EVEN after India quit negotiations to join the Regional Comprehensive Economic Partnership (RCEP) two years ago, the currently 15-nation trade deal is still open for the South Asian country to join, according to a senior Japanese official.

In a recent report, Indian newspaper The Hindu quoted Noriyuki Shikata, Japan's Cabinet secretary for public affairs, in saying that India staying out of the RCEP could impact "India-Japan collaborations in other countries" and make it more difficult for products with Indian components to be sold easily in RCEP markets due to the megapact's "Rules of Origin" clause.

Japan has been trying to persuade India to join since the beginning of the negotiations, in part to try to counter China's influence under the framework. But notwithstanding Japan's seemingly confrontational mindset, rejoining the RCEP would be great for India, especially as its economy is struggling amid the coronavirus pandemic and the ongoing Russia-Ukraine conflict.tps://www.manilatimes.net

India dropped out of RCEP negotiations in November 2019 after seven years of marathon talks. Its longstanding protectionism was behind the move. Despite the inclination of Narendra Modi's government to take market measures to boost the Indian economy, it has been facing strong headwinds from different domestic interest groups.

India is a country with a long history of adopting both tariff and non-tariff protection measures, and it has developed an extremely unbalanced industrial structure, with the services sector a mainstay and with a still-low proportion of manufacturing in its economy.

Though New Delhi has rolled out massive investment projects in recent years, claiming to improve the country's business environment to attract foreign investment and enhanced manufacturing development, the results are far from satisfactory.

The largest economy in South Asia has seen its momentum declining even before the pandemic struck, not to mention the repeated hit it has taken from it and from the Russia-Ukraine conflict.

Under such circumstances, it is possible that India may reconsider its choices in front of the open door of the RCEP, given the trade deal's large membership, rich resources and great market potential. The deal was inked a year after India dropped out and came into effect in January.

Current RCEP countries are Australia, Brunei Darussalam, Cambodia, China, Indonesia, Japan, South Korea, Lao People's Democratic Republic, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, Thailand and Vietnam.

Many of India's raw materials and technologies are sourced from or exported to markets in the Asia-Pacific region. Joining the RCEP would enable India to integrate into the regional economy more quickly and access various resources to support its economic growth. Integrating into the regional economy does not necessarily clash with India's independent development.

As the world's sixth-largest economy, India aims to become a regional powerhouse, with some of its people viewing China as a rival, which was also a reason behind its decision to drop out of the pact's talks.

But such anti-China notions are biased and mostly driven by political reasons. In fact, India is currently short on capacity to compete with China in the global industrial chain. It is integrating into regional development and cooperating with China, the world's leading manufacturing powerhouse, which would greatly boost India's industrial development and economic growth in the long run.

It would be a hard step for New Delhi if it chooses to rejoin the economic bloc, but its benefits are clear. Though India has stepped up efforts to conclude bilateral trade deals, they are not comparable to the advantages offered by regional trade agreements. And it needs to be pointed out that the door opening for India does not mean it could make bargains as much as it wants; necessary limits need to be put in place if negotiations to join the partnership restart.

Source: The Manila Times

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