Distinct market access for each RCEP member to restrict Chinese entry.

NEW DELHI: India plans to stick to its strategy of protecting its domestic industry as it faces China in the regional comprehensive economic partnership (RCEP) grouping by proposing separate product lines and tariff structures for the member countries during the third round of negotiations in Malaysia that aim to conclude an agreement by next year.

A commerce department official said that India would offer each RCEP member distinct market access in terms of number of products as well as duty reduction, a proposition that is technically called deviation from common schedule.

"Our priority will be to insulate ourselves as much as possible from China," said the official, requesting anonymity. "Our main concern is China, with which we have so far avoided a free trade pact. We have free trade agreements (FTAs) with most other members and are negotiating with Australia and New Zealand."

RCEP is a 16-member grouping of 10 ASEAN countries and six others - Australia, China, India, Japan, Korea and New Zealand - that have FTA with it. The grouping accounts for 40 per cent of world trade.

India had a $39-billion trade deficit with China last year, a situation that the government fears could get worse if it were to ink an FTA with the manufacturing powerhouse. However, RCEP is an important negotiation for India since it could be left out of the region. "We cannot stay out of it. But we have to protect our interests too. It is a good opportunity to integrate our value chains," the official added.

The government is holding consultations with the industry, which is against opening up the market to Chinese goods. Arpita Mukherjee of Icrier agrees that India needs to proceed with care at the RCEP.

"Our manufacturing is not competitive, so the fears of the industry are very valid. We require infrastructure and logistics linkages to gain out of this regional trade deal," she said, adding that India should have rather concluded a deal with the European Union, with which the country shares a relationship of a supplier rather than competitor.

It should be ascertained how much more China can export to India since it is already doing a lot even without an FTA, said Biswajit Dhar of the think tank Research and Information System for Developing Countries. "However, we will need to take certain safeguards by putting certain products and product lines in the sensitive list, which will essentially be auto, two-wheelers, textiles, light engineering, etc," he said.

The government is mindful of such concerns, the official cited earlier said, adding, "We will try and protect the sensitive sectors such as auto parts and engineering, among others." RCEP will cover trade in goods and services along with investment, economic and technical cooperation, intellectual property, competition, dispute settlement and other issues. Negotiations for the agreement began in 2013.

Source : economictimes.indiatimes.com