Mega trade agreement TPP will certainly have an impact on India's exports in sectors such as pharmaceuticals, textiles and chemicals, Commerce and Industry Minister Nirmala Sitharaman said today.
She, however, said that the country is preparing itself to deal with the adverse impact of the Trans Pacific Partnership (TPP), a mega trade deal among 12 countries, including the US.
"We have certainly started looking into all the implications of any possible diversion in trade ... So keeping that diversion possibility which will happen and which can negatively affect India we are certainly looking at those sectors which will be bearing the brunt immediately after the TPP comes into the force," she told reporters here.
She said that the government is also looking and identifying countries where Indian investments for manufacturing can happen.
Talking about negative impact of Trans Pacific Partnership (TPP), she said there also will surge in imports into India.
"The TPP will certainly have an impact on India's exports and it is most likely to affect sector like leather goods, plastics, chemicals, textiles and clothing," she said.
On investments, the minister said the investor-State dispute mechanism will have a "serious bearing" on countries like India which are not part of the TPP.
Besides, India would have to look at the labour laws, rules of origin of products, intellectual property rights and product standards.
She said that this trade pact could impact the overall trade scenario and countries like India would have to look at their policy stance to cope up with the implications.
To deal with the situation both the industry and the policy makers will have to work together in this situation, she added.
The TPP is a trade agreement among 12 countries, including Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam.
The TPP agreement has been concluded but is not yet ratified for implementation by the participating countries.
Sitharaman said trading and manufacturing public sector
units would be impacted from the TPP and "we should be conscious of that also".
She said that questions will be raised on India's pharmaceuticals sector as "evergreeing" of patents will get eased in the TPP countries.
"...I think it is as much a challenge as post 1991 where the structural adjustments were to be made in the Indian economy in a comprehensive and far reaching ways," she added.
The minister asked the industry to look at regions like Africa and CLMV (Cambodia, Laos, Myanmar and Vietnam) to enhance investments and take advantage of TPP norms and export to those economies.
Further, she said India is also part of a mega trade deal - Regional Comprehensive Economic Partnership (RCEP) agreement, which is under negotiations.
The 16-member bloc RCEP comprises 10 ASEAN members (Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand, the Philippines, Laos and Vietnam) and their six FTA partners -- India, China, Japan, Korea, Australia and New Zealand.
She also said that talks are on for bilateral trade pacts with countries, including Canada and Australia.
"We are working on all the FTAs. So, India is not just sitting and watching the TPP. It is ensuring that it is moving in the right direction and making sure that the details of TPP are being looked into with great interest," she said.
The minister said that experts are working to see the net impact of this agreement on India's trade and after few weeks, the complete picture would arise.
Sitharaman said that Indian industry also needs to work on their product standards to enhance competitiveness.
She added that the way global trade is changing, the policy space is going to be restricted each time.
"India is also making a very serious attempt at getting into APEC...So Asia-Pacific Economic Cooperation (APEC) is another way in which we shall also make sure that we are not out of trading reality which are emerging into this world," she said.
And investment too - in both directions - is well below
what it could, and perhaps should, be, she added.
She also said that as India has a much larger population, there is a view in some quarters that this means the country can satisfy its growth requirements through its large domestic market.
"But I think India would be selling itself well short were it to take this stance. We can look at China, a country of similar dimensions to India, to see an example of the enormous contribution that international trade can make to national economic growth," she said.
The Indian economy has become more market-oriented, including easier access for foreign investment and reductions in tariffs "albeit to still high average levels," she added.
Sidhu further said trade is not about winning more than the other party, it is about win-win.
Talking about the Trans-Pacific Partnership Agreement (TPP), she said it allows for new members to join in the future, which will amplify its benefits.
About RCEP, she said it holds significant economic potential.
"Through commitments on goods, services and investment RCEP will provide the economic architecture to support ongoing trade and investment liberalisation in the region. And its potential significance for India should not be underestimated.
It represents a substantial market for Indian goods, services, but also for Indian technology, intellectual property and human capital," she said.
It would also help provide India access to the region's vast pools of capital, vital to building the infrastructure necessary to support a modern, thriving economy, she said.
"From my perspective, India should have a regional voice commensurate with its size and economic weight. Australia supports India's growing participation in the economic architecture of the region," the High Commissioner said.
"Our increasing reference to the 'Indo-Pacific', rather than the earlier term of 'Asia-Pacific', reflects this desire to embrace India as a key contributor to building regional cooperation and integration," she said.
RCEP provides an ideal forum in which India can contribute in shaping and influencing the rules governing trade and investment in the region and Australia is keen to work with India to achieve a sufficiently ambitious RCEP outcome, she added.
