Structural transformation in India’s export and import composition: Evidence from broad economic categories and multiple structural break analysis

Does trade liberalisation automatically induce structural transformation in an economy’s trade composition? Using India as a case study, this paper revisits this long-standing assumption by examining when, rather than whether, India’s export and import structure underwent meaningful transformation. Employing annual data for 1976–2023 and the Broad Economic Categories (BEC) classification, the analysis focuses on functional end-use categories, consumer goods, industrial supplies, capital goods, and transport equipment, rather than conventional commodity groupings. To avoid imposing policy dates ex ante, the study applies the Bai–Perron multiple structural break methodology, allowing statistically significant regime shifts in trade composition to be identified endogenously. The results reveal no robust structural break around the 1991 liberalisation, despite substantial policy reforms. Instead, a dominant and synchronised structural break emerges in the mid-2000s, centred on 2006–2007. This break is characterised by economically meaningful reallocation away from consumer goods and toward capital goods and transport equipment on both the export and import sides. The evidence indicates that liberalisation generated quantitative expansion of trade during the 1990s, but that genuine compositional upgrading occurred only after a prolonged period of capability accumulation, industrial deepening, and increased integration into global value chains. These findings challenge the conventional narrative of rapid liberalisation-led structural transformation and underscore the importance of distinguishing policy shocks from realised economic change. More broadly, the paper demonstrates the analytical value of combining end-use-based trade classifications with endogenous structural break testing for understanding long-run development trajectories in late-industrialising economies.