[Analytics] India will lose both ways after rejecting RCEP

India’s decision not to join the Regional Comprehensive Economic Partnership (RCEP) shows its vacillation over a move of momentous significance for the region. The world’s largest free trade agreement has come close to fruition. However, one of the largest economies in the world with the second-biggest population hasn’t agreed to enter its fold. Huang Dekai specially for the Global Times.

Giving its reasons for deciding not to take the plunge into the free trade agreement, New Delhi said, “(the RCEP Agreement) also does not address satisfactorily India’s outstanding issues and concerns.”

The RCEP came close to culmination during the 35th Association of Southeast Asian Nations (ASEAN) Summit and the East Asia Summit held recently in Thai capital Bangkok.

The RCEP is the largest regional free trade agreement launched by ASEAN in 2012. It will have a far-reaching impact on the world economic and trade structure and geopolitical pattern. In fact, since 2012, RCEP negotiations have been delayed several times because of India dragging its feet.

India, which has waffled over the issue, has been a beneficiary of regionalization and globalization and a defender of multilateral cooperation. Since Prime Minister Narendra Modi came to power, the government has actively promoted the transformation of India’s foreign policy. New Delhi has not only upgraded the strategy from “Look East” policy to “Act East” policy, but also seeks a greater impact in East Asia, Southeast Asia and the Pacific region.

The Indian government fears that the RCEP will hurt the fragile manufacturing industry of India. The growth of India’s economy is slowing down amid a large downward push. Although the Modi government has promoted “Make in India” initiative, joining the RCEP would expose it to the impact of three world-class manufacturing powers – China, Japan and South Korea. Small workshops, tiny businesses and small entrepreneurs could be devastated, and even the “Make in India” initiative will be imperiled.

For a long time, India has harbored the ambition of becoming a “powerful country with diplomatic discourse,” and with the rapid growth of its economy in recent years, it has positioned itself as a big country and carried out major-country diplomacy. But if India joins the RCEP, it would have to play second fiddle to China and Japan given the size of their economies. This would put India in a tight spot. Hence, India’s vacillation is a way of highlighting its importance in this region.

The trend of globalization and regionalization is obvious. Multilateralism and free trade constitute important paths to the future. However, nationalism and populism leading to protectionism is short-sighted behavior that focuses on immediate interests. The country will eventually suffer the consequences.

It is clear that the progress of the RCEP is a major victory for free trade in the pursuit of globalization and multilateralism. The fact that India did not join the RCEP for the time being shows that it wants to continue to share the dividends brought by multilateralism; at the same time, India does not want to offend the countries that promote protectionism.

As a big country and an important economy, India should take its responsibilities seriously. However, the South Asian nation has repeatedly used talks to block and delay the progress of the RCEP for its own interest. The expectations from the RCEP, an embodiment of global multilateralism in the new era, are high. Instead of supporting the RCEP, India on the contrary tried to delay the process.

As the saying goes, you cannot have your cake, and eat it. India intends to have it both ways, as well as keeping the flexibility of its foreign policy. The South Asian nation will find itself in a dilemma that would be of its own making. It will lose the opportunity of development along with links to the international community. At the same time, New Delhi will not be able to reap the benefits of protectionism either.

The author is a scholar at the Sichuan Police College.