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Day 51 – Q 2. New regional groupings on trade and commerce can be detrimental to India’s interests. Do you agree? What measures have been taken by the government to address this?

2. New regional groupings on trade and commerce can be detrimental to India’s interests. Do you agree? What measures have been taken by the government to address this?

व्यापार और वाणिज्य के नए क्षेत्रीय समूह भारत के हितों के लिए हानिकारक हो सकते हैं। क्या आप सहमत हैं? इसको दूर करने के लिए सरकार द्वारा क्या उपाय किए गए हैं?


In recent years, regional groupings on trade and commerce such as Trans Pacific Partnership (TPP), Regional Comprehensive Economic Partnership (RCEP) and Trans-Atlantic Trade and Investment Partnership (TTIP) have been at the centre of trade policy debate worldwide.

It has been debated that these regional groupings may prove to be detrimental to India’s interests.

Regional groupings and challenges before India:

Regional Comprehensive and Economic Partnership (RCEP):

  • It is ASEAN led initiative which also includes six non-ASEAN members such as India and China. This regional arrangement is opportunity as well challenge before India.
  • India has great opportunity to explore market of this continuous geographical area. China’s cheap consumer products and TRIPS Plus are the two major challenges before India.
  • Free Trade grouping of RCEP may flood Indian market with cheap Chinese consumer goods. And Stringent intellectual property norms under TRIPS Plus will hamper India’s generic medicine and pharmaceutical industries.

European Economic Area:

  • Currently India’s trade negotiations under BTIA are going on with EU. There are two major issues in-front of India in this regard. One is General Data Protection Rules (GDPR) of EU and other is Dispute Redressal Mechanism.
  • According a report, only 13% of the Indian firms in EU are prepared for GDPR. And India doesn’t have any data protection policy yet.
  • Similarly, on front of arbitration, India and EU are not yet on the same page.
  • These issues may hamper India’s trade with EU.

Comprehensive and Progressive Agreement on Trans Pacific Partnership (CPTPP):

  • Hitherto known as TPP, the new Mega regional group of CPTPP covers many of the countries bordering Pacific Ocean, except US and some other countries.
  • If this mega regional grouping succeeds in its objective, there are chances that India may lose because of differential treatment with non-member states.

Failure of SAFTA:

  • South Asian countries tried to make a regional free trade area within South Asia as SAFTA, but it failed badly.
  • According to WTO regional trade in South Asia is not more than 5% whereas regional trade between ASEAN countries is around 20% of their total global trade.
  • Similarly, hostile relations with neigbouring countries, is also a reason behind low regional trade. According to a report it is 20% cheaper for India to trade with Brazil as compared to trade with Pakistan.
  • Regional investment in South Asia is less than 1% of overall investment in the region.

Decline in role of WTO and rise of regional arrangements:

  • WTO was established to assure rule based global trade and commerce. But recent developments prove the weakening of WTO. India’s demand such as finalisation and implementation of Doha Developments, and a agreement for free services in line with FTA (Free trade agreement), etc.
  • Similarly, there are vacancies in WTO arbitration court and appointments are being blocked by some developed countries.

Measures taken by the government

  • With regard to RCEP, negotiations are going on with ASEAN countries. They agreed for separate negotiations between India and China. Concerns over TRIPS Plus are still a challenge to be addressed.
  • With regard to EU, India is pressing hard for BTIA. Srikrishna Commission suggested some measures for data protection, and a bill for data protection policy has been drafted by government of India.
  • Concern related to CPTPP can be addressed by strengthening role in RCEP. RCEP can help India to retain and improve trade relations with East Asian and South East Asian nations.
  • India’s Act East Policy is also a key step towards greater regional integration of Asian countries.
  • BIMSTEC is also a great platform to further push for regional trade and cooperation.
  • Kaladan Multimodal project, power plant developments, connectivity and infrastructure developments are some of the other measures taken by India to make strong regional trade and strategic relations.
  • Recent review of electricity guidelines can be considered as first step towards barrier free trade within the region.


  • India always supported for rule based global trade and commerce, hence these new developments may create challenges before India. But India needs to create compatibilities with the changing world order.
  • India is one of the fastest growing economies of the world. In the era of protectionalism it cannot afford to remain isolated from such regional groupings.
  • These groupings may be currently are detrimental to India’s interests but Data protection Bill, and all other such measures can make it otherwise also. These groupings are challenge as well as opportunity for India.

Best Answer: Swapnil

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