Checking India’s RCA Value Across Products

An exporter will need to know the comparative advantage of the product he needs to export. For this a competitiveness tool has been used namely Revealed Comparative Advantage (RCA). RCA use the trade pattern to identify the sectors in which an economy has a comparative advantage, by comparing the country of interests’ trade profile with the world average and is therefore defined as a country’s sectoral share divided by the world sectoral share.

Business Interpretations of RCA values for an exporter

• Values of RCA more than 1 indicate the strength of numerator more than the denominator which is indicative of India’s presence being better than the other suppliers of the same commodity in the world. Hence as first step sectors with more than 1 value of RCAs are picked up from amongst the lot. RCA value of 2-15 is best suited for a startup firm.