New Delhi: Ringing the alarm bell for the first time, trade minister Nirmala Sitharaman on Monday said the US-led Trans-Pacific Partnership (TPP) trade agreement may become as much a challenge as the balance of payments crisis in 1991 and may require similar structural changes in the Indian economy.

Speaking at a book launch function on “TPP and India: Implications of mega regionals for developing countries", Sitharaman said TPP will impact a host of sectors such as plastics, chemicals, textiles, pharmaceuticals as well as state-owned enterprises through a surge in imports and more trade barriers in their activities.

“Stricter investment and labour standards under TPP may also reduce the policy space for India. We need to work towards common standards," she added.

TPP is a trade agreement under negotiation among 12 nations: Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam, which comprise 34% of the world’s gross domestic product (GDP).

In addition to greater market access for goods and services, the areas of negotiations covered by TPP include intellectual property rights, foreign investment, competition policy, environment, state-owned enterprises, e-commerce and supply chains.

Sitharaman said India is already looking at the possible trade diversion that may occur due to a zero-duty scenario, though the agreement is yet to be ratified by the member countries. “We are also looking at stricter rules of origin that TPP may impose and trying to overcome it by making investments in CLMV (Cambodia, Laos, Myanmar and Vietnam) countries," she added. Speaking at the event, chief economic adviser Arvind Subramanian said TPP will bring seismic changes in the world economy and India will have to take it seriously.

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