Gurcharan Das
November 4, 2019 was a sad day. Prime Minister Narendra Modi decided to walk out of the Regional Comprehensive Economic Partnership (RCEP) negotiations at the eleventh-hour, admitting that India couldn’t compete with Asia, especially China. It was a big and painful decision as this is no ordinary trade agreement. Had India joined, RCEP would have become the world’s largest free trade area comprising 16 countries, half the world’s population, 40% of global trade and 35% of world’s wealth in the fastest growing area of the world.
India should have joined RCEP. The deal on offer was a reasonably good one and many of our fears had been allayed. Our farmers had been given protection from imports of agricultural products and milk (say from New Zealand). A quarter of Chinese products had been excluded, and for the rest a long period of tariffs was allowed from 5 to 25 years. The deal offered a unique safeguard from a sudden surge of imports from China to India for 60 of the most sensitive products.
If much smaller countries in Asia – Vietnam, Thailand, the Philippines, Laos, Myanmar – can compete and have joined RCEP, why can’t India? Why does it need tariff protection, normally meant for infant industries? Why are India’s companies still infants after 72 years of Independence? No nation has become prosperous without exports; open economies have consistently outperformed closed ones. The $5 trillion target cannot be achieved without exports. The lesson from this fiasco is that India must act single-mindedly and execute bold reforms to become competitive. We can still join RCEP by March 2020. Consider this period a pause to get our house in order. It’s never too late to do the right thing. Here are ten ways to make the nation competitive.