The government on Monday said India will not join the Regional Comprehensive Economic Partnership (RCEP) deal, adding that doing so would adversely affect the national interest.
This was a nod by the government to concerns raised by domestic industry and farmers, most of whom had opposed the pact, fearing it would lead to uncontrolled dumping by China.
“India conveyed its decision to not join… (There are) significant issues of core interest and the impact it would have on the livelihood of vulnerable sections. India has participated in good faith in the RCEP discussions and had negotiated hard with a clear-eyed view of our interests,” said Vijay Singh Thakur, secretary (east), Ministry of External Affairs, in Bangkok.
She added that not joining the pact was the right decision at the moment.
Fifteen other nations, however, went ahead with the deal after the conclusion of the summit in Bangkok, which was also attended by Prime Minister Narendra Modi.
“Participating countries have concluded text-based negotiations for all 20 chapters and essentially all their market access issues,” said the joint statement issued after a meeting of RCEP leaders. The deal is now being scrubbed for legal issues.
Negotiations, started in 2012, will now culminate in a final deal being signed by 2020, it added.
The RCEP nations have also left the door open for India — the largest untapped consumer and industrial market — in the bloc. “All RCEP countries will work together to resolve these outstanding issues in a mutually satisfactory way. India’s final decision will depend on satisfactory resolution of these issues,” the joint statement added. But Modi informed the other leaders that the deal in its current form “does not fully reflect the basic spirit and the agreed guiding principles of the RCEP”.
“When we look around we see during seven years of RCEP negotiations, many things, including the global economic and trade scenarios have changed. We cannot overlook these changes,” he said.
Industrialists welcomed the government’s decision. The Confederation of Indian Industry (CII) had over the weekend said India needed to enter the bloc so as to not lose access to Southeast Asia. But, on Monday, it changed its opinion.
“The CII appreciates government’s stance on addressing all outstanding issues before joining the RCEP. We sincerely hope issues will be resolved soon to the mutual satisfaction of all RCEP countries,” said CII President Vikram Kirloskar. Dairies were the strongest opponents of the deal.
Among one of the most vocal industries against the deal, dairy majors fully supported the move. "On behalf of 100 million dairy farmers of India, we would like to thank the PM as well as Government of India that whatever promise they made to us have been fulfilled. GoI had promised that nothing will be done to compromise the interest of small farmers. This decision will rekindle interest in dairying and encourage them to invest more in the sector and put us into a high growth trajectory," RS Sodhi, Managing Director of Amul, said.
The domestic electronics manufacturing industry, which has remained afraid of the nascent growth in manufacturing being decimated by a resurgence in cheaper imports, also supported the move.
"This is a very encouraging step for Indian manufacturing, especially fo4 the IT and electronics manufacturing sector, as it reiterates the government's strong support to the industry's growth. India now needs to rapidly build its global manufacturing competitiveness, particularly keeping in view that China is its major competitor." Nitin Kunkolienker, President of Manufacturers Association of Information Technology (MAIT), said.
With inputs from Sanjeeb Mukherjee & Neha Alawadhi