India’s decision of not joining the Regional Comprehensive Economic Partnership (RCEP)—the mega trade deal comprising 16 Indo-Pacific nations initially—will deal a big blow to the member countries, particularly China, as they stand to lose a huge market. China, with its already huge built-in capacities, has been looking at India as one of its most prominent markets for several years now.
The trade deal would have further boosted China’s interests.
Sources said that the member countries will continue with their efforts to convince India to join the mega trade pact even after sealing the deal. “Most other countries including China want India to come on board. Let us understand that China will keep trying, through other member countries, to convince India to join the trade deal,” a person familiar with the development told IN.
Another person said that though most countries though have officially maintained that they do not want to defer the signing of the agreement, several of them may find it tough to get the watered out deal vetted by their respective Parliaments.
“Now as it is becoming clear that India will not have a rethink over its decision on RCEP, the pact may take a little longer to get approved and signed by all members as not only will this be a watered down pact but also due to the altered geopolitics of the region with the spread of coronavirus and Chinese military and political aggression,” he added.
Ashiwani Mahajan, national co-convenor, Swadeshi Jagran Manch said that several countries have already expressed their concern over India's decision. "Many countries including Japan are not happy with the present contours of the deal," he said.
Last year, India exited the RCEP negotiations to protect its own domestic manufacturers. In fact, most of the free trade agreements (FTAs) that India has signed with other economies have done considerable damage to the Indian manufacturing sector leading to a steady surge in imports.
India’s overall trade deficit in 2019-20 stood at Rs 152.88 billion compared to Rs 184 billion in 2018-19.
Inward shipment from China has been steadily rising and in 2017-18, imports from the dragon nation accounted for 16.4 per cent of the total basket. In 2009-10, the figure was just 10.7 per cent. However, since then it has eased a little. While in 2018-19 imports from China accounted for 13.69 per cent, sources said it was too early to cheer as the dragon continued to export to India indirectly, which means it re-routed its goods through other countries.
Without India, there are 15 countries are in RCEP. These include the China, Japan, South Korea, Australia, New Zealand, Vietnam, Thailand, Singapore, Philippines, Myanmar, Laos, Malaysia, Indonesia, Cambodia and Brunei..