India in the Regional Comprehensive Economic Partnership (RCEP) – Need for Caution

Regional Comprehensive Economic Partnership (RCEP) is a large trade negotiation among 16 countries of Asia Pacific which aims to cover goods, services, investments, economic and technical cooperation, competition and intellectual property rights among these nations. The 16 RCEP countries include China, India, Japan, South Korea, Australia, New Zealand, and the 10-member ASEAN which represent more than 3.5 billion people and about 40 percent of global GDP. India already implemented a free trade agreement with ASEAN, Japan and South Korea and negotiating similar pacts with Australia and New Zealand. There are apprehensions that RCEP agreement will lead to large-scale import of manufactured goods from developed members of RCEP particularly China which enjoys a trade surplus of more than 50 billion US$ with India. Also, large coverage of items in the tariff reduction programme will lead to an influx of cheaper commodities into India affecting the manufacturing sector. Easy access to burgeoning Indian consumer market may affect a large number of informal players affecting their livelihoods. India’s gain primarily comes from the services sector which needs greater access to the members’ markets. Also, the previous experiences of India’s RTAs did not yield desirable results as India’s import increased rapidly compared to exports. In this context, the paper argues for India’s caution and push for a comprehensive agreement by including services sector where India’s advantage lies.