India revisits its trade relationships with China under RCEP

India reconsiders its trade ties with china amidst troubled relations between the two superpowers

Despite the continuous power struggles between India and China, opportunities are being mined to reduce the surging trade deficit. India is rooting for business visitor commitment, in its service sector. The pact would ensure smooth movement of professionals, according to a government source.

With its increased trade deficit margin with china, India anticipates a better business deal, with negotiations gaining momentum for Regional Comprehensive Economic Partnership (RCEP) agreement.

India has already been gaining favorable business opportunities under the RCEP agreement from other ASEAN members, thus opening world markets to it.as a part of its recent negotiations an anonymous official said “ “We will be pressing China for a better deal as compared to other countries that are part of the RCEP negotiations.”

Keeping in mind the widening trade insufficiency with China, India wants to give zero duty market access to inadequate of Chinese goods, as compared to other RCEP member countries in the proposed trade agreement. In addition to the deal, India also is thinking about eliminating duties on Chinese goods.

The RCEP negotiations initiated in November 2012 by the leaders of ten ASEAN Member States (Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) and 6 ASEAN Foreign Trade Agreement (FTA) partners (Australia, China, India, Japan, South Korea, and New Zealand) during the 21st ASEAN Summit in Phnom Penh, Cambodia.

The negotiations have been drawn as the member countries mulled agreement over the removal of customs duties on the maximum number of products traded. However, countries like India have certain reservations on this as the grouping includes China, with which New Delhi has a wide trade deficit.

The ASEAN members want a more trade conducive environment as they expect India to remove custom duties and tariffs on 90-92 per cent trading goods with the countries falling under the FTA category, including ASEAN and Japan.

With the non-free trade agreement partners, China, Australia and New Zealand – discussions  for abolishing duties on 80-86 per cent of the products. India has asked for 20 years period to remove these duties. But with China, it wants more time for elimination of tariffs.

“What we got in goods is amazing. We have got high flexibility. Now, how much we can give to China is a challenge but we believe that given the trade deficit, China should give us more and we would give them lower and take a longer staging period,” the government official said.