The sustainability of trade deficits in the presence of endogenous structural breaks: Evidence from the Indian economy

► We examine long-run relationship between India's exports and imports and interest payments on net debt. ► Unit root and cointegration test with endogenous structural breaks are applied. ► The series have multiple breaks clustered around early and mid 1970s, 1986-87 and 1997-98. ► Existence of long-run equilibrium relationship between exports and imports and interest payments on net debt cannot be established. ► The finding implies India is in violation of its international budget constraint.