Tony Abbott, the Australian Prime Minister's Special Trade Envoy, stated, "It was a wise decision by India to withdraw from the RCEP so that both countries could focus on the bilateral deal."
The Special Trade Envoy also mentioned India and Australia as natural economic partners, saying, "India is a great manufacturing nation." Australia has a robust resource economy. Australia has everything India needs to make "Make in India" a reality.
Before digging deeper into why India opted out of the deal, it is essential to understand the goal and significance of Regional Comprehensive Economic Partnership in the region.
So WHAT IS RCEP
The RCEP was announced in November 2012, and talks began in May 2013. It addresses the following topics
In October 2018, Indian Prime Minister Narendra Modi announced at the RCEP summit in Bangkok that India will withdraw from the agreement because it does not reflect the basic spirit and guiding principles of the agreement
According to an NITI Aayog paper, India has a bilateral trade deficit with the majority of RCEP member countries.
Indian export items' competitiveness and potential in the RCEP region are limited , India has a low export intensity with RCEP member countries .Higher revealed comparative advantage (RCA) and duty reduction in partner countries may help India in enhancing exports of only a few commodities
India has a high RCA in commodities for which RCEP countries' tariffs are already moderate. Given India's current trade balance position, tariff structure, non-tariff barriers (NTBs) of partner countries, intellectual property rights (IPR), and export competitiveness of Indian commodities, it appears that India had few options but to opt out of RCEP.
Except for China, India has already signed free trade agreement with all of the Rcep countries . One of India's major concerns after signing the RCEP is that cheaper Chinese products will flood the Indian market.
