The Government of India has decided “not to review” its stand to not join the Regional Comprehensive Economic Partnership (RCEP), which benefits China disproportionately and opens Indian market to economic threats, especially from Chinese preys.
Despite claims that India’s decision is influenced by the initial inaction of China to curb the outbreak of the wide-spread coronavirus, and keeping its information hidden, and the unprovoked killing of 20 Indian soldiers by Chinese troops in a brutal clash on June 15, the Central government has maintained that the recent incidents do not have any bearing on India’s decision to not join RCEP. The decision was based solely on economic reasons after multiple Ministerial discussions in November 2019.
Most of the countries that are part of the RCEP, including the 10-member ASEAN, Japan, South Korea, Australia and New Zealand, are pushing India to decide on its market opening offer for China as early as possible as that was holding the rest of the negotiations back.
India, however, stands to lose much more than gain from this economic alliance. Be it a glance at the statistics or a thorough analysis of it, same result would be yielded. India has colossal trade deficits with most negotiating countries in vast range of goods, and most of all with China.
China has said that if India went beyond its current offer of eliminating tariffs on about 74 per cent items for the country, it would not only match it but commit to a higher number.
India, however, is apprehensive that its industry will not be able to make as much gains from the tariff elimination under RCEP as the Chinese already have a head-start which is reflected in the $54-billion trade surplus China has over India.
The trends suggest a growing concern over the bilateral trade between India and China as it has grown four-fold in the past decade, favoring China in majority of the sectors. There is a steady yet significant widening of the trade deficit gap. It is evident that India has provided China with abundant market access over time, even without a Free Trade Agreement.
Presently, with a strong focus on self-reliance or ‘atma nirbhar’ India campaign, the Government of India does not need to open its market to China any more than it already has or is considered necessary for the economy.
Subsequent to the campaign, the Indian Government had decided to ban 59 Chinese apps, which were allegedly “stealing and surreptitiously transmitting users’ data in an unauthorized manner to servers located outside India”. The move by India against China’s notoriety was internationally lauded and US plans to follow the suit soon.
Any trade agreement with China, at this point, is neither favourable to Indian economy nor advisable. Therefore, despite the geo-political tensions and China increasingly souring its relations, India’s decision to ‘not review’ its option to join RCEP is purely an economical one.