UPSC MAINS 2019 : Regional Comprehensive Economic partnership (RCEP) and India

Regional Comprehensive Economic partnership (RCEP) and India

Topic : Regional Comprehensive Economic partnership (RCEP) and India

Topic in Syllabus: General Studies Paper 2: International Affairs



Regional Comprehensive Economic partnership (RCEP) and India

Australia is leading diplomats from various countries involved in the negotiations for the 16-member Regional Comprehensive Economic Partnership (RCEP) free trade agreement to convince India to commit to the deal by the end of the year.



  • Serious concerns, including worries over the flooding of the market with Chinese goods
  • The lack of access for Indian services in the RCEP countries


What is RCEP?

  • The Regional Comprehensive Economic Partnership (RCEP) is a proposed mega-regional Free Trade Agreement (FTA) between 16 Asia-Pacific countries.
  • Regional Comprehensive Economic Partnership (RCEP) was established in order to broaden and deepen the engagement among parties and to enhance parties’ participation in economic development of the region.
  • It was established by the leaders of 16 participating countries on November 12, 2012 at Phnom Penh summit.
  • The RCEP will include all the nations with which the ASEAN has trade deals — New Zealand, Australia, China, India, Japan and South Korea.
  • The Association of Southeast Asian Nations (ASEAN) has free trade agreements with six partners namely People’s Republic of China (ACFTA), Republic of Korea (AKFTA), Japan (AJCEP), India (AIFTA) as well as Australia and New Zealand (AANZFTA).
  • The Partnership will account for nearly 45 % of the global population with a combined gross domestic product of $21.3 trillion


How RCEP benefits India?

  • It is expected to provide market access for India’s goods and services exports and encourage greater investments and technology into India.
  • It would also facilitate India’s MSMEs to effectively integrate into the regional value and supply chains.
  • On the other hand, India is not a member of the Asia-Pacific Economic Co-operation (APEC) which is a grouping of twenty-one countries in the Asia Pacific region with an aim to deepen and strengthen economic and technological cooperation amongst APEC member countries.
  • The RCEP negotiation includes: trade in goods, trade in services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement, e-commerce, small and medium enterprises (SMEs) and other issues.
  • India has consistently focused on services trade norms, such as those allowing the free movement of trained professionals across national boundaries.
  • This would effectively allow Indian professionals — such as chartered accountants, teachers and nurses — to practice in other RCEP nations without the need for bilateral mutual recognition agreements.
  • Since India has an abundance of trained labor that is interested in migrating while sending remittances back home, this is a prime focus area for the country.


What are the hurdles where the India got stuck?

  • The talks have seen little movement since partner nations have been unwilling to concede on crucial issues under planning since 2012.
  • The crucial issues of goods, services including easier movement of professionals and, investment are also the areas of negotiation.
  • The main bone of contention is market access for foreign goods and reduction of import duties on them.
  • This is the discussion area where India is gravely cautious since manufacturing powerhouse China is part of the arrangement.
  • India fears the RCEP pact will allow China to push its products at lower prices and finally capture the market.
  • At present, India’s import barriers remain high to Chinese products.
  • The $63 billion trade deficit with China remains a burning political issue for the government and security concerns have also arisen over Chinese conglomerates dictating market trends in sectors such as telecommunication.
  • On the other hand, richer nations like Australia and New Zealand have remained adamant on issues such as seeking more leeway in selling specific products such as dairy and fruits in India.
  • India has also moved slowly on investment norms, especially dispute settlement guidelines.


The Australian High Commissioner to India :

  • It was the industry’s responsibility to use the FTAs well.
  • Australia is leading diplomats from various countries to convince India to commit to the deal by the end of the year.
  • Indian negotiators like any good negotiators can get the best deal in their own country’s interests.
  • But the second part is that industry has to use the access that they gain from the agreement to extend their reach



  • Despite the challenges to be faced by industry, the government is keen to be part of the pact as once implemented the RCEP could be the largest free trade zone in the world as member countries account for 25 per cent of global GDP, 30 per cent of global trade, 26 per cent of global foreign direct investment (FDI) flows and 45 per cent of the total population.


Sample Question:

Examine the significance of ASEAN for India’s comprehensive growth?(250 words)



Regional Comprehensive Economic partnership (RCEP) and India infograph