India has been extended an invitation to join talks on the proposed Regional Comprehensive Economic Partnership (RCEP) next month, but is still on the fence about participation, say sources.
The 10-member Association of the Southeast Asian Nations (Asean) bloc has invited India to Bali, Indonesia, for RCEP talks on February 3-4. The Asean secretariat hopes the meet may be able to iron out existing wrinkles raised by India. Since there had been no significant progress on the matter over the past two years on most issues, New Delhi is yet to decide on the invite, an official said.
The RCEP is a proposed pact between 10 Asean economies and six others (New Zealand, Australia, China, India, Japan, and South Korea) with which the grouping currently has free-trade agreements.
In November last year, the Narendra Modi government had announced it was pulling back from RCEP talks, arguing doing so would adversely affect national interest. Modi had informed the other leaders that the deal in its latest form “does not fully reflect the basic spirit and the agreed guiding principles of the RCEP”.
This was a nod by the government to concerns raised by domestic industry and farmers, most of whom had opposed the pact, fearing it would lead to uncontrolled dumping by China. But the RCEP nations had left the door open for India — the largest untapped consumer and industrial market — in the bloc.
All nations, apart from India, went ahead with the deal after the conclusion of the summit in Bangkok. “Participating countries have concluded text-based negotiations for all 20 chapters and essentially all their market-access issues,” said the joint statement issued after a meeting of RCEP leaders.
“All RCEP countries will work together to resolve these outstanding issues in a mutually satisfactory way. India’s final decision will depend on satisfactory resolution of these issues,” the joint statement had said.
Negotiations, started in 2012, are currently expected to culminate in a final deal being signed by end-2020. The deal is now being scrubbed for legal issues.
The RCEP issue had divided the domestic industry, with various sectors like retail, dairy, and electronics vehemently opposing the deal, fearing an onslaught on imports from China and other nations. But other sectors, such as textiles and pharma, had supported India’s participation, citing the deal provides access to the huge Chinese consumer market.
NITI Aayog had pointed out that existing trade agreements with Malaysia, Japan, Singapore, and South Korea are grossly unfavourable to India and have led to a widening trade deficit with these nations.
India has repeatedly maintained that if other RCEP nations come up with better offers, it will be open to discussion. Currently, India is exploring trade agreements with the US and the European Union to allow the manufacturing and services sectors to benefit from access to large developed markets.