Important Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.
Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora.
Rethinking India’s membership in RCEP
In the ambitious Regional Comprehensive Economic Partnership (RCEP) pact India is negotiating with 15 other nations including China. The rising pressure for opening up markets in goods is making negotiations unsustainable. India will not be able to justify its continued efforts to reach a compromise.
Regional Comprehensive Economic Partnership (RCEP) is an ASEAN-centred proposal for a regional free trade area. 10 ASEAN states (Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, Vietnam) and six states with which ASEAN has existing FTAs (Australia, China, India, Japan, South Korea and New Zealand) are members to it. ASEAN+6 RECP is aimed at transforming the region by higher economic growth through more cross-border trade and investment.
For most RCEP members, the sky seems to have become the limit as far as ambitions in opening up markets for goods go. As has been reported, many members have demanded that import tariffs on goods — both agricultural and industrial — must be reduced to zero for more than 92 per cent of tariff lines. What is less known is that some RCEP countries have further suggested that tariffs should be reduced to less than 5 per cent on an additional 7 per cent of lines which would take the total coverage of items to 99 per cent. This would mean that India has to phase out duties on most items and dismantle the wall protecting its industry and farmers from indiscriminate competition.
To make matters worse for India, which is grappling with the demands already on the table, countries like Australia and New Zealand which want India to lower tariffs on items like wheat and dairy, are now insisting that the offers should not be just linked to tariff lines but to the value of the items. This means that agreeing to eliminate tariffs on a large number of items is not enough. The items should be of significant trade value too.
What is more worrisome is the thought of unhindered flow of goods from China with which we have an annual trade deficit of over $50 billion. A Free Trade Agreement (FTA) with no duties on most products could increase the deficit significantly.
India participated in the negotiations for so long even it was not in a position to offer zero tariffs on many items because New Delhi was never averse to the idea of eliminating tariffs on a considerable number of items — the length of the list depending on the country for which it was making the offer. The issue is that India is being pressured into treating all members equally and offering tariff elimination or reduction on an exceptionally long list of items, giving it very little scope to protect its sensitivities.
Over the last two years the concerns of India have been sidelined:
India’s first set of offer for tariff elimination based on a three-tier system — 42.5 per cent of tariff lines for China, New Zealand and Australia, a higher 65 per cent for its FTA partners South Korea and Japan and the highest offer of 80 per cent for Asean — was rejected by all members, including Asean.
Last August, India was forced to give up its proposal for a three-tier system at the ministerial meet in Laos in favour of a single offer for all. India had to satisfy itself with members agreeing to allow deviations to protect its vulnerabilities with respect to certain members (read China). The caveat, of course, was that the deviations can’t be too high.
The offer proposed by India has not satisfied the RCEP members. At the recent negotiating round in Hyderabad, India was pushed incessantly to improve its offers with Australia and New Zealand, insisting on increased market access in items like wheat and dairy. The existing situation is exactly what the Indian industry and farmer groups, protesting against the RCEP pact, were apprehensive about.
India’s expected gains in goods from the RCEP pact are not significant, given the fact that the existing levels of tariffs in member countries are relatively low and there wouldn’t be significant gains from further cuts. This is the main reason why India’s gains in goods have been much lower than that of the partner countries in its FTAs with Asean, Japan and South Korea.
While India’s gains in RCEP are to mainly come from services liberalisation, including easier work visa norms, the offers in the area have been almost non-existent. The Asean countries have refused to offer even the level of openness that exists among the 10-member group.
Many RCEP members are now insisting on inclusion of substantial commitments in the area of e-commerce and investment facilitation — the two areas where India wants to preserve its sovereign right for policymaking.
New Delhi needs to get assertive about what it cannot agree to, even if it means getting isolated in the RCEP related talks. For a country with a large number of sensitive agricultural crops and labour-intensive industry sectors, bending to above mentioned demands is a near impossibility.
It is high time India asked itself why it needs to be part of a pact where it runs the risk of putting the future of its industry and farmers at stake while getting almost nothing in return. Its fear of being the only major economy not part of a mega trade deal is no longer real. Negotiations on most large trade pacts such as the Trans Pacific Partnership, Transatlantic Trade and Investment Partnership and a new NAFTA have hit major road blocks after President Donald Trump took over in the US.
New Delhi has to realise that there is no issue in getting out of a bad deal. There is a world of wisdom in exiting while there is still time rather than signing a bad deal. A free trade pact between the RCEP countries accounting for 45 per cent of the world population and over $21 trillion of GDP does seem attractive, but not at the price India is being asked to pay.
Connecting the dots:
A free trade pact between the RCEP countries is attractive, but not at the price India is being asked to pay. Critically analyze.
General Studies 2
Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
General Studies 3
Conservation, Environmental pollution and degradation, environmental impact assessment.
Rethinking on River-Linking Project
Is the proposed interlinking of rivers a bold and ambitious engineering project that will resolve the country’s water woes or is it an ill-conceived plan built on obsolete ideas that will devastate the country’s riverine ecosystems? Expert opinion on the matter remains as sharply divided as ever.
The sheer scale and scope of the project: 30 river linkages and more than 3,000 storage structures spread across a 15,000km canal network that will transfer 174 trillion litres of water every year, and will cost a total of Rs5.6 trillion. This puts the river-linking project on a par with some of the most daring feats of engineering attempted in the history of mankind. It is a reimagining of the entire aquatic ecosystem of a country as large and diverse as India.
Connect the Himalayan and peninsular rivers via a network of canals so that excess water from one channel can be diverted to another which has inadequate flow.
It will irrigate about 87 million acres of farmland, control floods, and generate 34 GW of hydroelectric power. These are tantalizing prospects: India’s rain-fed farms are forever hostage to the vagaries of nature, so much so that even one bad monsoon has a direct and debilitating economic impact.
At the same time, simultaneous floods and droughts in different parts of the country continue to wreak havoc, destroying the lives and livelihoods of millions.
India also desperately needs clean energy to fuel its development processes, and if river water can be leveraged and redirected to serve these purposes, that’s an option worth exploring.
The project is built on bad science and an outdated understanding of water systems and water management. Specifically, the concept of surplus and deficit river basins—which is at the core of the river-linking project—is contested. A new study by researchers at the Indian Institutes of Technology in Mumbai and Chennai, analysing weather data over 103 years (from 1901 to 2004), has found that rainfall has decreased over the years by more than 10% even in river basins that once had a surplus, such as those of the Mahanadi and the Godavari.
The project seems to view the river as a unidimensional water pipeline when it is, in fact, an entire ecosystem—and any changes to its natural course will have an impact on all the flora and fauna, the wetlands and the floodplains that are intricately linked to the river system.
The long-term environmental impact of such a project is a major concern. For example, one of the reasons why the Ken-Betwa link, which is now receiving priority attention, has been stuck for several years is because it requires environmental clearance for diverting 5,500 hectares from the Panna National Park, a tiger reserve.
Less than positive experience other countries have had with such projects—be it the Soviet regime’s decision to divert the Amu Darya and the Syr Darya, which fed the Aral Sea, to irrigate the desert, or the Australian government’s experiments in its Murray Darling basin.
Political challenges as well. Water transfer and water sharing are sensitive subjects that have already spawned century-long disputes. Moreover, water is a state subject in India, and even though the Centre is empowered to bring an inter-state river under its control to serve the national interest, it has effectively never done so owing to enormous resistance from the states.
Given the concerns and the massive investment required, perhaps the government would do well to consider other interventions, both on the supply side and the demand side, such as conservation of water resources and more efficient irrigation and agricultural practices, etc., to deal with India’s looming water crisis.
Connecting the dots:
Given the concerns and the massive investment required for river-linking project, the government should consider other interventions like conservation of water resources, more efficient irrigation and agricultural practices, etc., to deal with India’s looming water crisis. Analyze
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