Regional Comprehensive Economic Partnership (RCEP)

[op-ed snap] Lost opportunity


From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : RCEP - why India should have stayed?


India has chosen to hold back from joining the Regional Comprehensive Economic Partnership (RCEP) trade agreement.

Opposition to RCEP

    • Domestic opposition to joining the RCEP is rooted in 
      • fear of the influx of cheap Chinese products
      • non-tariff barriers which tend to restrict market access
      • cheaper dairy products from New Zealand that would worsen the trade deficit and dent the domestic industry.
    • State of the economy – deeper than expected slowdown in the economy may have tilted the balance in favor of not joining.

Concerns with the decision

  • Short term – The loss to the economy far exceeds the short-term perceived benefits of staying out of the pact. 
  • Protectionism – This action signals a shift towards a protectionist stance
  • Sector-wise approach lacking – Indian side should have made greater effort to convince other countries for carve-outs for certain sectors, and for allowing a gradual phasing out of tariffs to ease domestic fears. 
  • No focus on reforms – India should have used this opportunity to push through contentious but necessary reforms that would boost competitiveness. 
  • Policy dilemma – On the one hand, India wants to become a manufacturing hub. Staying out of the RCEP reduces opportunities for trading with these countries, which account for roughly a third of global trade. 
  • Missed supply chains – Manufacturing today requires greater integration with global supply chains. 
  • Chinese slowdown advantage – Signing the agreement would have signaled an embrace of freer trade. It could have aided in the shift of companies out of China to India. 
  • Strategic loss – With this, India has also ceded space to China to have a greater say in the region.


The failure to persuade on long-run benefits and bowing to the pressure of various interest groups shows that parliamentary strength alone is not sufficient to push through contentious but necessary reform.

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