India should be part of RCEP and CPTPP: NITI Aayog CEO B.V.R Subrahmanyam

Sub: IR

Sec: Int groupings

Context:

V.R. Subrahmanyam, the CEO of NITI Aayog said that India should reconsider its stance and join both RCEP and CPTPP to boost its economic growth, particularly benefiting its Micro, Small, and Medium Enterprises (MSMEs) sector.
Subrahmanyam also highlighted that India has not fully capitalized on the China Plus One

Rationale behind the statement:

MSMEs contribute significantly to India’s economy, accounting for 40% of the country’s exports.
According to Subrahmanyam, these smaller businesses could gain far more from expanded trade opportunities provided by such agreements than larger corporates, which are not typically high exporters.
He argues that India’s continued exclusion from these large regional trade agreements places the country at a disadvantage as it limits its access to growing global markets.

About RCEP:

The Regional Comprehensive Economic Partnership (RCEP) is a free trade agreement (FTA) involving 10 ASEAN member countries (Brunei, Cambodia, Indonesia, Malaysia, Myanmar, Singapore, Thailand, the Philippines, Laos, and Vietnam) along with six FTA partners: China, Japan, South Korea, Australia, and New Zealand.
India was initially part of the negotiations but decided to pull out in 2019.

India’s Withdrawal from RCEP:

Despite entering negotiations in 2013, India raised concerns regarding the lack of sufficient safeguards to protect its farmers and industries, particularly MSMEs, from the negative impacts of trade liberalization.
India’s withdrawal from the RCEP in 2019 was primarily due to concerns over trade imbalances and the potential influx of cheaper Chinese goods that could undermine Indian industries.

About CPTPP:

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is another significant trade agreement involving 11 countries spanning five continents.
These countries include Canada, Mexico, Peru, Chile, New Zealand, Australia, Brunei, Singapore, Malaysia, Vietnam, and Japan.
The CPTPP aims to foster economic integration across the Pacific Rim by reducing trade barriers and increasing market access among the member nations.

China Plus One Strategy:

The China Plus One strategy refers to a business and investment approach where companies diversify their supply chains by maintaining a primary manufacturing base in China, while also establishing an additional production or sourcing location in a second country.
India, with its large labour force, expanding manufacturing base, and the potential to tap into new markets, has been positioned as a significant beneficiary in this strategy.