US heat, China thaw nudge India to RCEP

Govt weighs costs, benefits of membership in a changing world

- Dhirendra Kumar

Pushed by escalating trade tensions with Washington and with its relations with Beijing on the mend, New Delhi is warming up to a deeper embrace of the East by signaling a potential return to an eastern trade bloc that it had walked out of nearly five years ago.

According to two senior government officials aware of the matter, India is weighing the possibility of rejoining the Regional Comprehensive Economic Partnership (RCEP), a trade group of 15 countries. India had left the group in November 2019 just before the pact was signed, citing concerns over market access, widening trade deficits, and risks to farmers, domestic manufacturing, and small businesses.

India's earlier opposition was shaped by key concerns such as an unfavorable trade balance with China, fears that Chinese goods would flood Indian markets through third countries, and New Zealand's plan to supply milk and milk products to India that would hurt India's small farmers and dairy cooperatives.

According to one of the officials cited above, internal discussions have begun in the Indian government on reassessing the costs and benefits of RCEP membership in light of global supply chain realignments, tariff wars, and the urgency of diversifying export markets.