Not being part of RCEP will harm India's exports and investment flow, says CII

NEW DELHI: Citing a potential increase in trade within Asia-Pacific region and opportunity for India to become part of the global value chains, the Confederation of Indian Industry (CII) has said the country should join the proposed Regional Comprehensive Economic Partnership (RCEP) trade agreement.
The industry association said that if India does not join the agreement, it would be cut off from the RCEP region in terms of preferential access and that this would “hinder investments from many RCEP countries and thus stymie its efforts to increase its integration into regional and global chains”.

“Not being part of the block is tantamount to not having an even footing in terms of preferential access and losing export competitiveness. This will only harm India’s export and investment flow in the future,” the CII said in a statement.

Talks for the proposed trade pact are in the final stages in Bangkok and Prime Minister Narendra Modi is visiting Thailand from November 2-4 to participate in various ASEAN related summits, including the ASEAN-India Summit, East Asia Summit and a meeting on RCEP negotiations. “Clearly, India is under tremendous pressure to come on board. Further, Indian Industry, not having meaningfully articulated its offensive interests, is proving to be a major handicap for Indian negotiators in RCEP negotiations,” said the CII. “Even with China, we failed to use RCEP as an opportunity to seek market access given that bilaterally getting concession from China always proves difficult.”

The RCEP is a proposed free-trade agreement (FTA) between the 10 member states of the Association of Southeast Asian Nations (ASEAN) and its six FTA partners – China, India, Japan, South Korea, Australia and New Zealand. RCEP negotiations began in November 2012. In 2017, RCEP countries contained 47.6% of the global population, contributed 31.6% to global gross domestic product and 30.8% to global trade, according to the CII.

The CII’s statement comes at a time when various domestic industries including dairy, textile and automobiles have raised serious concerns and opposed the pact over tariff related issues, especially with China. The PM had said on Saturday that India will consider whether its concerns and interests in trade in goods, services, and investments are being fully accommodated when he attends the RCEP Leaders’ Summit.

CII president Vikram Kirloskar said that while a large section of the Indian industry has expressed serious concerns about joining the RCEP on the basis of genuine reasons, especially pertaining to China, any decision on joining an agreement of this size and magnitude must not be based on concerns with regard to just one country. The CII said that growth and expansion of global value chains will also draw momentum from the ongoing USChina trade war.