A quantitative assessment of India’s withdrawal from RCEP: Issues and Concerns

This study identifies and rationalizes some of the issues and concerns that India has with signing of the RCEP. By analysing the existing trade balance, import surge trends, dumping, and agricultural sensitivities, among other factors, the study provides the justification for India’s decision to remain outside of this mega FTA. The study examines some of the issues pertaining to the India-China trade in the recent past. Further, it predicts the impact of tariff elimination under the RCEP on various macro-economic variables of the RCEP member countries by using the GTAP model under two scenarios: (1) India does not join the RCEP, and (2) India joins the RCEP. Results show that India’s GDP would be adversely affected in case India joins this agreement, and its overall trade deficit might deteriorate after joining the RCEP. In terms of the bilateral trade balance, India’s trade deficit with ASEAN and China will grow steeply if it joins the agreement. The study also finds that an RCEP without India might lose its shine as the GDP of most of the other members of the RCEP would be negatively impacted by India’s decision to stay out. ASEAN member countries, in particular, will be adversely impacted by the agreement in terms of their trade balance whether or not India joins the RCEP. Finally, the study concludes that it may not be favourable for India to re-join this mega FTA