The agreement on Regional Comprehensive Economic Partnership (RCEP), involving the Association of Southeast Asian Nations and others was expected by the end of 2018 but has now been pushed till 2019. Despite reservations, India can ill-afford to be out of the RCEP which is likely to be sealed sooner than later.
Apart from the provisions of free trade, the RCEP will try to evolve common ground in the fields of e-commerce, competition and investment. This is the right time for India to reflect on the benefits or otherwise resulting from such an agreement. Despite not having any free trade agreement with China, India is running a huge trade deficit against it.
We need to understand a few things. First, a free trade agreement suits those countries that have a huge manufacturing base and a comparatively low consumption base. In India, the situation is the reverse. Our manufacturing base is not big enough to even fully cater to our own market. Second, to fully capitalise on our much talked about demographic dividend, we need to produce jobs for our young population. More than 10 million youths are added to the working population every year. Third, India needs huge investment and technology to become a manufacturing hub like China. The proposed RCEP would not work in our favour unless we get investment and cutting edge-technology from partner countries in lieu of opening up of our market to them. Last but not the least, India needs certain safeguards to check and balance the presence of our geopolitical rival China in the infrastructure sectors including telecom, port and power.
Sanjeev Kumar Singh, Jabalpur
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