Japan, Korea and China are working on the Regional Comprehensive Economic Partnership (RCEP). India is the only major economy seemingly distant from the idea of getting RCEP over the line. A reluctant participant from the very beginning, India finds that its own interests are almost entirely at a variance with those of the principal proponents of RCEP.

When most countries spoke of undertaking trade liberalization in both agricultural and industrial products, India drew its own divergent line in the tariff negotiations. India’s major concern was the presence of China. India was therefore reluctant to offer lower tariffs on too many goods to its northern neighbor. The concern was not without basis: even without preferential tariffs, India’s imports from China increased nearly eleven-fold between 2004-05 and 2017-18. During the same period, the increase in India’s exports to China was relatively modest, resulting in a steep increase in the trade deficit with China.

Adding to this is India’s not-too-happy experience implementing the three FTAs with Asean, Japan and Korea. India had agreed to eliminate tariffs on about 80 per cent of its products in each of these agreements and the outcome was quite similar—consistently rising trade deficits. While India lowered its tariffs to allow easier market access to its partner countries, Indian entities were unable to secure enhanced market access using the lower tariffs offered by the FTA partners.