India on Monday decided to stay out of the Regional Comprehensive Economic Partnership (RCEP), saying that the proposed mega trade deal did not fully reflect "the basic spirit and the agreed guiding principles of the agreement."
Indian Prime Minister Narendra Modi said: "The RCEP does not address satisfactorily India's outstanding issues and concerns. In such as a situation, it is not possible for India to join the RCEP Agreement. Standing for greater regional integration, India has been pro-actively and constructively engaged in the RCEP negotiations since its inception. But during the last seven years, many things, including the global economic and trade scenarios, have changed."
Talking about the Indian farmers' concern over India signing the world's largest trade pact, Modi stated that when he looked at the RCEP agreement with respect to the interests of all Indians, he did not get a positive answer.
"Our farmers and traders have stakes in such decisions. Equally important are the workers and consumers. When I measure the RCEP agreement with respect to the interests of all Indians, I do not get a positive answer. Therefore, my conscience does not permit me to join the RCEP," the Prime Minister added.
At a meeting of trade ministers of the ASEAN bloc in Bangkok, it was agreed to provide a fresh 10-day negotiating window for India to be convinced to become a member of the China-led 16-nation RCEP grouping.
During the last ministerial meeting, Indian Minister for Commerce and Industries Piyush Goyal raised several concerns - including over the base year for tariff reduction to ensure protection against Chinese imports into the country.
While a few member countries said that India raised the issue at the last moment, sources said the government has been demanding for several months that its concerns be taken on board and resolved, the Times of India reported.
For India, the biggest concern lies in the design of the trade agreement that includes the abolition of import duties on 80-90 percent of goods, easier access to services and simplified investment rules.
India is taking a tough stand because imports from China are likely to flood Indian markets resulting in increased competition for domestic manufacturers.
The RCEP negotiators hope to sign the deal in 2020 with the new tariff regime kicking in from 2022. The 16 countries involved account for half the world’s population and 32.2 percent of global Gross Domestic Product, equivalent to $22.6 trillion.
The RCEP comprises the 10-nation Southeast Asian Nations (ASEAN) bloc and Australia, New Zealand, South Korea Japan and China.