India is bidding on to enter RCEP but the domestic industry not yet convinced over it. Small businesses in the industry are worried about RCEPs outcomes.

 

With India moving ahead in its deliberations to join Regional Comprehensive Economic Partnership (RCEP), industry experts believe that India cannot be left our as other 15 nations have given their nod. Though, they are of opinion that there is a need to closely study the areas where India can avail protection. 

 

Significance of RCEP due to its practical purposes has substantially increased recently. 15 nations have already accepted it. Thus, India cannot remain isolated with RCEP as the region contributes to 45 per cent of global population and 16 per cent of the trade. India will have to sign it. 

 

K Nandakumar, CMD, Chemtrols India Pvt Ltd, said, “Government is looking ahead to protect India’s interests in a limited way. If we look time prior to RCEP, we had free trade agreements (FTA) with countries like South Korea and Japan. India was at the losing end for last 10 years as FTAs were signed in a hasty manner with no protection and we lost out. But the government has held lot of discussions and feedback from various industry stakeholders in last two years.”

 

Distinct industry bodies and organisations like Process Plant and Machinery Association of India (PPMAI) Confederation of Indian Industry (CII) were considered for having more suggestions on non-tariff protection options. 

 

“One of the area suggested is of the product certification by local bodies. This is must clause for any kind of product certification for exports. During FTA with Japan, the Indian Basmati rice had to be certified by Japanese certification agency. There were absolutely no issues with having a certification mechanism but the Japanese testing facility took 3-4 months to certify Indian products. Thus, we need to locate areas where we can protect ourselves. Some areas like restriction on the imports and exports, needs to be really studied well by the government yet,” added Nandakumar.

 

Experts in the industry believe that if India does not look into imposing higher import duties in some categories, dumping of goods from these nations would kill local market and businesses dependent on the domestic demand. This will also adversely affect ‘Make In India’ initiative as SMEs will have a hard time to sustain in such an environment. 

 

The steel industry also has concerns regarding China. If they are included under the RCEP, their excessive imports could harm the domestic market. The Confederation of All India Traders in an issued statement has said, “It (RCEP) will damage India’s export competitiveness, since, the trade balance in the country is already skewed to a greater extent. Therefore, we are of the considered view that India should not enter into any RCEP agreement on steel and other allied products.”

 

An ASSOCHAM paper also alerts over RCEP. It stated that the domestic industries - from steel to pharmaceuticals - have been criticising our various existing trade agreements with ASEAN, Japan and South Korea on the grounds that India's trade deficit with these countries have only widened after these pacts came into force and there was little for domestic industry to benefit from”

 

Anil Parab, Executive Vice President-Heavy Engg & Nuclear, L&T, rued, “35 per cent of exports of L&T Engineering was accounting to China. The India-China retreat deficit against India was 1 billion dollars in 2002 and after 16 years it is 53 billion dollars. You are giving access to your markets to these countries and in return are not negotiating about your demands.”