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India should be part of RCEP, CPTPP: NITI Aayog CEO

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Last Updated09/11/2024

India should be a part of the Regional Comprehensive Economic Partnership and Comprehensive and Progressive Agreement for Trans-Pacific Partnership, Niti Aayog CEO BVR Subrahmanyam said on Thursday.

During an event hosted by the industry body Assocham, Niti Aayog CEO, BVR Subrahmanyam, expressed the need for India to be part of major international trade agreements.
He emphasized India’s potential membership in the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as a strategic step towards strengthening India’s economic positioning.
Subrahmanyam highlighted that India stands out as one of the few large economies that is not a part of such extensive trade agreements. According to him, joining these trade blocs would provide significant growth opportunities for India’s economy and enhance its role in global markets.

RCEP Overview: The RCEP is one of the largest trade agreements globally, aiming to simplify trade and increase economic cooperation among member nations. It includes 10 ASEAN member countries—Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand, the Philippines, Laos, and Vietnam—as well as six countries with which ASEAN has free trade agreements: China, Japan, South Korea, Australia, and New Zealand.
India’s Withdrawal in 2019: India was originally part of RCEP negotiations starting in 2013. However, in 2019, India decided to withdraw, citing concerns about potential trade imbalances, fears of an influx of Chinese goods, and the impact on domestic industries, including agriculture and manufacturing. India’s government also voiced concerns about the lack of adequate protection for India’s sensitive sectors.

MSMEs and Their Export Contribution: Subrahmanyam emphasized that joining the RCEP and CPTPP could significantly benefit India’s Micro, Small, and Medium Enterprises (MSME) sector. MSMEs are vital to India’s economy, accounting for 40% of the country’s exports. Unlike large corporations, MSMEs contribute considerably to India’s export landscape and employment generation.
Improved Market Access: By joining these trade agreements, India’s MSMEs could access larger markets with reduced trade barriers. This would allow smaller businesses to compete more effectively on a global scale, increase their production capacities, and expand their export reach.
Reduction in Trade Barriers: Membership in RCEP and CPTPP would also mean lower tariffs, better access to global supply chains, and a reduction in regulatory hurdles, which are often challenging for MSMEs to navigate. These changes could lead to cost savings and efficiency gains for smaller enterprises.

Managing Import Pressures: One of India’s primary concerns about joining such agreements is the potential for increased imports, particularly from China, which could impact domestic industries. However, Subrahmanyam suggested that strategic policy adjustments could help safeguard local businesses while still allowing India to benefit from the trade partnerships.
Balancing Exports and Imports: By focusing on MSMEs and their export potential, India could work to balance the trade deficits that initially raised concerns during the 2019 RCEP negotiations. Greater exports from MSMEs could help offset the effects of increased imports, creating a more balanced trade environment.