Opinion | RCEP an opportunity before Asian giants to show a united front
Trade deficit with China has to be solved for creation of job opportunities in India
An alarming level of deficit has now cast a shadow on the flourishing trade between the two fastest growing economies of the world and the engines of growth in Asia. Bilateral trade between China and India touched $87 billion in 2018-19, with the trade deficit widening to $53 billion in China’s favour. Imports from China were 13.6% of India’s total merchandise imports in 2018-19. These imports mainly comprise consumer goods and electronics, such as phones and ICs. Despite the political frictions on the border, it is trade which has steered relations between the two countries. Though bilateral trade is expected to touch $100 billion next year, it is largely overshadowed by the rising deficit concerns on the Indian side. Indian industry is worried that the further influx of goods from China will hurt local companies, especially those in consumer durables and manufacturing. In fact, many years ago, the India-China free trade agreement (FTA) was put on hold even after a Joint Study Group from both the Indian and Chinese side recommended the FTA largely due to lobbying by the chambers of commerce in India. Indian industry is also concerned that the 16-member Regional Comprehensive Economic Partnership (RCEP) agreement, led by Asean and China, will further increase India’s trade deficit with all its major trading partners.