India opted out of the Regional Comprehensive Economic Partnership deal, citing a failure on the part of negotiating countries to acknowledge the country’s legitimate concerns on several issues. The deal would have given India unbridled access to the most prosperous region outside the western hemisphere. With India opting out, 10 ASEAN countries, Australia, China, Japan, Korea, and New Zealand are expected to ratify and operationalise the agreement next year. India’s refusal to join the regional trade grouping betrays its lack of confidence to engage its eastern neighbours, which have more developed manufacturing bases. Indian market would have been flooded with cheap imports from RCEP member countries once duty free imports are allowed. But not joining the regional grouping will definitely hurt India’s long-term economic interests.
The Chinese economy expanded at 9.5% during the 1978-2013 period. The 35 years of sustained high growth saw the country becoming the second largest economy in the world. The experimental nature distinguished the Chinese reforms from those in the other parts of the world. The leadership avoided nationwide rollout of reforms. Changes were introduced after successful implementation in small regions, leaving no room for failure. This may be because China had experienced the disastrous outcomes of large-scale government-initiated policies such as the Great Leap Forward.
India cannot afford to delay productivity-enhancing reforms any longer. The government should take all stakeholders like the industry and farmers into confidence and assure them all support in case of adverse situations. The long-term prosperity of the country cannot come through splendid isolation. Staying away from regional trade pacts will impede India’s development into an economic superpower by limiting its access to technology and capital.