Impact of liberalised trade on energy use and CO2 emissions in India

International trade plays an important role in shaping the industrial structure of a country and consequently it affects the country's environment. How trade affects the environment and how environmental regulations affect trade are issues that have been debated for long by economists, environmentalists and world bodies like the WTO. The globalization process in due course makes this matter more and more evident. The goods and services produced in an economy are directly or indirectly. associated with energy use and, according to the type of fuel utilized, with CO, emissions as well. This study aims at contributing to environment, trade debate by evaluating the impacts of international trade on energy use and subsequently on the emissions of carbon dioxide, on the Indian economy during 1993-94 using Input Output techniques. The paper has also constructed an index of pollution terms of trade from the energy and the carbon embodied in the exports and imports of India. The study finally explores the implications of the EXIM policy of the country for the year 2002. The author finds that India produces goods which are more environment friendly than the goods it imports thus indicating a large inflow of pollution embodied in trade. Moreover, though the Pollution terms of trade (PTOT) is expected to be below the borderline during 2006-7, the index is gradually seen to be moving higher from 1993-94 to 2006-7. On the background of this information, the author finally recommends some policy measures for action.