Why Is India Leaving The RCEP And What Are The Consequences?

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.

[sambit]

It's actually a very simple logic.
India has individual FTAs with all RCEP nations except China. And India will never sign FTA with China directly. So, China decided to sign an indirect FTA with India via RCEP to dump it's products in Indian markets.
This is the reason why the RCEP did not agreed to the clause of "compulsory source of origin" mechanism proposed by India. Also, RCEP did not agree to liberalise SERVICE sector where India has a edge over China.

[venigopaldadheech]

Indian prime minister really smart person ...He only made history to reach Indian economy very good now

[hdthor]

If Tony Abbot thinks it's good to withdraw from RCEP, then why doesn't he withdraw Australia from it? I judge a politician by his actions, not his words. He's keeping Australia in RCEP. That's enough to gauge where he stands on the issue.

[codechamp]

India is really developing in all fields under the leadership of Narendra Modi.

[lachen]

India withdraws- "a wise move by India", says Australia. Then why is Australia a part of the same RCEP? Is there something Oz knows but India doesn't? Or India knows but Oz doesn't?

[maxwellsequation]

India and Australia friendship
Defense dialogue - 50 points
Matthew Wade - 10000 points

[DipayanDas]

Good decision...China had an undue advantage due to RCEP.

[GoodLuck-gcpv]

India is opening it's market and economy for private players and we already have huge customer
If govt keep focusing to stop dumping of chinese product Indian domestic player will get much profit
It's simple....

[limkheakwei]

India opted out of RCEP for one very simple reason.Its industry cannot compete against those of China and ASEAN countries.Hidding behind a wall of trade tariffs will do India no good in the end

[chevalsg]

China let in Tesla to stimulate competitiveness of its indigenous EV industry. It turns out that local EV makers have greatly improved themselves and resisted Tesla. Just a whole different logic compared to India's.

[summersnow]

When China entered WTO 20 years ago, they took a huge gamble, because they weren’t any where near as competitive as they are today. But they did it anyway in order to force their local players to improve or die. With hindsight, we know that played a hugely important role of China’s growth.

India is foregoing an important opportunity to transform its economy. History has taught us that no country can become world class by closing its door to competition. Why would India be different?

[vkumar]

That's the good news and proud of respected PM

[prateek]

Even as an Indian, I will say this which everyone might disagree about, we are trying too much to protect our internal market and avoiding free trade in this country. It will and has been stirring up incompetence in our market's dominant shareholders. Though we are lacking, but being in the rcep will allow us to face competition and adapt our market towards it. It would have helped in providing infrastructure to the country's economy and governance plus it would have boosted India's R&D as well as manufacturing sectors.
It can be understood that major companies did not have the capabilities to survive free market hence they urged the government to avoid this deal.
Today or tomorrow it has to be formed, question is, will it, cuz if not today will India ever be ready.

[rathanapparathanappa]

INDIA not participating in the CHINA lead RCEP. Was a well laid out strategy.

[sony]

No country in the world can compete with China in terms of cheap pricing because China does not play by the rules like democratic countries. So democratic countries should form an alternative economic block for trade amongst themselves and bypass China altogether.

[rophiamphu]

RCEP, regional china economic predation.

[parklilys]

Really smart move? To be competitive, a country's products and services have to openly compete with the best in regions and the world. It is hard to image that by not joining regional trade pack, its products and services can have any advantage over others. The opposite is true: by closing door it protects backward products and services and they will lag behind. The decision more or less is political one.

[radhakrishnamohanty]

Why chini companies could sell their products in India better than Indian companies...

It's because Indian companies want to loot their customers the moment they think it's possible.

Ex: Xiaomi phones sold-out crazily in India due to its highly competitive price.
If any Indian product gets the demand like that, It would have increased it's price instantly. But Xiaomi didn't do that...

They give the product features what customers want not the company.

That's the reason behind their successful journey in India.

[radramesh]

Decision is highly welcomed. Our PM knows which is good for our nation and many experts already mentioned in the below comments about the advantages. So it is a wise decision by India

[aravindc]

RCEP doesn't cover services sector, this is very unfair to India.., no one talks abt it ...,