NEW DELHI: India is likely to agree to deeper cuts in manufacturing import tariffs during negotiations at Regional Comprehensive Economic Partnership (RCEP), but may try to backload opening up of sensitive markets such as dairy products, textiles and auto parts in the face of intense lobbying by domestic players, who fear dumping by countries like China and Australia-New Zealand.
The RCEP pact being negotiated among 10 ASEAN members and their six trading partners including China, Japan, India and Australia, is expected to be sewn up by next month. Union Commerce Minister Piyush Goyal will be taking a delegation next week to a crucial ministerial meet at Bangkok. The treaty may be signed next calendar year itself, according to officials.
“We cannot back out (of RCEP) after so many rounds of negotiations, yet we cannot fully agree to their terms as our interests would not be served by such acceptance. It is going to be a tight rope walk,” said an official.Top officials said India will backload opening up of sensitive sectors, but will go ahead with the RCEP agreement, which will call on India to reduce import duties on most product lines over a 25-year period in phases.
“To start with, we will be opening up only those areas where they (Chinese exports) will not be able to impact domestic manufactures. The exact lists and time frames will depend up on our negotiations,” said an official. Many textiles product-lines will be kept out in the early phases as textile makers have complained that trade concessions to Bangladesh and ASEAN have already impacted their market. Similarly, most, if not all, dairy products will not be opened up in the first phase.
Agricultural lobbyists including India’s giant milk cooperative Amul have lobbied against the opening up, warning that even a small country like New Zealand has the potential to disrupt Indian markets, given their cost economics and mass scale of production.
“They (milk cooperatives) have warned us that most of their members are small farmers who have 2-10 cows and can never be able to match the scales of advanced dairy nations like New Zealand and Australia. We will have to give them time to adjust and afford them maximum protection,” said an official.
Auto-trigger system
Officials said the commerce ministry is trying to build an auto-trigger mechanism that would allow India to raise tariffs if there was a sudden surge in imports of any particular product line. “Say steel imports from China surges, then this will kick in,” said an official.