India must reassess its rejection of the RCEP trade bloc

Joining it can work in our favour as global trade barriers get reshaped and value chains are forged

- AJIT RANADE

Five years ago, on a November morning in Bangkok, just on the verge of signing the Regional Comprehensive Economic Partnership (RCEP) agreement, India abruptly walked out of it. For the prior seven years, India had actively participated in negotiations over its text and terms. The RCEP was hence signed by the remaining 15 nations. Even without India, it is the world's largest trading bloc, representing 30% of the world's population, trade and gross domestic product (GDP). Its share of GDP will rise, since this part of the world is growing faster than the rest. If fast-growing India also joins RCEP, the lead will accelerate. India backed out of RCEP because it would amount to a de facto free trade agreement with China. This fear was based on an implication of the rules of origin (ROO) that would come into force in the bloc. These rules apply collectively and cease to be country-specific. This fear was sought to be addressed via China-specific clauses and backloaded or delayed tariff reductions for China-origin goods. Surely, 15 years is enough time for Indian industry to prepare itself. Hence, the real reason for India's exit five years ago might have been pressure mounted by sector-specific lobbies. This includes the dairy sector, which warned of a deluge of imports from New Zealand and a threat to India's dairy farmers. India's per capita consumption of milk is still below the world average and we need a nationwide campaign to feed a glass of fresh milk to every child every day to meet nutrition needs, which could greatly enhance the demand for milk and tackle the threat of Kiwi supply. Other industry bodies that had lauded India's exit from RCEP