Indian officials have made it clear that the Modi administration is unwilling to accept any deadline and wants... Read More

NEW DELHI: The government is acting tough on signing the Regional Comprehensive Economic Partnership (RCEP) agreement to be part of the mega trade bloc and has pointed out that its concerns — ranging from the base year for tariff reduction to protection against Chinese imports and opening up services sector by the other 15 countries — have not been addressed yet.

With talks entering the final lap ahead of a joint statement on Monday evening, negotiators are scrambling to put together a deal amid statements from Thailand and the Philippines that it may be delayed until February.

Indian officials have made it clear that the Modi administration is unwilling to accept any deadline and wants the country’s interests to be fully protected before it inks the pact.

Leaders from 16 countries are in Thailand for what was expected to be the final meeting.

A preliminary RCEP deal is expected today, setting the stage for countries to finalise the legal text that would cover a third of the global economy, making RCEP the largest trading bloc.

While some countries indicated that India had raised issues at the last minute, sources told TOI that the government had been demanding for several months that its concerns be taken on board and a solution found.

During the last ministerial meeting, commerce and industry minister Piyush Goyal had flagged several issues, which led the trade ministers to provide a special 10-day window for negotiations. “The issues are yet to be resolved,” an Indian official said on Sunday evening.

Indian negotiators are questioning the design of the trade agreement, which will see elimination of import duties on 80-90% of goods, along with easier services and investment rules. For India, the big concern is goods trade as domestic industry fears that lower customs duty will see a flood of imports, especially from China, with which India has a massive trade deficit .

India has raised a red flag over the move to use 2014 as the base year for tariff reduction. While RCEP negotiators are seeking to sign the deal in 2020, the new tariff regime will kick in from 2022 and will see duties go back to 2014 levels.

This will mean that for several products, such as mobile phones and electronic goods, tariffs may have to be eliminated over time, which runs contrary to the government’s recent moves to increase import duty as part of a strategy to boost domestic manufacturing. “This is a fundamental design issue,” said a source.

Similarly, the government has asked for more protection through what is called tariff differential. Unlike the past, the other 15 countries want a common list of products on which protection is provided by insisting on value-addition. This is seen to be crucial to ensure that Chinese goods are not repackaged and routed to India via, say, Vietnam. So, 30-35% value addition in case of a mobile phone, for instance, is being sought instead of a situation where only tempered glass is put on a Chinese phone in Vietnam and then exported to India at zero or lower duty.

“The principle that is being used is very weak, which can lead to misuse,” an official said.

Besides, India has been seeking a special safeguard mechanism for several goods imported from China, Australia and New Zealand to immediately impose higher duties in case of a surge.

