtual Water: A Heckscher- Ohlin Approach

Abstract

Aim: This paper provides the economics of Virtual Water (VW) exporting to other countries through major agricultural commodities from India. Virtual Water is interconnected with food sustainability and it is the amount of hidden water transferred to other countries through trade. India produces and exports high water-consuming products but contains only 2.56 per cent of total water available in our world. By analysing VW, the total VW export from and import to India and the comparative advantage in producing the commodity in India can be obtained. Methodology: VW for major crops is estimated by dividing the total water required or applied for the specified crop by the total yield of the crop. In this paper, we computed the virtual water trade for the major crops in India and analysed the comparative advantage for India in producing the crop. The data required for the analysis are collected from various secondary sources like the Directorate of Economics and Statistics (DES, GoI), Indian Agricultural Statistical Research Institute (IASRI), EXIM Bank, and FAO Aqua Stat. Results: In the years 2018-19 and 2017-18, India exported 34515 MCM and 41080 MCM of VW through rice followed by 420 MCM and 622 MCM of VW through Wheat, 276 MCM and 184 MCM of VW through Maize. When comparing the production of rice and groundnut in China and India in water requirement aspect, India has the comparative advantage in the production of groundnut and china has the comparative advantage in the production of rice and also shows the same in the yield aspect. Conclusion: With the growing water scarcity in India, we should shift the focus from the high-water requirement crop to the lower crop. In the end, we sort out the water scarcity problem and can attain sustainability.