Regional Comprehensive Economic Partnership is an agreement on free trade between 16 countries in the Asia-Pacific region, which include China, Japan, South Korea, Australia, New Zealand, and ten members of ASEAN. The ratified countries aim to stimulate economic cooperation and reduce trade barriers, including tariffs, to establish a unified market. However, Indian authorities refused to sign the given agreements, mainly because of the risks of legalization in the country may experience significant harm to domestic sectors, including agriculture and manufacturing. An increase in the supply of cheap imports destroys local competitors. 


First, India has been cautious about its trade deficit as it expands with countries under free trade agreements (FTAs). In the last six years, India’s bilateral trade deficit almost doubled to $105 billion in 2018-19. This increase could lead to a decline in India’s foreign exchange reserves. In 2018-19, only 20% of India’s exports went to RCEP Nations, whereas 35% of India’s imports came from them. India has a trade deficit with Australia, China, Indonesia, Laos, Myanmar and the Philippines.

Second, India is concerned that RCEP could reduce tariffs and tariffs on member states, potentially allowing Chinese goods to flow into India and widening the trade deficit again. India has already imposed tariffs on Chinese emissions, but there are fears that these could be weakened under RCEP. China, which is the largest exporter of most RCEPs, including India, appears to be engaged in “market imperialism” practices. India considers inadequate subsidies for Chinese exports and is concerned that 75% of Chinese goods could enter India duty-free in the future, increasing the already existing trade surplus by $63 billion.


i)By leaving the RCEP, India can still prevent China from dumping goods into India. But Chinese products, from turbines to needles, are widely available in the Indian market.

ii)Avoiding the RCEP will shield the Indian indigenous industry from low-cost imports.

iii) India’s absence from the Regional Economic Partnership (RCEP) will strengthen China’s economic hegemony, potentially enhancing its regional influence through its greater economic strength. This could reverberate in India’s neighbouring countries, further strengthening China’s regional influence.

iv) If the agreement is signed, it will signal the recognition of free trade, which could help drive industries from China to India.


I) The opening of the Indian market to RCEP countries, especially China, may have had a negative impact on the domestic manufacturing sector. 

ii) There is also a rising belief that it would be in India’s best interests to invest heavily in ongoing bilateral negotiations with the United States and the European Union.

iii) India, along with some other countries, is now joining the Indo-Pacific Economic Framework for Prosperity, which is led by the United States.


M Shanthish Kumar, 5th year B.A, LL. B(Hons.), Veltech School of Law, Chennai


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