No pacts that are FTAs by stealth with China, to focus on EU, US: India on RCEP


New Delhi: India will avoid joining agreements which are actually trade pacts by stealth with China and instead explore trade agreements with developed countries with large markets such as the US and EU where Indian products and services would be competitive unlike ASEAN, officials said, a day after 15 Asia-Pacific countries signed the Regional Comprehensive Economic Partnership (RCEP) agreement.

“India will avoid joining agreements, which are in reality FTAs by stealth with countries like China,” said an official.

India had pulled out of the pact last year after negotiating it for seven years citing its concerns on trade deficit, circumvention of rules of origin and base rate of customs duty, remaining unaddressed.


“We are already suffering huge trade imbalance and market distortions with these countries. This has negatively impacted domestic producers and the Indian economy,” the official added.

Officials said that India took a stand based on firm principles.

New Delhi has said its stance to not join the pact remains unchanged despite calls by the grouping “expressing their strong will to re-engage”.

The RCEP now comprises the 10 Association of Southeast Asian Nations (Asean) nations, as well as Australia, China, Japan, South Korea and New Zealand.

New Delhi had raised concerns at a threat of Circumvention of Rules of Origin by China wherein cheap goods from China would come into into India via other RCEP members. It had also sought a change in base rate of customs duty from 2014 to 2019 to reflect latest realities and safeguard domestic manufacturing of electronics and mobile phones.

“These were not bargaining chips for greater concession…To sign RCEP, India needed to resolve issues in its previous FTAs and ensure balanced, fair and beneficial framework in the RCEP,” said the official.

Similarly, it had pitched for an automatic mechanism to impose safeguard duties in case of import surge from RCEP members and a carve-out that local policy measures should be applicable only in top two levels of government.

India also wanted an exclusion from the Most Favoured Nation (MFN) clause related to investment commitments under the pact as it offers such benefits on investments only to strategic allies or geopolitical reasons and was not keen to be hand out to countries it has border disputes with.

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