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Analysis of India’s Vaccine Diplomacy and Foreign Trade

Analysis of India’s Vaccine Diplomacy and Foreign Trade

On 1 March 2021, India’s Prime Minister Narendra Modi received the first dose of Covaxin, India’s indigenously made COVID-19 vaccine. It kicked off the world’s most ambitious vaccination program.

This analytics is set to study if any changes are brought by the vaccine diplomacy of India in terms of its foreign trade. Further, the analysis dives into the partnership prospects of vaccine gainer countries in terms of past trade with India.

In January 2021, India launched the Vaccine Maitri (Vaccine Friendship) initiative – a major diplomatic effort to gift and supply made-in-India vaccines to low-income and developing countries globally. As the world’s third-largest producer of pharmaceuticals, India is a serious contender in the race to produce COVID-19 vaccines.

India’s pharmaceuticals powerhouse provides generic medicines globally and produces nearly 60 per cent of the world’s vaccines, including vaccines for Diphtheria, Pertussis, Tetanus (DPT), Tuberculosis, and Measles. India’s Serum Institute – the world’s largest vaccine producer by volume – is producing the Covishield vaccine (developed by Oxford University – AstraZeneca) and India’s Bharat Biotech is producing Covaxin. Several other made-in-India vaccine candidates are at different stages of development, including a potentially game-changing nasal vaccine and Russia’s Sputnik V vaccine (currently undergoing phase 3 trials in India led by Dr Reddy’s Laboratory).

Made-in-India drugs are cheaper particularly for low-income and developing markets. Pfizer-BioNTech’s and Moderna’s vaccines, widely used in the Global North, are priced at US$19 and US$32-37 per dose, respectively. In India, while vaccines are not yet on the private market and vaccine makers are supplying doses at subsidized rates to the government, they are still significantly cheaper. India’s Serum Institute will reportedly price Covishield at US$13 per dose commercially.

In addition to being cheaper, the made-in-India vaccines are more suitable for countries with weak cold chain and infrastructure facilities. Both the Pfizer and Moderna vaccines must be stored at sub-zero temperatures whereas both Indian-made vaccines can be stored at between 2 and 8 degrees Celsius – refrigerator temperatures. India also has significant capabilities and expertise to share on mass immunization programs and its vaccine rollout is being closely followed in several countries.

India’s vaccine diplomacy came at a time when the international community is raising concerns over ‘vaccine nationalism’ and the growing inequity about vaccine supply. The WHO has called out many developed countries for hoarding vaccines, leaving little for middle- and low-income countries. As countries scramble to secure supplies, many are turning to India to close the accessibility and availability gaps. India is also at the forefront of efforts to ensure a level playing field for vaccine development and supply, particularly for developing countries.

As of April 2023, India provided 30.12 lakhs of vaccines to 99 countries through different modalities including grants in aid, gifts, commercially and through WHO – GAVI’s COVAX alliance. 

Here is the World map showing continent-wise and country-wise vaccine supply provided by India.

India’s Continent-wise Supply

The data for India’s vaccine supply has been obtained from the Ministry of External Affairs’ Vaccine Maitri webpage. On the other hand the data for trade has been obtained from the Directorate General of Foreign Trade’s website.

Firstly, we used hypothesis testing to test whether India’s vaccine diplomacy has led to an impetus to the foreign trade or not. Here we have considered the financial year 2021-22 as the pre year and 2022-23 as the post year, for both imports and exports. The supply of vaccines from January 2021 to March 2023 is the intervention.

Our null hypothesis was that there was no change in trade after the vaccine supply. On the contrary, the alternate hypothesis stated that there was a change in trade after the vaccine supply.

Considering the vaccine supply as the intervention, we resorted to using the statistical test of Two-sample t Test for exports and imports separately.

At the significance level of 5%, it is found that for exports and imports both, study rejected the null hypothesis and hence accepts the alternative hypothesis concluding that there has been a change in India’s trade, export and import after the vaccine supply.

By the analysis done so far, it is clear that India’s Vaccine diplomacy has led to a change in foreign trade with other countries. Next question that arises is whether that trade was favourable for unfavourable, the degree of change in the trade was increasing or decreasing.

Secondly, to deep dive into the details of trade relations with 99 countries, we divided the total vaccine supply into quartiles categorising countries into 3 types of quantities, namely, 1000 lakhs to 50 lakhs (11 countries); 49 lakhs to 1 lakh (58 countries); 96 thousand to 12 thousand (30 countries).

Next, we calculated Balance of Trade (BoT), a difference between exports and imports of a country. If the difference is positive, then trade is favourable. On the contrary, if it is negative then trade is unfavourable. The countries in each of 3 categories were further classified into 2 groups of favourable and unfavourable BoT on the basis of export and import data of financial years 2021-22 and 2022-23.

India has a favourable BoT condition with a total of 68 countries out of 99 countries, and unfavourable BoT condition with 31 countries.

Lastly, due to vaccine supply as an intervention, India’s trade with a particular country has changed in which direction, positive or negative, we analysed whether the favourable and unfavourable BoT has increased or decreased.

India’s Vaccine Supply & Countries with Favourable Balance of Trade

It can be observed that the majority of the country from favourable BoT group belong to two categories, first with vaccine supply worth 49 lakh to 1 lakh and secondary, have increasing BoT which means compared to 2022-23 with 2021-22, India’s exports have been more than imports to these 20 countries. 

India has unique trade relations with different countries, hence generalised statements or inference will not be useful here. However, decreasing BoT under favourable group is an area where attention should be paid for expanding India’s foreign trade. Country-wise analysis in terms of variation in export basket and quantity should be conducted to draw concrete conclusions.

India’s Vaccine Supply & Countries with Unfavourable Balance of Trade

On the contrary to favourable BoT group, in unfavourable BoT group attention should be paid to increasing ones. If a total of increasing across 3 categories is calculated the count of countries would come to 18 nations, and of decreasing BoT is 13 countries demonstrating the gap in count itself. Over here also, the large number of countries are found in the category of vaccine supply 49 lakh to 1 lakh. There is no country in the category of vaccine supply of 96 thousand to 12 thousand, India having a decreasing BoT with.

To conclude, India’s vaccine diplomacy can serve as an effective tool and instrument of Indian soft-power and influence across the Indo-Pacific region. The goodwill India has earned or earning through its vaccine diplomacy has resulted in changing trade dynamics with multiple countries. With India’s intentional focus upon rule of law and world order, these positive trade dynamics can contribute to the development and betterment of the world as international trade is foreseen in theory.

Vaibhavi Pingale

Ms. Vaibhavi Pingale is a Visiting Faculty of Economics at Gokhale Institute of Politics and Economics, Pune & at Savitribai Phule Pune University. She is pursuing her PhD. She has been actively writing media articles other than academic research.

Santoshi Rajguru

Santoshi Rajguru is a Data Scientist at Tatvita Analysts. She has pursued Masters in Statistics and works on various projects as researcher and data analyst.

Mihir Kulkarni

Mihir Kulkarni is a Research Intern at Tatvita Analysts. He is pursuing his Graduation in Economics.

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