India eyes benefits from new, mega free trace bloc; industry cautious

The Commerce Ministry is in hectic consultations with other Ministries and the industry to ensure that India is a net gainer in the Regional Comprehensive Economic Partnership — the largest free trade bloc proposed so far.

The Free Trade Agreement (FTA) being negotiated between India, China, Japan, South Korea, Australia, New Zealand and the ten-member ASEAN, is a difficult one for India to navigate, as it would have to open doors to a large number of countries in one go.

“Although we have separate FTAs with many of these countries, they want to go beyond what has already been given to them,” a Commerce Ministry official told Business Line.

With the industry already finding faults with the pacts India has signed with the ASEAN countries, Japan, South Korea and the limited one with Thailand, it would find it hard to open up its markets further.

ASEAN includes Brunei, Burma (Myanmar), Cambodia, Laos, Vietnam, Indonesia, Malaysia, the Philippines, Singapore and Thailand.

The automobile and the electronics industry, for instance, which have been shielded to a large extent in the FTAs signed with the Asian countries individually, would want continued protection, despite pressures for opening up by the members of the new bloc. “We have warned the industry that they have to send us their inputs at the earliest. They have to tell us exactly where they want protection, how they would want non-tariff barriers placed by other countries to be addressed, and the areas that we have to push aggressively for greater market access in other countries,” the official said.

Comments have been also sought from other Ministries and departments on what the country’s negotiating strategy would be.

These could be incorporated in the separate carve-outs that India wants with individual countries, especially China, which poses the greatest threat to the country.

But the main reason for India participating in the negotiations despite the threats to its domestic industry is the opportunity in store. The group of 16 countries, with a population of more than 3 billion people, has a combined GDP of about $17 trillionand accounts for 40 per cent of the world trade.

“If you are talking of major economies in Asia, Australia and the Oceania coming together, India not being part of it would have been an unthinkable situation. We are also looking at RCEP as an opportunity for us to be more competitive. That is a challenge,” Commerce Secretary Rajeev Kher said at a recent seminar.

India’s exclusion from the RCEP would have isolated it completely in the region, with all other countries trading with each other on favourable terms. “Since staying out of RCEP is not an option at all, we have to focus on how to maximise our gains and minimise our losses. For that we want inputs from the industry and other ministries fast as negotiations are happening very frequently,” the official said.

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