RCEP Dangerous for India

Why is RCEP dangerous for India – especially for Agricultural and Dairy Sectors.

Over the past few weeks we have witnessed many farmers’ protests against India joining the RCEP. The Regional Comprehensive Economic Partnership is said to be the world’s biggest trade agreement since it involves countries who are engaged in a huge percentage of global trade. It includes the ASEAN countries along with their six other trading partners such as India, China, Australia, New Zealand, South Korea and Japan. China is in the front and will be the biggest exporter to India. Targeting India will provide these countries with a humongous market wherein their cheap products will easily replace indigenous products. India has had a stumbling stance on joining the trade deal due to a variety of reasons.

Let us see why the idea of joining the RCEP has invited so much criticism and worry. Joining the RCEP would mean that India would allow cheap products to enter its markets with import duties on products reduced to nearly zero. Also, it is expected that Chinese products will flood Indian markets at low costs giving a tough competition to indian products. India already has trade deficits with 11 countries of the RCEP, agreeing to this deal will make the condition worse. It is not new to note that India’s experience with previous Free Trade Agreements (FTA) has not been encouraging. The spice industry of India suffered a great deal when India signed an FTA with Sri Lanka. There was a steep decrease in the price of pepper when the FTA with Sri Lanka was signed. It led to the fall in the price of pepper from 720 per kg in 1999 to 330 per kg. There are several other incidences to show that India has always been the receiving end in these free trade agreements. Considering the current economic position, it will further deteriorate the conditions and impact thousands of livelihoods. Therefore it can be said that India’s history of such agreements has been disappointing.

rcep india

Here are some facts- Nearly 65% of India’s population is dependent on agriculture for livelihood, India is currently witnessing an economic slowdown, unemployment is at its peak. Given this, RCEP certainly looks like a bad idea at this point of time. The conditions of Indian farmers is not hidden by anyone, they already do not get the right price for what they produce. Bringing in RCEP will lead their situation to unimaginable chaos. Since, it will allow agricultural products to flood into the market like- pepper, cardamom, dairy products, it will undermine the farmers’ gate prices as there is already a crash in prices due to overproduction of these goods. The production of wheat will also be severely impacted. In India, wheat is an important food grain after rice, any factor leading to the tampering in its production will cause huge distress on the farmers.

Rubber from Vietnam and Indonesia, Coconut from Philippines will definitely affect India rubber producers and coconut farmers severely. It is disheartening to know that Government has not engaged stakeholders, farmers to reach a decision. There have been no surveys and studies to point out the benefits or the loopholes of the deal.  If RCEP agreement is signed it would surely be in the interests of processing corporates and importers who will only benefit from this and again the poor Indian farmer will suffer.

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Furthermore, the daily sector will see the likely impact of RCEP. Countries like New Zealand’s figures of exports of dairy products are tensing for India if it signs the deal. New Zealand exports 93.4% of all its milk powder and 94.5% of butter oil produced. Companies can easily import skimmed milk which can be mixed with water to be sold as milk in the market. Milk and other dairy products are already much more than requirements. Dairy as a source of income is viable for a huge number of farmers who do not have land or other assets. Selling milk as a daily source of income is very common in India. RCEP will only lead these lives into misery. With regard to Indian exports there are a variety of non tariff barriers which lead to lesser exports to countries like Japan, South Korea already.

Not only the agricultural sector, the industrial sector will suffer equally. Aluminium, iron and steel industry, electrical appliances and what not will cause serious harm to Indian industries. Therefore, it is completely visible that RCEP will completely exploit the Indian agricultural and industrial markets and kill the interests of Indian farmers if agreed upon. If inevitable, The government must ensure that at least the agriculture sector is kept out of the deal. However India must reject joining the RCEP and should protect its people when it can.

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