Key ministers of the government came to a huddle on Monday as Prime Minister Narendra Modi chaired a meeting to take a final call on whether India should go ahead with the Regional Comprehensive Economic Partnership (RCEP) deal or not.
“This is the meeting which will decide whether we are in or out of RCEP," a government official said under condition of anonymity.
India is still grappling with ways to deal with China in the RCEP forum, even as trade ministers of the countries in the grouping are working toward sealing negotiations for a trade deal later this week in Bangkok.
India, whose trade deficit with China and RCEP in 2018-19 was $53.6 billion and $105 billion, respectively, is apprehensive that further liberalization in tariffs to the neighbouring country could lead to a surge in imports, harming the domestic industry and the Make In India programme. On the contrary, India is unlikely to gain even if China substantially reduces its tariff levels because of non-tariff barriers raised by China which favours its state-owned enterprises over foreign companies.
There were a series of preparatory meetings prior to the meeting chaired by Modi. The ruling Bharatiya Janata Party also separately conducted a meeting on RCEP on Monday attended by officials from dairy cooperative Amul and some trade experts.
Amul has been vehemently opposing RCEP, holding that it would compromise the interest of small dairy farmers if India concedes market to countries like New Zealand and Australia. Small industries and steel sector are also opposed to the free trade agreement.
A person with knowledge of the deliberations said political compulsions may force India to at least keep the dairy sector out of the RCEP deal.
Earlier in the day, home minister Amit Shah chaired a meeting of finance minister Nirmala Sitharaman and trade minister Piyush Goyal, external affairs minister S. Jaishankar and minister of state for commerce Hardeep Puri, excluding even senior officials.
On Sunday, till late night, Goyal, Jaishankar and Puri held meetings with commerce ministry officials to get a sense of the technical aspects of the deal.
The RCEP is a proposed trade pact between the 10 countries of the Association of Southeast Asian Nations (Asean) and their six FTA partners, including Australia, China, India, Japan, Korea, and New Zealand. The countries in the proposed trade grouping account for 25% of global gross domestic product, 30% of global trade, 26% of foreign direct investment flows, and 45% of the world’s population.