Entrepot trade
Topic: International Trade Policy, WTO and Intellectual Property · NCERT: Beyond NCERT
Meaning
Entrepot trade means importing goods into a hub port only to send them on to other countries. The goods may be stored, repacked or lightly processed at the hub, but they are not really changed. Hubs earn from handling, storage and services, not from making anything. This matters for India because hub ports decide where its cargo moves and how much the moving costs.
Example
Singapore, Dubai (Jebel Ali) and Colombo are classic entrepot hubs. Much of India's transshipment cargo has been handled at foreign hubs, especially Colombo, and this adds cost and delay. India's response is Vizhinjam in Kerala, its first deep-water transshipment port, commissioned in 2025.
Don't confuse with
- Trade deflection: sending imports through the FTA partner with the lowest external tariff so that they pay less duty. Rules of origin exist to stop it. Entrepot trade is a normal hub-and-re-export business.
Related concepts
- Absolute advantage
- Comparative advantage
- Gains from trade
- Autarky
- Heckscher-Ohlin theory
- Stolper-Samuelson theorem
- Leontief paradox
- Intra-industry trade
- New trade theory
- Gravity model of trade