India out of RCEP: Raising global competitiveness

India out of RCEP: Raising global competitiveness

Amidst farmers’ protests and resentment, India has taken a judicious decision to opt out of the Regional Comprehensive Economic Partnership (RCEP), keeping in view the country’s interests.  Obviously, the outcome may go against the interests of China as it was desperate to become the unchecked dominant economic power of Asia and flood our domestic market with its products. As is well known, the signing of the RCEP would have forced the government to reduce import duties on several goods. Experts estimate that the Indian government stood to lose around Rs 50,000 crore, or even more, if it had agreed to reduce duties.

Recently farmers’ representatives had decided to intensify protests if the free trade agreement between India and 15 Asia-Pacific region countries (of RCEP) was signed as this would have paved the way to flood local markets with inexpensive farm, dairy and plantation products. Incidentally, these 16 countries account for about 25 per cent of global GDP and around 30 per cent of global trade. It is understood that producers of coconut and palm oil, areca nut, tea, coffee, rubber and cardamom as also dairy products would have been the ones at the greatest risk, if the agreement was signed.

By walking out of RCEP, India has been bold enough to point out that it is unwilling to do business on their terms but remain open for business. As the Prime Minister rightly observed that “the present form of the RCEP agreement does not fully reflect the basic spirit and the agreed principles of RCEP”. However, India’s ASEAN FTA will continue though even that is being renegotiated with Thailand and South Korea. According to government sources, India would prefer to pursue bilateral agreements for some time.

Members of the Alliance for Sustainable and Holistic Agriculture (ASHA), Bharatiya Kisan Union (BKU) and the Indian Coordination Committee Farmers Movement (ICCFM) urged the State governments to oppose the RCEP as that would affect farmers. Foreign farm products would be cheaper because of the comparative efficiency advantage of foreign or because they are subsidised by foreign governments.

According to farmer group representatives, dairy cooperatives now get about Rs 280 to Rs 300 for a kg of milk powder. Though India is the largest producer of milk in the world, most of the production is consumed internally and it is apprehended that milk powder from Australia and New Zealand might become available at Rs 180 to Rs 200 a kg. Also rubber imports from Malaysia would be sold much cheaper in the domestic market.

This speculative news was indeed distressing for farmers as this sector has been in a crisis for quite some time, specially since 2017. Instead of opening up avenues and export markets, it is possibly a right decision to examine the whole issue and not sign the RCEP agreement as this would have had a cascading effect and lakhs of farmers would be affected, directly or indirectly.

The question remains why India has not been competitive in the global arena? Why is it that these foreign farm products are cheaper? We should examine our subsidy in relation to those offered by foreign governments and provide similar incentives. Moreover, agricultural research has to be diversified, keeping in view the prices prevalent in the global arena.

It needs to be stated here that India’s agrarian future, whether gene based or drone based, continues to be productivity focused drawing upon the green revolution model. Alternative visions based on different kinds of crop choices, farming systems, technologies and practices have not been given due emphasis in the last few decades by governmental and non-governmental organisations. In fact, it would not be out of context to state that agriculture with 12 per cent contribution to the GDP has been somewhat neglected keeping in view the large number of people dependent on this sector for their livelihood.

Productivity of the entire gamut of agricultural produce is quite low except for two staple cereals. It needs to be mentioned here that productivity of a single grain per unit of land in a given season is a misleading metric as it fails to account for multiple products and crops that land can provide in the same season and that, in many places, multiple crops are grown on the same land across seasons. Plus, what about the feasibility of land to continue producing in future?

It is a well known fact that the high levels of wheat have come at the cost of depleting/replacing soils, groundwater and the livestock economy in ways that are non-replenishable, non-renewable and carbon emitting. Thus, the needs for diversification of crops – some of which are value added – have been aired by agricultural scientists at conferences and seminars but no effective plan of action at the grass-root has been evolved.

It is in this connection that one may refer to the large imports of oilseeds and pulses from Indonesia, Malaysia and Myanmar. Imports fulfilled nearly 35 per cent of India’s domestic requirement of oilseeds and over 20 per cent of pulses, according to available data around 2-3 years ago and the situation has remained unchanged. The rise in the prices of pulses has put them beyond the reach of the low income groups.

Thus, diversification of the agri sector with value addition in horticulture, floriculture, pulses and spices and on-farm processing for production of various types of oil, both for the domestic and export markets, is the need of the day so as to ensure higher incomes on a sustained basis. One needs to mention here that oil seeds production of the country is way below world average and needs to be boosted up with proper usage of micronutrients and mechanisation apart from increasing processing centres with latest technology.

Thus the hype about self-sufficiency of rice and wheat has no meaning as it does not help in complete nutrition. Recent research of the National Institute of Nutrition revealed that cereal-heavy diets of the poor and the EWS have contributed to an epidemic of anaemia along with creating malnutrition and nutrient deprivation, specially among women and children. Very little efforts at the ground level were initiated to harvest oilseeds and pulses in a big way through training and also technical guidance by the high profile ICAR.

Through proper technical guidance and subsidies that our competitors give, our country can definitely be competitive. Why do we have to bother if foreign products enter the domestic market even though such government decision is undoubtedly wrong and needs to be examined by a panel of economists and agricultural scientists?

India very rightly withstood pressure and not signed the trade pact, more so in a situation where the global economy has changed considerably with the US-China trade war and the Indian economy struggling. However, one cannot deny that prospects of India’s increasing exports are quite high. Thus it is imperative to evolve a new strategy, which may be formulated with agricultural scientists, traders and representatives of farmers’ organisations, preferably with a State-wise or better still a district-wise action plan, to professionalise our agricultural production, concentrate on certain crops and increase overall productivity.




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India out of RCEP: Raising global competitiveness