Climate Change Creates Trade Opportunity in India

Climate change is an emerging challenge to developing economy like India however it also creates opportunity to grow through climate friendly goods production and new direction of trade. This paper focuses India’s potential export trade in climate friendly goods. The estimated gravity model is defined as the potential trade and potential trade gap is measured as how well a bilateral trade flow performs relative to the mean as predicted by the model. Potential trade gap means that actual trade is less than predicted trade value. It suggests that there is a scope to increase the export of climate friendly goods (CFG) to trading partners. The total estimated CFG export potential trade gap in India is around 6 billion US dollar (USD) in 2008. This study contributes on the empirical measurement of potential trade of climate friendly goods in India. Paper suggests a possible climate smart export-led growth model in India and mitigates climate change problems.