Any agreement on RCEP deal to be based on national interests: Piyush Goyal

Goyal says free trade pact can't be held hostage by one or two domestic industries

Any agreement on the proposed Regional Comprehensive Economic Partnership (RCEP) deal would be based on national interests, Commerce and Industry Minister Piyush Goyal said on Wednesday. He, however, warned that while the government would strive to protect the interests of a majority of industries, the overall discussion could not be hijacked by one or two sectors. 

“As long as India's domestic industry and our national interests are protected, the faster it (the RCEP) is done, the better for India,” Goyal said. “Any agreement that India finalises will ensure that indiscriminate imports don't come in, while major opportunities for exports and job creation are reserved,” he added.

The RCEP is a proposed pact between the 10-nation Association of the Southeast Asian Nations (Asean) bloc and six of their free trade agreement (FTA) partners — New Zealand, Australia, China, India, Japan, and South Korea. Delegates from RCEP nations will be in New Delhi on September 14-15 to discuss ideas to move forward on the deal. Most of the members, led by the Asean bloc, have been pushing hard for finalising the deal by 2019-end.

Industry divided

Stressing that most industries were in favour of the deal, Goyal said some of the opponents had not understood the details of the RCEP yet. “Not everybody is opposing the RCEP. We are literally vertically split, with half the industry saying it should be brought quickly," Goyal said.

This includes the pharmaceutical sector which has argued for greater access to Chinese markets to give it a much-needed leg-up. China imports about $25 billion worth of medicines, of which India's share is only $200 million.  

Cotton textile exporters have also requested a speedy conclusion to the negotiations, citing an 8 per cent duty that hinders their chances of exporting to China, Goyal added.

Goyal had told leaders from Asean in July that India’s domestic industry was not convinced that the proposed RCEP deal would create a “win-win situation for all” by ensuring balanced outcomes for both goods and services.

A report on the RCEP, commissioned by the Confederation of Indian Industry and submitted to the government, has recommended that products — the trade of which is dominated by China — should not be included for tariff reductions under the RCEP. Many ministries, including agriculture, steel, chemicals and MSME, among others, have also opposed the deal.

Harnessing FTAs

“Looking at the past examples of other countries which have used FTAs very efficiently and effectively, my own sense is that we can also use these extremely well," Goyal said. He added the government was also looking at domestic measures to ensure the industry was competitive and could take advantage of the concessions allowed to them under the FTAs.

These measures include mega sessions with exporters that teach how to use FTAs properly. According to a study by the NITI Aayog, the utilisation rate of trade deals by Indian exporters is very low (between 5 and 25 per cent). Goyal also trained his guns on companies that have not taken advantage of the deals either due to lack of knowledge or effort, or due to the “comfort of a protected domestic market”.

The minister squarely blamed the earlier governments for not being able to negotiate better trade deals for India, which has led to a situation where the industry has not been able to benefit from FTAs. The Asean-India FTA did not have an automatic review mechanism built into it, Goyal said. 

“After almost 10 years of implementation, imports have grown faster than exports. Indian industry also had to suffer from the circumvention of rules of origin, across products,” T V Narendran, CEO & managing director of Tata Steel, said.