Regional Comprehensive Economic Partnership (RCEP) has the distinction of reaching to covering world’s one third of economy and half its population and while it is opening doors and windows for India for getting connected with worldwide supply chains , it at the same time , cannot afford to ignore the dominance of China to protect her interests at others’ cost as also the American hegemony in dictating terms of trade by it like being critical of India’s export promotion measures being ‘inconsistent with’ the requirements of the World Trade Organisation (WTO) . In other words, duty free imports for our exports shall have to be pursued by India while on the other hand, India was going to raise tariffs on 29 US goods very shortly. To steer amidst these two humps definitely needs a matured and bold Indian leadership coupled with economic policies constantly reviewed. While going ahead with being a party to any of the binding agreements , India has to see whether its key concerns were adequately addressed. We have to ensure to protect the interests of our agricultural, industrial and services sectors. Our agriculture accounts for around 12% of India’s GDP and major portion of it is unbelievably from milk and milk products. We have compulsions to go in for ‘protectionist’ option and not otherwise. Besides, can we afford to share the same norms and conditions of trading as China , Japan, Singapore, Australia and Malaysia even Myanmar and Laos under the proposed deal?
Since the year 2014, India is being known in the comity of nations as a resurgent and vibrant India, ready to take calculated risks and introduce aggressively much needed reforms and promote more ties with major economies of the world simply because of the size of the market and the extent and the depth of our sound economy. The principle of parity, however, plays a major part in bilateral trade and commerce. However, not only has India to show its fists clenched in matters of security and protecting its territorial integrity but also in matters where our economic interests were not imperilled. Whether or not Prime Minister Narendra Modi would get through the challenging test emerging out of pressing issues on the domestic economic front and his projection as a leader taking highly sensitive decisions was keenly watched not by the member countries of the ASEAN or its five FTA Partners in as much as by the opposition leaders in India who, waiting in wings, were ready to take it to the streets in case India would have joined the RCEP pact.
Only on November 2, Congress party had termed the prospective RCEP deal as a “body blow” to Indian economy which according to the President of the party Sonia Gandhi would result in ‘untold hardships’ to farmers , shopkeepers and small enterprises. So far so good, so long one perceives the impending harm in any way to any of the sectors of our economy but she had more to say as she was highly critical of Narendra Modi being “too busy managing headlines and events”. What had signing of the deal got to do with Modi managing headlines and events needs no clarification as the intention behind such a remark was self explanatory. Needless to add, irrespective of the type of the issue, Modi Ji has to come under attack even at personal levels .
Not going in the intricacies of technicalities of the covenants of RCEP pact, let us take the vast stratum of dairy, an important allied activity under agriculture sector to have a sense of how under Free Trade Agreement (FTA) with a group of 15 countries from the Asia Pacific , it was going to be affected. Dairy and dairy products in which are engaged, hundreds of thousands of people from our rural and semi urban sector, needed protection from all types of restrictions that would have subjected this vast sector of our economy to free trade region. Not only single animal owning units, there are several cooperatives and most of them adequately financed could not allay their fears in respect of their livelihood getting impaired. Imports from New Zealand for instance, would bring not only disaster for the growth and expansion of this sector in India but its sustenance too would get jeopardized. Domestic prices would be of the levels of no match for the exported items if the deal would have clicked.
We are largest producers of milk in the world but not only is the entire produce consumed domestically but vast market of adulterated milk too ‘flourishes ‘ in our country thanks to highest demand for it. On the contrary, New Zealand is far behind India at seventh position but its 90% dairy products are exported because the demand is just below 10 % on account of very thin population. In case the deal would have clinched , its products at cheaper prices and pure and unadulterated stuff would have touched India to force current domestic prices to crash down resulting in a severe blow to this sector. There were curious eyes and impatient ears to learn what could be the role of India in the 16 member group of the RCEP which right from start, had sent the signals of a split where pro- Chinese were dominating. Agreed, our weakness is that we have a massive trade deficit with China and other RCEP countries totalling $ 105 billion .Not to speak of levelling the trade with these countries , glut of Chinese products would have further flooded our market through the back channel or through other RCEP countries, had India signed the pact.
However, Prime Minister Narindra Modi has shown exemplary courage and matured sagacity together with making it clear that India meant core business and practically declaring so in Bangkok, by not being a signatory to RECP pact. In other words ,he has made it clear that there could be no compromise with our short term and long ranging economic interests. He has proved his dynamics and demonstrated ‘India and Indians first’ at Bangkok by saying that “When I measure the RCEP Agreement with respect to the interests of all Indians, I do not get a positive answer . Therefore neither the talisman of Gandhiji , nor my own conscience , permits me to join RCEP”. However, Congress has given credit to it by itself for India pulling out of RCEP because of “forceful opposition” by that party. Its General Secretary Priyanka Vadra too has ridiculed “BJP going to RCEP with full fanfare” and attributed India not joining RCEP pact because of “opposition from Congress workers and farmers.”
The question , however, remains as to whether India could afford to stay out of the RCEP indefinitely in the era of globalisation and liberalisation and when countries were coming closer to do trade and commerce , while being part of International or Regional Economic agreements. How can we ignore the fact that our country has not only economic ties but even security related interests with most of the RECP but at the same time, how can we afford to ignore our own gains and prospective losses. As of now, the decision of Prime Minister Narindra Modi was what was best required and that has been done . Let India’s concerns be addressed adequately, other things can follow.