| Introduction: Contextual Introduction Body: Impact of India’s withdrawal from RCEP & measures to mitigate the impact. Conclusion: Way forward |
India’s trade policy in Southeast Asia, particularly in the context of its withdrawal from the Regional Comprehensive Economic Partnership (RCEP), remains a subject of critical importance in shaping its economic and strategic engagements in the region.
India’s Withdrawal from RCEP: Economic and Strategic Concerns
- Trade Deficits: One of India’s primary reasons for exiting RCEP was its fear of worsening trade deficits, particularly with China. India’s trade imbalance with China, exacerbated by RCEP’s trade liberalization provisions, could have undermined its domestic manufacturing and industrial sectors.
- Agricultural Sector: India was also concerned about protecting its agricultural sector from competition with other RCEP members, particularly those with more efficient farming sectors, which could harm Indian farmers.
- Lack of Protection for Domestic Industry: Indian industries were wary of increased competition from more advanced manufacturing economies like Vietnam and China. The perceived inability of RCEP to offer sufficient safeguards for domestic sectors, especially textiles, electronics, and manufacturing, was another concern.
India’s Post-RCEP Strategy in Southeast Asia
- Strengthening Bilateral Agreements: India is strengthening bilateral trade and investment ties in Southeast Asia, focusing on Malaysia, Singapore, and Vietnam. Collaborations in sectors like digitalization, health, and advanced manufacturing aim to address trade imbalances by leveraging India’s competitive advantages.
- Exploring New Economic Areas: India is also pursuing semiconductor diplomacy with Malaysia and Singapore, both of which have significant semiconductor production capabilities. This move is part of a broader strategy to explore new sectors like space technology and digitalization to diversify its economic engagements.
- Reaffirming the Indo-Pacific Vision: India’s Indo-Pacific strategy aligns with its geopolitical goals. Recent visits by the President to Fiji and New Zealand, along with diplomatic engagements by the External Affairs Minister, reflect India’s commitment to shaping the region’s economic and security landscape.
- Bilateral Trade with ASEAN: India continues to prioritize trade with ASEAN, working to improve existing agreements and hosting leaders from Malaysia and Vietnam. It aims to enhance ties outside RCEP, particularly by revitalizing the ASEAN-India Free Trade Agreement for better market access.
Conclusion
Prime Minister Modi’s recent visits to Southeast Asia, including Singapore and Brunei, highlight India’s efforts to mitigate the impact of its RCEP exit by strengthening alternative trade and investment frameworks.
