India has decided not to join the RCEP agreement over India’s concern not being addressed in deal .PM Narendra modi says “neither the talisman of Gandhiji nor my own conscience permits me to join RCEP”
Let us now see what are the reasons behind this decision. Before that let us see what is RCEP ?
- What is RCEP ?
The Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement in Asia Pacific region between the 10 member states of ASEAN (Association of Southeast Asian Nations)(Brunei , Cambodia ,Indonesia ,Malaysia, Myanmar , The Philippines ,Singapore, Thailand and Vietnam) and 6 FTA partners (Australia ,China ,Japan, New Zealand ,South Korea and India)
Reasons behind non participation :
- Indian economy is passing through a difficult time. Industry is reeling under pressure .A massive free trade pact like RC EP would expose the Indian business and agriculture to unequal competition from countries like giant sharks in export arena.
- India runs a large trade deficit with at least 11 out of 15 RCEP members ..China alone accounts for $53 billion of India’s $ 105 billion trade deficit.
- widening trade deficit would empty foreign exchange reserves of India at a faster rate.
- In agriculture domestic players dealing in dairy products, spices, rubber, coconut etc. would face dumping from South Asian spice majors
- Vietnam and Indonesia have very cheap rubber to export and Australia and New Zealand are waiting for a free access to India for their dairy products.
Hence to protect Indian industry and agriculture and to avoid further trade deficit India has decided not to join RCEP. But according to some experts RCEP could have been beneficial to India as it covers over 3 billion people and over 20% of global GDP ,access to this market on frictionless duty free basis would have provided tremendous advantage to India’s exports.