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The threat to agriculture from RCEP has stopped, but that does not solve the problems of the sector
Nov. 22, 2019
The run-up to last week's RCEP leadership summit in Bangkok was really amazing. While both left-wing and right-wing farmers and trade union activists opposed India signing the RCEP, the government seemed to be in two minds.
Nonetheless, senior ministers were reluctant to take a clear stance as it was uncertain whether the Center had not determined if India should join the mega-free trade agreement for Asia.
It was only on 4 November when the Prime Minister declared in his speech at the summit that India would cancel its plans as talks had failed to address "outstanding issues and concerns."
Only after that did the government take a clear stance that the RCEP, as currently envisaged, would not be in the national interest of India. Even industry-led organizations such as FICCI and CII had not produced policy papers on a topic of direct interest to their members.
It seems that the prime minister made the final decision just days before the Bangkok Summit or perhaps even during the talks that were stated to have taken place the night before the announcement.
India signed FTAs in 2009 with ASEAN and South Korea and in 2011 with Japan. We know there has been a rise in the trade deficit with these nations, though Indian exports have not seen proportionate benefits.
Three reputable think tanks, ICRIER, Center for Regional Trade at IIFT New Delhi and IIM Bangalore, were commissioned by the government to assess the benefits of FTAs to India and to hold consultations on investment, goods and services negotiations.
Agri export strategy?
India's agricultural commodity exports have declined over the past five years from $43.25 billion in FY 2014 to $39.20 billion in FY 2019. Agricultural exports were down to $33.69 billion in the 2017 fiscal year.
That's not the only source for concern, though. In FY 2019, India exported $7.74 billion in rice, $3.03 billion of which was non-basmati rice. North-western Punjab, Haryana, and west UP must produce much less non-basmati rice if the region's agriculture is to remain sustainable. Over the next two decades, there will be no option but to reduce the cultivation of paddy in this region, so joining RCEP would not have increased the export of non-basmati rice in any way.
Buffalo meat exports have fallen from $4.3 billion in the 2014 fiscal year to $3.58 billion in the 2019 fiscal year. This is no surprise with the threat of violence on the trade and transportation of animals, and it is doubtful that buffalo meat exports will see a significant increase given global demand for Indian meat and animal availability.
Marine exports have grown from $5.06 billion in FY'2014 to $6.80 billion in FY'2019. Southeast Asia's exports have risen from $1.3 billion to $2.2 billion, but exports to Japan have stagnated from about $410 million to $500 million.
Source: Industry Global News24
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