When US President Donald Trump made a tariff pressure on India, China’s eyes fell on India’s huge market. China has invited India to join a huge market with zero tariffs and lobbied in its favor. But this breathtaking offer of China can prove to be a bigger tension than Trump’s tariff.
The huge market of India, the population of 1.4 billion, the strong purchasing power of the middle class makes it an attractive market for any ambitious country in the world. The economic strength of any superpower cannot achieve highs without incorporating India. Therefore, China has once again offered India to join the ‘Regional Comprehensive Economic Partnership-RCEP’ due to increasing tension on tariffs from the US.
China has been trying to get India included in RCEP since 2019. For this, China has lured India with zero tariff in a huge market. But India has refused to join this organization till now, recognizing Chinese ambitions.
What is rcep
RCEP is a free trade agreement between regional comprehensive economic participation between 15 countries. This includes 10 ASEAN countries and their FTA partners- China, Japan, Korea, Australia and New Zealand. RCEP is currently the world’s largest trading block, which covers about 30% of the global GDP and about 3 billion people.
Its purpose is to make trade and investment easier, easy, simple and integrate the market of all 15 countries to promote trade and investment. The RCEP agreement came under implementation in November 2020 and is effective from 1 January 2022.
The main objective of RCEP is to reduce, eliminate and make investment and trade convenient between these member countries.
What has Global Times written
China’s official newspaper Global Times has written that after the US has increased 50 percent tariffs on India, India’s huge dependence on the US market is becoming a weakness. The newspaper writes that in such a situation, India’s possibility of strategic inclination towards the Asian markets can not only help reduce these risks, but can also provide India more mobility and market diversification opportunities.
According to Global Time, search for alternative markets has become mandatory for India under such circumstances. Meanwhile, the huge Asian market and the abilities waiting for exploitation promise a more stable development path for India.
The newspaper wrote, “The economic and business capabilities of the Asian markets are obviously, and if India has to bring real changes in its business with Asia, then it is undoubtedly an important step to join the RCEP.”
Zero Tariff offer in RCEP
This newspaper believes that the effect of RCEP will increase continuously for the next 10 to 15 years and by then 90 percent of the tariffs on 90 percent of the goods will be zero. Given the market capacity and trade prospects, the region can provide India an extremely necessary protection against American trade instability.
Further, the newspaper has advised India’s economic policy-makers that India will first have to do research on market demand and consumption priorities in Asian countries to increase trade towards Asia. Apart from this, investment in research and development and production of relevant products will have to be increased. At the same time, India will have to strengthen industrial cooperation and exchange with Asian countries. Which will increase India’s competence to compete.
What is India’s worry
China has not given this offer new to India. This offer has been with India since 2020, despite India not joining RCEP. There are serious concerns and extensive reservation about RCEP.
India had initially said that RCEP does not reflect its original objectives and its results are neither appropriate nor balanced.
Actually, India’s biggest concern is about its domestic industries. If the very cheap products from some other countries of Asia including China get easy entry in the Indian market, then the Indian domestic industry can be completely destroyed. Because the relatively expensive products of India will not survive in front of cheap foreign goods.
China has already gained skill in large -scale production. In such a situation, it will not be easy for India to compete with this price war. To avoid this, India was demanding a mechanism that would allow him to increase the tariff on a product where imports have crossed a certain limit. But it could not be agreed.
India’s trade deficit with China is already very high. India’s trade deficit with China has reached 99.2 billion US $ 99.2 billion in the 2024-25 financial year. India fears that joining the RCEP may cause floods of cheap Chinese goods in India, which will increase its trade deficit further.
In fact, the economic impact of RCEP decreases without India as India is a big and fast growing market. RCEP for China is important from both economic and geopolitical perspectives as it promotes its regional dominance and BRI.
India has preferred its national interests and self -reliant India policy in trade and international relations to maintain autonomy in the global supply chain and show firmness in any adverse situation with China.
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