RCEP would have been extremely detrimental to Indian industry, says Rakesh Mohan Joshi of IIFT

India on Monday decided to stay out of the 16-country Regional Comprehensive Economic Partnership (RCEP) free trade agreement on the grounds that the pact does not address India’s concerns in its current form.

Biswajit Dhar, professor of economics at Jawaharlal Nehru University (JNU) and Rakesh Mohan Joshi, chairperson-research division, Indian Institute of Foreign Trade (IIFT) spoke with CNBC-TV18 about the matter.

Talking about India’s concerns that haven’t been met by the RCEP stakeholders, Dhar said that India for a long time has been saying that several of its sectors are quite vulnerable like agriculture and manufacturing and these need additional doors of protection.

China’s increasing footprints even without a preferential deal is a big concern for Indian industry and if China were to get a preferential deal where tariffs are lower than the current level then that would be a curtain call for the industry. This was one of India's objections, said Dhar.

The second objection was related to e-commerce — especially data localization and local servers’ issue. So these two issues were top priority on which there was lot of disquiet among both industry and government officials, added Dhar.

According to Mohan, the RCEP would have been extremely detrimental to the Indian industry because currently a lot of Chinese manufacturing goods and consumer electronics dominate Indian market and it would have only increased under the RCEP.

Mohan said that with the RCEP dairy products would have been dumped into India by New Zealand and Australia despite India being the largest producer of milk in the world because of quality issues, which would have impacted Indian small and marginal farmers.

“I am happy that concerns of small farmers and manufactures have been taken into account,” said Mohan.

According to Dhar, India has not invested in our domestic sectors and have not made our agriculture and manufacturing efficient. So, if we are not prepared to face global competition then by opening markets, we would lose jobs, he added.