India’s interests and concerns in RCEP: Possible strategies and measure

Abstract

Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement between sixteen countries which include the ten member states of the Association of Southeast Asian Nations (ASEAN) and their six FTA partners namely People’s Republic of China, Japan, India, South Korea, Australia and New Zealand. [1] The negotiations first started in November 2012 and are still awaiting conclusion. Year 2019 could be significant for RCEP nations and India as trade ministers are keen on finalizing the world’s largest free trade deal. The negotiations have taken longer than usual die to multiple challenges surrounding the RCEP nations. The major area of contention for India is the possible increase in imports and hence the trade deficit. As per the prediction of the World Integrated Trade Solution Simulator, India's imports might see an annual increase of USD 29 billion during the post-RCEP period (5-6% of FY2018-19 imports). Currently India has a trade deficit as many as 11 RCEP countries in FY 2018-19. The domestic industries which are most worried with the introduction of the RCEP are steel, aluminum, copper, pharma and dairy especially with the introduction of China as FTA partner might have a huge impact on imports. India will also face tough competition from Australia and New Zealand in agriculture and dairy specifically because currently India doesn’t have a trade agreement with these. Most of the discussion in RCEP is currently revolving around reducing the trade tariffs, through this report we aim to analyze its implications on India’s trade relations with the countries. Apart from focusing on tariffs, there are various areas where India can gain like non-tariff measures, services and investments. For example, in the services sector, India should put a strong foot while negotiating its proposals such as more mobility for professionals via various measures such as visa fee waivers. On NTMs India should negotiate for RCEP countries to lower their application of NTMs. Investment is also an crucial area and through RCEP India should try to create a positive investment scenario for itself