New Delhi (CNN Business) India is ducking out of one of the world's largest free trade agreements, saying it wants to protect its farmers and local businesses. That decision risks hurting the country's already struggling economy.

Indian Prime Minister Narendra Modi decided not to sign the Regional Comprehensive Economic Partnership (RCEP) at a summit in Bangkok, Thailand on Monday, a proposed trade pact involving 16 countries in the Asia-Pacific region.

"India had significant issues of core interest that remained unresolved," Vijay Thakur Singh, a senior official at India's foreign ministry, told reporters late Monday. Modi was concerned about the "fairness and balance of the agreement" and the "impact it would have on the lives and livelihoods of all Indians, especially vulnerable sections of society," Singh added.

as well as India was worried that its market could be flooded with Chinese goodsas well as agricultural and dairy products from countries like Australia and New Zealand. Local trade groups as well as India's main opposition party had urged the government not to sign the RCEP.

Modi has walked a tightrope when it comes to India's economy, trying to strike a balance between promoting local businesses and attracting more foreign investment.

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