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Indian industries survived being destroyed due to Prime Minister Modi's 'foresight'

Tuesday - November 5, 2019 12:23 pm , Category : WTN SPECIAL
India separated itself from the RCEP trade agreement
India separated itself from the RCEP trade agreement

The Modi Government gives a big jolt to China's cunning

NOV 05 (WTN) - After all, the Modi Government has taken that decision, for which everyone wanted to know. The Modi Government's decision has revealed that Prime Minister Narendra Modi is a 'successful strategist'. If the Modi Government did not take this big decision, then the coming time would be the witness of the running of Indian industries!

Indeed, India has taken the 'crucial decision' of not being part of the 16-nations RCEP trade agreement. After all, what is the reason that the Modi Government has decided that India should not be a part of the RCEP trade agreement? So we explain to you in detail why the Modi Government finally took such a decision and what harm India would have to suffer from it?

First of all, let us tell you what is the RCEP trade agreement after all? Actually, in RCEP, Regional Comprehensive Economic Partnership, India, China, Australia, South Korea, New Zealand, and Japan, and 10 ASEAN countries are participants. According to the RCEP trade agreement, free trade amid the compromising countries is promoted.

It is a kind of 'free trade agreement' amid the countries involved in this agreement. The 16 countries involved in this agreement will give each other several economic discounts, including tax deductions in trade. The GDP of the 16 member countries of the RCEP is calculated one-third of the GDP of the whole world and it is comprised of half of the world's population. The agreement covers subjects like import-export of goods and services, investment, intellectual property.

Why did India decide to stay out of the RCEP?
That is to say, it is a simple trade deal between many countries. But India has kept itself out of this agreement. Actually, India could have suffered a lot from this agreement. For your information, let us know that with the countries involved in RCEP, India imports more than exports. In such a situation, there is no such system under this agreement, so that if the imports increase then it can be controlled. That is there is no clear position in this agreement on allowing goods of China or any other country in sufficient proportion in the Indian market.

To join the RCEP, India would have to remove tariffs on 90 percent of goods coming from ASEAN countries, South Korea and Japan. In addition, 74 percent of goods from China, Australia, and New Zealand would have to be tariff-free. At the same time, India had many doubts about the RCEP, but in several rounds of discussions, in many cases, India could not get confidence that how this agreement can be controlled if there is an increase in imports, so that domestic industries can be controlled to be protected.

For your information, let us know that India's trade with RCEP member countries is not in a profit position, but in a deficit of $ 105 billion. China is the biggest reason for the Modi Government's exit from the RCEP agreement. This is why because if India had signed this agreement, the Indian market would have been filled with cheap Chinese goods and this would have broken the back of Indian industries.

Explaining the reason behind not joining the RCEP agreement, Prime Minister Narendra Modi said, “The current draft of the RCEP agreement does not fully explain the basic spirit and valid guiding principles of this agreement. The agreement also does not satisfactorily address India's long-standing issues and concerns in the current situation.”

Drawbacks in agreement
Experts believe that this agreement has many flaws. The agreement violates labor standards, does not contain measures to prevent corruption and the buying process is also not transparent. It is being said that this agreement focuses only on tariff-free trade. At the same time, questions are also being raised about the economic inequality amid the countries involved in this agreement. 

Threat from China!
The RCEP agreement is, in a way, a huge trade opportunity for China, as the rest of the 15 member countries stand nowhere in terms of production. It is natural that China is trying to increase its economic dominance even more through this agreement. Indian economic analysts feared that the RCEP agreement would result in Chinese goods being captured in Indian markets. For your information, let us know that India already has a trade deficit of $ 53 billion with China. India's trade deficit with China was 2600 billion rupees in FY 2014-15, which has increased to 3700 billion rupees in FY 2018-19. 

As you know, China is having a trade war with the United States, which is causing them losses. It is being said that China wants to compensate for the loss caused by trade war to America by selling its goods in the markets of India and other countries. In such a situation, China is most excited and enthusiastic about the RCEP agreement.

In fact, this agreement is also being called as China's response to the Trans-Pacific Partnership (TPP) of America. For your information, let us know that US President Donald Trump has separated the US from the TPP, and then China has drafted the RCEP as proof of the free trade of Asian countries. China is working on a strategy to capture the markets of ASEAN member states under the RCEP agreement. 

Modi Government's foresight
As you know, India is badly affected by the economic recession at this time. Due to the economic slowdown, India's export growth rate has come down to 1.4 percent from 11.8 percent in the first eight months of 2019. If this decline continues, India's trade deficit will increase further, because India imports more than it exports to other countries. Given all these figures, the RCEP agreement would have proved suicidal for India. 

Explain that out of all the countries with which India has entered into a free trade agreement, except Sri Lanka, India is mostly at a disadvantage. FTA (Free Trade Agreement) partner countries take advantage of India's market, but India has failed to increase its exports to those countries. In such a situation, it can be said that the Modi Government has taken a far-reaching decision and separated the RCEP agreement to save Indian industries from ruin.