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Political perspective of India's rejection on joining the RCEP

India decided not to join the Regional Comprehensive Economic Partnership (RCEP) trade deal

New Delhi/Bangkok, Nov 06 (UITV): India on Monday decided not to join the Regional Comprehensive Economic Partnership (RCEP) trade deal saying it did not get any “credible assurance for India on market access and non-tariff barriers". Prime Minister Narendra Modi-led government, in the run up to the deal, was under extreme pressure from associates of Rashtriya Swayamsevak Sangh (RSS), opposition parties and small-scale industries.

The resolution has political significance, coming in the backdrop of growing uproar over the state of the economy. The progress comes just a fortnight after ruling Bharatiya Janata Party's (BJP) below-expected performance in state polls and less than two weeks ahead of the important winter session of Parliament.

One of the major elements that appeared in the decision was that there were no commitments on getting access to markets like China while the trade pact would have opened up India's market, a person familiar with the RCEP talks said.

"I don't think we got any assurances that Chinese goods would not swamp our market. That would have had a significant impact on our domestic industries notably the small and medium scale sector," the person said. "There was a lot of concern expressed by our industry representatives that joining RCEP would have meant suffering a greater trade deficit with China which has great competency in the manufacturing sector."

That the government was unable to convince sections within the party and its larger fold also played a part, the person cited above said pointing to statements by groups allied to the BJP in recent weeks.

Opposition to the possible signing of the deal came from Swadeshi Jagran Manch (SJM) and Bharatiya Kisan Sangh (BKS), the two affiliates of RSS, the ideological parent of BJP. The SJM put out a press note saying the decision would favour the country's small businesses, farmers, dairy, data security and manufacturing sector.


“SJM believes that the RCEP would have undone various good works done by the NDA government under PM Modi in last six months. The agreement would have killed the Make In India, Digital India, Skill India and various other avenues of job creation. After coming out of the RCEP negotiations; we request the government to review the faulty Free Trade Agreements (FTAs) and CEPA done with Japan, South Korea, and other countries," Ashwani Mahajan, national co-convenor of SJM said in a press note.

Soon after the decision, top leadership of the union government said the move was made keeping national interest in mind and that it would benefit farmers particularly. “India’s decision to not sign RCEP is a result of PM Narendra Modi’s powerful leadership & resolute resolve to ensure national interest in all circumstances. It shall safeguard support to our farmers, MSMEs, dairy & manufacturing sector, pharmaceutical, steel & chemical industries," home minister Amit Shah tweeted.

Congress' charge was led by its president Sonia Gandhi who, on Saturday, said the Indian economy was 'under siege' and signing of RCEP will deal a 'body blow' to it. Congress had also announced that it would raise the issue in a series of ground protests.

The party welcomed the move of signing out of RCEP but criticized the government for having double standards over the interests of farmers and small traders. “BJP Govt had gone overboard in their zeal to sign RCEP completely bartering the interests of farmers,fishermen & MSME’s. As BJP and Amit Shah indulge in fake credit seeking today, let them remember that Congress' forceful opposition made them back down," Randeep Singh Surjewala said in a tweet late Monday.

Just hours before Monday’s development, at least a dozen opposition parties also warned the government of the pessimistic influence of joining the deal at a time when the Indian economy was “in a shambles".

Jaimini Bhagwati, former Indian high commissioner to the UK, said “Clearly, lack of collaboration with China and concern about even greater trade imbalance with that country was one of the noteworthy concerns," that made India pull out of the RCEP.

“Along with it, we do not seem to have negotiated well by keeping our Asian trading partners well informed about our responsiveness fairly well in time," he said.

“It is a key missed opportunity. India needed to move ahead in the last 5 years towards further land, labour, legal reforms and reducing the extent to which the Indian Rupee is misconstrued. Any deal with US if and when it happens, has to be augmented with a trade pact like RCEP. It is not either-or. Europe, as a bloc, is still India's substantial trading partner as compared to other individual countries. It is more than high time that India should have concluded its trade pact with the European Union. Latin America is distant and will over time become more important. However, cannot overshadow Asia, Europe or the US (that is the pecking order) even in the medium term."