Doha deal gives only modest gains to India - study

GENEVA (Reuters) - India's output would grow by only an additional one half of a percent under a successful Doha round deal to open up world trade, according to a study by the Carnegie Endowment for International Peace published on Tuesday.

However this would be better than the potential gains from the most favourable bilateral trade agreements under consideration, the study said.

"A Doha agreement along the lines of the study's simulation would be positive, albeit quite modest, for India," it said.

Economic simulations by the U.S. think-tank suggest a deal would boost domestic production in the world's second most populous country by only $4.5 billion, or 0.52 percent, the study said.

Exports would increase by $2.4 billion or 3.8 percent, with the strongest gains seen in apparel, textiles, leather and footwear, it said. Imports would rise by $2.2 billion or 2.9 percent.

India's vibrant industry and flourishing services sector mean it is well placed to benefit from any trade deal. The economy, Asia's third largest, is expected to grow by 8.75 percent in the year ending in March, the IMF said on Monday.

But with almost two thirds of India's 1.1 billion people living in rural areas and over half working in agriculture, India is vulnerable to fluctuations in food prices.

The study warns that the potential gains from a deal could be wiped out by falls in the price of agricultural commodities, if India binds its agricultural tariffs under the deal at levels preventing it from offsetting global price shocks.

A 50 percent fall in the world rice price would have a negative impact on India's real income as large as the positive impact of the entire Doha deal, with poorest households suffering most, the study said.