The Regional Comprehensive Economic Partnership (RCEP) is a mega trade deal being negotiated between 16 countries, including the ten member-countries of the Association of South-East Asian Nations (ASEAN) namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, and its six FTA partner nations – India, China, Japan, Australia, New Zealand, and South Korea.
Recently, Thailand's capital city of Bangkok played host to the 7th RCEP ministerial meeting at which both members and partners, including India, agreed that there is an urgent need to conclude a mega free trade agreement between them to deal with ongoing global uncertainties.
Sanjeev S. Ahluwalia, an Advisor with the Observer Research Foundation (ORF), a New Delhi-based think tank, told Sputnik that various calls for a reluctant India to join the trade body RCEP has merit at several levels, but primarily at two significant ones.
RCEP is set to hold its meet in India's national capital city on 14 and 15 September.
"We have all seen how competitive our (Indian) industry has become, but at the same time we should be concerned about factors responsible for our exports becoming stagnant and non-compatible," said Ahluwalia, a former World Bank specialist.
"In the context of RCEP, India's role-playing would be dual in nature – at one level it would be economical and geopolitical, and at another level, it would be about aligning national interests to the RCEP vision," he added.
India currently has a trade deficit with several RCEP member countries.
Indian industry, large and medium, would be forced to become competitive, add scale and skill if the country joined the RCEP, Ahluwalia told Sputnik, adding this could initially be a painful experience.
"In the interim period, some pain will have to be endured. Imports of cheap goods will happen. The government will have to step in to eliminate the pain in terms of cost, cheaper loans, offering special lines of credit, creating technology, etc.," he said.
"The RCEP can be a window of opportunity for us to push the growth of our core strengths in technology, information technology, services and design. These are areas where we have a competitive advantage and edge, compared to manufacturing where we have lagged," he added.
India has lost the edge it gained post-liberalisation of its economy in the early 1990s, Ahluwalia said, adding that offering large sums of government credit during the global economic crisis of 2008-09 made "industry fat and had pulled in the type of entrepreneurs who feed on cheap credit".
On India asking RCEP members like Japan and Korea to review their FTAs with New Delhi, he said: "It (FTAs) is good, they are non-tariff regulatory barriers, standards to keep your imports out. There should, however, be a determined thrust from the government and industry to ensure that access is open for our goods. For instance, China is a case in point. So, overall, I would say FTAs are good but must be accompanied by caveats."
Though the deadline for India to join the RCEP is nearing, India has reservations about entering the proposed mega free trade agreement due to concerns over "protectionist policies" of some member countries, specifically China.
India's External Affairs Minister Subrahmanyam Jaishankar highlighted this during the India-Singapore Business and Innovation Summit held in Singapore earlier this week.
On 11 September Indian Commerce Minister Piyush Goyal said his ministry had a brief from Prime Minister Narendra Modi to conduct RCEP negotiations keeping in mind the need to protect domestic industry.
At the same time, the government is aware that the country's exporters must not be placed at a disadvantage and should avail more significant business opportunities in terms of new technology, opening up of the services sector and attracting foreign investment.