Recently, India opted to stay out of the 15-member free trade agreement that was signed by many major nations of the Asia-Pacific. Touted as the biggest ever FTA made in the world, the agreement is aimed at increasing economic cooperation between the countries that have trade relations and are interdependent.
The RCEP deal is expected to help member nations carry on with international trade without tariffs on imported products for the RCEP members. This will greatly boost the profits of member nations. The deal also includes guidelines on the sharing of intellectual property within the RCEP bloc and also the exchange of professional, financial and e-commerce services between countries. The RCEP bloc, therefore, creates a framework for the exchange of goods and services between member countries.
The RCEP agreement aims at increasing the flow of trade between the member countries and establish a uniform and equal platform for trade between the RCEP nations. This is necessary for ensuring free and prosperous trade in the region and is a step towards ensuring collective progress of the global economy. Even though the RCEP deal looks like a lucrative deal on paper, India had its own concerns regarding the protection of its domestic trade sector as well as the potential impediment that the trade deal could have on its independent trade in the future.
While India was a leading nation during the initial discussions over the RCEP deal, it opted out of being a member nation of the RCEP bloc in November last year after its concerns regarding the finer details of the RCEP agreement were not addressed and the amendments it had demanded were not incorporated into the final agreement.
One of the major reasons behind India walking out of the RCEP deal was the presence of China on the bloc. The Chinese already had their own beef with India, but following the Galwan valley clashes and the consequent tensions and economic hostility, India has decided to decrease its dealings with China, especially on the economic front. Signing the RCEP deal would have foiled this objective and made China and India unlikely trade partners which would have further complicated Indo-China relations. One of the major concerns for India was the possible dumping of cheap products that China could have done by taking advantage of the guidelines of RCEP if the country was to be a part of it.
Some economic and political experts believe that India’s decision will have a negative effect on its economy. They reckon India might have jeopardised a fair share of its bilateral trade ties as the RCEP bloc and its members will be strengthening ties within the bloc. With the RCEP bloc constituting 2 billion people, experts fear that India is missing the opportunity of tapping into world’s largest market.
The RCEP members have not showed any hostility towards India so far and some, such as Japan, have been trying to get India back in the bloc. While it is true that India will be facing some economic consequences of the decision to leave the RCEP deal, its concerns regarding the RCEP guidelines are also legitimate and the country seems likely to join RCEP again only when its concerns have been addressed.