As many as 15 countries have come together to form the world’s largest trading bloc: Regional Comprehensive Economic Partnership (RCEP) and India will not be a part of this.
New Delhi has not accepted even the position as an observer as the pact only benefits China.
Take a look at our this report that decodes why India walked out of this agreement and now building a trade partnership with ASEAN nations.
Also read | Asian nations sign RCEP, a China-backed trade pact, excluding India and US
To the unversed, India dropped out of the RCEP negotiations last year following the participation in 28 out of 31 rounds of talks in a six-year period.
New Delhi sees this decision as difficult, yet necessary as it believes this will lead to a flood of Chinese imports, which threatens millions of local businesses, industries and jobs.
Reportedly, RCEP members wanted India to make deep concessions, make tariff cuts on 92 per cent of tariff lines across countries.
And in such a scenario, China would have been the ultimate benefactor as Chinese goods as its goods that have import restrictions, would able to enter India via other members of this group.
This act would have resulted only in the trade surplus, which as per reports already stand at over $48 billion.
Also, New Delhi is looking to cut short Chinese imports, especially amid the tense border standoff in Ladakh.
Post the clashes in June, India’s trade with China has declined by seven per cent on a year-on-year basis, the steepest since 2012-13.
India has realised from the border standoff that there can’t be business as usual with China and that is why it is exploring new ways to expand trade with Southeast Asia.
Reportedly, Indian Prime Minister Narendra Modi has called for an “early review” of ASEAN-India trade in goods agreement.
Signed in 2010, the agreement allows both sides to reduce and eliminate duties on more than 75 per cent of all goods.
Last week in a virtual summit, Modi pitched for a deeper trade relationship with the bloc.
With New Delhi’s rejection of being an observer, the Modi government is keen on opening new doors with its own free trade pacts that are free from China.