Modi’s rejection of RCEP trade deal welcomed by Indian businesses
Indian farmers and businessmen welcomed the decision of Prime Minister Narendra Modi to refuse a comprehensive Asian trade pact, with Amul, the country’s largest dairy company, praising the Prime Minister for “supporting livelihoods.”
New Delhi’s 11th-hour rejection of the Regional Comprehensive Economic Partnership (RCEP), which was supposed to cater for 30% of global GDP and a link of half of the world’s population, comes as India continues to slow down production and consumption.
The deal would have improved the exposure of India to other markets in Asia. Nonetheless, New Delhi feared that if the country make with cheap Made-in-China products, particularly in crucial employment sectors such as agriculture and textiles, its domestic industries would be hit.
Amul praised Modi’s “exemplary leadership and encouragement” in a tweet late Monday to dairy farmers, who would have been subjected to more rivalry under the RCEP.
“Your dream of promoting their survival would help to double their incomes and make India richer,” she said.
Praveen Khandelwal, General Secretary of the leading lobby group, Confederation of All India Traders (CAIT), stated AFP warning that the agreement would have enabled Chinese manufacturers to flood “the Indian market with Made In China goods at meagre rates… thus generating a disequilibrium.”
B M Singh, Coordinating Committee of All India Kisan Sangharsh, said the rejection of the agreement was “a huge victory for the lower classes.”
“We should not go for an open negotiation like the RCEP just because we can’t compete with other big countries,” Singh told AFP.
“It’s like tossing someone who is 25 kg into a boxing ring and expecting him to deal with an adversary weighing 100 kg.”
Many small business owners welcomed the move but said it wouldn’t be enough to maintain or keep them profitable in their sectors.
In Mumbai’s vast Dharavi slum, Shaikh Mobinuddin, a plastics maker, said the cost of setting up a company in India remained prohibitive while the procedure became unnecessarily bureaucratic.
“Today, the situation is pretty poor with political inertia, lack of infrastructure and capital available for companies. They are not able to grow most of these small-scale enterprises,” he told AFP.
Critics have been split on Modi’s move, warning that New Delhi, which has a long history of protectionism, may lose out as it strives to become a more globally competitive economy.
“In an environment in which manufacturing needs the opportunity to become more-not less-integrated into global supply chains, this policy seems for the moment to make things easier to improve manufacturing in India,” senior fellow Alyssa Ayres ‘ Council on Foreign Relations wrote.
“The central issue for the Indian government isn’t in the language of a trade deal, but in the productivity of the Indian economy,” Ayres added in a blog post outlining the need for further reforms to kick-start development.
Others advised that in the wake of the recession, India was not able to deal with the flood of cheaper products.
“India’s economy is currently struggling under some pressure, and it wouldn’t have been the best time to take a decision that probably could have had a large impact on different sectors of the economy,” said Pushkar Mukewar, co-founder of Drip Capital.
Nonetheless, India’s pullout is seen as a hit to the agreement, which now involves all 10 Southeast Asian Nations Association (ASEAN) states including China, Japan, South Korea, Australia, and New Zealand–but not the US.
Upon reading an approved draft document, the remaining members plan to sign it next year.