Context- This article discusses the need for India to reconsider its position on the RCEP
considering the recent developments.
What is the RCEP?
- RCEP is a trade deal that created one of the world’s largest trading blocs.
Its members include
- 10 Association of Southeast Asian Nations (ASEAN) members: Brunei, Cambodia,
Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.
- 5 other FTA partner countries of ASEAN: Australia, China, Korea, Japan, and New
- RCEP members account for about 30% of the global GDP and 1/3rd of the world’s
What are the ongoing developments with respect to RCEP?
- Slower economic growth and increasing geopolitical fragmentation has led to slowdown
of global trade.
- In light of this, Sri Lanka and Bangladesh are considering joining the Regional
Comprehensive Economic Partnership (RCEP).
- For Sri Lanka, which is dealing with an economic crisis, easier access to regional markets
could help it become more competitive.
- For Bangladesh, RCEP could help compensate for export loss as it exits from the group of
least developed countries.
- Their joining the RCEP will also open markets for China in India’s neighbourhood.
What has been India’s position regarding the RCEP?
India exited the RCEP 4 years ago due to various concerns. These include:
- Potential increase in the import of cheaper goods from member countries, particularly
- Geopolitical and national-security considerations: Especially with respect to China.
- Lack of safeguards: India had cited the grouping’s refusal to accede to its requests on
safeguards as a deal breaker.
What is India doing to counter the impact of not joining the RCEP?
- India has been working with a different strategy of higher tariffs, along with fiscal
incentives for large manufacturers.
- Additionally, India is working on various free-trade agreements (FTA).
Why should India reconsider its position?
- Countries such as Australia and Japan have joined RCEP despite ongoing geopolitical
tensions with China.
- Lost opportunity to become part of the world’s largest and most dynamic trading bloc,
which has the potential to enhance transnational economic integration.
- India’s trade deficit with China has been increasing significantly despite India not joining.
- It would give India the opportunity to deal with trade-related issues more effectively,
besides opening markets of member countries.
- Opportunity to become part of large global value chains: This will improve participation
in global trade, which is critical in boosting local manufacturing and generating
- Limited gains through FTAs.