As many as 15 countries have signed the RCEP agreement, which is touted as the world's biggest-ever trade deal. The members of RCEP are 10-nation bloc ASEAN (Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia), and 5 FTA partners -- China, Japan, South Korea, Australia and New Zealand.
India, too, could have been a part of the mega trade deal but it walked out on November 4 last year as negotiations failed to address India's outstanding issues and concerns, especially relating to China's influence over the bloc. RCEP signatory states have said they will restart negotiations with India for joining the pact once New Delhi submits a written request.
What India would have gained?
The RCEP members account for 25 per cent of the world GDP; 30 percent of the world trade; 26 per cent of the FDI flow; and 45 per cent of the world's population. The combined trade of the RCEP members and India is estimated to be $2.7 trillion. With India deciding to opt-out, the country could lose on trade opportunities with the RCEP nations and increasing exports.
A large chunk of India's trade is already established and the RCEP countries on the country-level. RCEP nations account for 27 per cent of India's total trade. Exports to RCEP countries account for about 21 per cent of India's total exports. Imports from RCEP nations comprise 34 per cent of India's total imports. For any nation, this presents an enormous opportunity.
Out of 15 countries in RCEP, India is running a trade deficit of about $105 billion with 11 countries, including $53 billion with China alone. All these trade differences would have been diminished had India joined the mega trade deal.
What India lost
India lost an opportunity to be in the world's biggest trade bloc. With India out, China is practically dominating the trade in the region. No common trade deal with 15 nations means a big blow to India's export plans. Also, India will miss out on the global supply chain for high-end goods.
What India wants
India wants certain issues to be addressed before it joins the RCEP trade bloc. The major ones among those are base year issue; Ratchet Clause; rules of origin; tariff lines; data localisation; and safeguard mechanism. On the base year, India wants it to be 2019 but the majority wants it to be 2013. Under the Ratchet clause, India wants the freedom to increase tariff rates, while other countries say once reduced, tariffs should only go down. On data localisation, India wants control over e-data flow, while the majority stands for the free flow of data, except for national security purposes.
Also read: Infographic: Can India afford RCEP exit?