A Confident India need not stay out of RCEP anymore

Context: Joining Regional Comprehensive Economic Partnership (RCEP) would take the current economic and connectivity engagements under Act East Policy, a notch higher to Embrace East.

Significance of joining the RCEP:

• Rising trade with India: India’s free trade agreement with ASEAN was signed in 2010. Since then, bilateral trade has more than doubled, making ASEAN India’s fourth-largest trade partner.
  • India has upgraded its Look East policy of the 90s to an Act East policy: implying greater economic engagement and also greater road, sea and air connectivity.
• Retains trade consistency: For E.g. India has three different trade treaty relationships with Thailand and the RCEP provides a platform for sustaining consistency among multiple overlapping treaties.
  • Note: India has a free trade treaty with Korea and Japan, and one with Australia is in the works.
• Shifting of world’s economic Centre to the East: Including India, the RCEP would cover half the world’s population and a third of global output.
  • Japan, Australia and New Zealand have signed up, and China has a consistent trade deficit with ASEAN.
• Presence of necessary safeguards: It includes safeguards for agriculture trade, and even though RCEP covers 90% of products, its zero-tariff regime will come into play almost after 20 years.
• Smoothen value chains: that straddle multiple countries.
• Promotes India’s Atmanirbhar campaign: Atmanirbhar Bharat does not mean autarky or import substitution but being competitive and resourceful enough to afford necessary imports.
  • For E.g. India can be the world’s leading exporter of bulk drugs, but not without backward linkages of active pharmaceutical ingredients, which are sourced from RCEP countries.
• China’s move towards domestic-oriented growth: as announced through its “dual circulation model” increases the prospects for ASEAN which could now access a $6 trillion consumer market.
  • India’s exports to China have grown in the past three years, a trend that can be strengthened under RCEP.

Probable Threats of not joining the RCEP:

• Exclusion of India from the trading blocs: Resurgence of Trans-Pacific Partnership (TPP) agreement is likely with the change in the US administration, of which some QUAD countries are also a part of (Australia).

Conclusion: Walking away from RCEP is an antithesis of India’s push towards becoming a global manufacturing hub and singing up RCEP, a sign of self-confidence and ambition.