India’s reservations regarding the potential adverse impact of eliminating duties on its local manufacturing and job creation is understood to be slowing down the Regional Comprehensive Economic Partnership (RCEP) negotiations.
The RCEP is a proposed mega Free Trade Agreement (FTA) involving 16 Asia Pacific nations including India and China, and aims, among other things, to liberalise investment norms in the region, besides boosting trade by dismantling most tariff and non-tariff barriers.
The “slow pace” of negotiations was worrying, Phairush Burapachaisri, vice chairman, Board of Trade of Thailand and Thai Chamber of Commerce, told The Hindu here on Tuesday. “We hear that while most RCEP countries have agreed to quickly eliminate barriers affecting goods trade, India is seeking more time to do so, and that is delaying the negotiations,” said Mr. Burapachaisri, who attended stakeholder meetings held with the RCEP Trade Negotiating Committee on the sidelines of the RCEP negotiations. “The talks have already missed many deadlines and it looks like the negotiators won’t be able to conclude it this year. Asia Pacific is a fast growing region, but trade between countries in the region is affected by several barriers. If RCEP talks are not concluded quickly and these barriers are not eliminated, the region will miss out on many opportunities.”
Meanwhile, Indian companies and industry bodies, including CII, flagged their concerns. The Centre’s ‘Make In India’ initiative to boost manufacturing and job creation could be hit by a hurried pact, they opined.
Widening trade gap
Siddhartha Roy, economic advisor, Tata Group, said: “India’s trade deficit [annual] with RCEP nations is about $100 billion, and half of this is with China alone even without an FTA with China.”
“Post India’s FTA with ASEAN, Japan and Korea [who are all RCEP members], our trade deficit with them have increased, and the government needs to take this into account during RCEP negotiations,” he said. “Eliminating duties under the RCEP will impact many sectors including steel, aluminium, auto-components, many engineering items and readymade garments.”
CII Trade Policy Committee chairman Deep Kapuria said while many countries were urging greater focus on duty elimination, India ought to highlight the need for removal of non-tariff barriers including those in China in addition to pushing for greater market access for its services sectors including IT/ITeS.
Aditya Ranade, chief economist, Aditya Birla Group, pointed out that India was the third poorest in per capita income among the RCEP nations, adding that a mega FTA like the RCEP could hit the MII initiative and job creation in India, in turn adversely affecting the livelihood of the people.
