"The messy state of Indian democracy has made it difficult to achieve a modest consensus on the Regional Comprehensive Economic Partnership or RCEP - a giant trade deal that weaves India, the Association of Southeast Asian Nations (ASEAN), Oceania, China, Japan and Korea together. The country has to arrive at constructive decision by August-end, when ministers from the 16 RCEP countries meet in Singapore. If New Delhi’s negotiators fail to achieve a consensus by then, the remaining 15 countries will have to move ahead without it. For many Indians though, this wouldn’t be much of a tragedy. India’s goods trade deficit with China was 60 per cent of its overall trade deficit. According to Indian policymakers, much of what’s being imported is sub-standard and susceptible to anti-dumping legislation. So far, 214 separate investigations have been opened against China for exporting substandard goods, which has worried policymakers about the effectiveness of the anti-dumping measures."

The messy state of Indian democracy has made it difficult to achieve a modest consensus on the Regional Comprehensive Economic Partnership or RCEP - a giant trade deal that weaves India, the Association of Southeast Asian Nations (ASEAN), Oceania, China, Japan and Korea together. The country has to arrive at constructive decision by August-end, when ministers from the 16 RCEP countries meet in Singapore. If New Delhi’s negotiators fail to achieve a consensus by then, the remaining 15 countries will have to move ahead without it.

For many Indians though, this wouldn’t be much of a tragedy. India’s goods trade deficit with China was 60 per cent of its overall trade deficit. According to Indian policymakers, much of what’s being imported is sub-standard and susceptible to anti-dumping legislation. So far, 214 separate investigations have been opened against China for exporting substandard goods, which has worried policymakers about the effectiveness of the anti-dumping measures.

More conducive measures required

India’s main concern is that RCEP’s focus on reducing goods’ tariffs is not adequate and the deal needs to open services trade simultaneously. It also needs to accord greater freedom of movement to professionals who are a major source of foreign currency for India. The real constraints of trade growth are non-tariff barriers which make competing in the Chinese domestic market such a nightmare.

However, certain Indian sectors have panicked about competition. One of them is steel -- which is slowly recovering after years of pummeling thanks to Chinese overcapacity. Dairy producers obsess about Australia and New Zealand. Manufacturers worry about everyone.

The problem is that, at the moment, RCEP is the only proposed deal. India needs to arrive at a more positive, forward-looking approach by the end of the month or it must abandon its ambition to infiltrate global supply chains. This could be disastrous as the country will shortly have the world’s largest workforce but a mere a 2 percent share of world trade.

Therefore, instead of being concerned about China’s overcapacity and its ability to dump goods, India must show to the world that a regional trade agreement that prevents countries from bringing fair, transparent and temporary anti-dumping actions is in nobody’s interest.

Need for a positive approach

India has raised tariffs on 400 products over the past two years, which is a major departure from a generation-long trend towards greater openness. It has unilaterally scrapped investor protection treaties with almost 60 countries. Even the government’s choice of economic policy advisers reflects a new distrust of the world. The American-educated economists who defined the Modi government’s initial years have been eased out, not entirely gracefully.

As the country retreats from the turnpike of world trade to the dirt road of autarky, it will be poorer in both the medium- and long-term. Therefore if the government wants to reassure the world that India isn’t willing to put up with the dirt road, then it needs to find a way to be more positive about RCEP.