Indian government to stay out of RCEP and review all FTAs
July 28, 2020: Following a recent meeting chaired by Prime Minister Narendra Modi, and an assessment of the outcomes of all India’s free trade agreements by the Commerce & Industry and Finance Ministries, the Indian government has created four working groups to develop a new trade strategy to boost foreign investment and exports, an official said to the Economic Times.
Under significant pressure from civil society and from business, India opted out of the Regional Comprehensive Economic Partnership deal in November 2019 and the trading arrangement with the 15-member grouping that includes China and Australia remains off the table for now, another official said.
According to the Economic Times, there has been a growing view among policymakers that FTAs signed by India have not brought the expected tangible benefits and on the contrary, have hurt the country’s manufacturing sector due to liberal rules of origin.
“All options are on the table… There is a view that if any trade agreement has not worked out as expected, we should also look at exiting such a deal,” one official said, adding that a final call on the future strategy for such arrangements would be taken at the highest level.
There is renewed focus in India on trade deals with the US, the European Union and the UK, which are key markets for Indian exporters and are keen to diversify their sourcing away from China.
The four working groups are drawn from the Finance, Commerce & Industry and External Affairs ministries.