India on Monday opted out of the Regional Comprehensive Economic Partnership (RCEP) agreement, with Prime Minister Narendra Modi putting his foot down and saying the country’s concerns, specially those linked to Chinese goods flooding the Indian market, were not addressed. “Our farmers, traders, professionals and industries have stakes in such decisions. Equally important are workers and consumers, who make India a huge market and the third biggest economy in terms of purchasing power parity. When I measure the RCEP agreement with respect to the interests of all Indians, I do not get a positive answer. Therefore, neither the talisman of Gandhiji nor my own conscience permit me to join RCEP,” Modi said at the RCEP Summit in Thailand, seven years after negotiations started for formation of 16-nation bloc, effectively wrecking its aim to create the world's largest free trade area having half of the world's population.
Chinese imports flooding India market was main concern
India’s “no” means the bloc will not become a reality - an outcome that will not just annoy China, whose ire was evident in the accusation in state-controlled media about India making last-minute demands, but also other members of the proposed trade grouping who have been eyeing the Indian market. This is the second time since 2014 that the government has taken a tough stand on global trade issues. Soon after taking charge, the Modi administration had threatened to walk out of the WTO’s Bali package, which could have impacted the country’s food procurement programme.
This time, the main concern was the threat of imports from China flooding the market. Indian negotiators said the terms on offer did not address its worry despite it being flagged repeatedly. Besides, there were elements in the trade package which could have impacted the government’s economic policy. For instance, RCEP would have forced the government to reduce import duties on several goods, including mobile phones, to 2014 levels, impacting the ‘Make in India’ programme. The Indian government also stood to lose around £5 to 6 billion if it had agreed to the reduced duties.
“Today, 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. The present form of the RCEP agreement does not fully reflect the basic spirit and the agreed guiding principles of RCEP,” Modi said. There were also fears that the weak rules could have allowed Chinese goods to be routed via Vietnam or Thailand, while there was little to ensure that Beijing didn’t erect non-tariff barriers to block the entry of Indian medicines or rice.
“India has consistently stood its ground to uphold our demands, particularly over controlling trade deficit, stronger protection against unfair imports and better market opportunities for Indian goods,” commerce and industry minister Piyush Goyal tweeted.
India, Saudi Arabia ink 12 agreements in Riyadh
India and Saudi Arabia signed 12 MoUs and agreements in key sectors including defence industries collaboration, renewable energy, security cooperation and civil aviation. The agreements were signed in the presence of Prime Minister Modi and Saudi Crown Prince Mohammed bin Salman. The two countries signed a Strategic Partnership Council agreement to further cement the bilateral ties in political, defence, security, trade and investment sectors between the two countries. MoUs were also inked on cooperation in fields of combating illicit trafficking and smuggling of narcotics and medical products regulations. An MoU was also signed between Indian Strategic Petroleum Reserves Limited (ISPRL) and Saudi Aramco.
Earlier, the Prime Minister delivered the keynote address at the third Future Investment Initiative (FII), also dubbed as the 'Davos in the Desert' and met several ministers of the Saudi leadership. Modi listed the attractiveness of the Indian economy and invited businessmen for investment. “From a purely buyer-seller relationship, India and Saudi Arabia are moving towards a closer strategic partnership that will include Saudi investments in downstream oil and gas projects,” PM Modi said as he began his official visit to the kingdom.