India has reportedly taken a policy decision that it will not walk out of the negotiations on the Regional Comprehensive Economic Partnership (RCEP), supposed to be finalised this week. Members of the Association of Southeast Asian Nations (ASEAN), China and Australia are adamant on getting India to agree to deep tariff cuts in several sectors, including textiles.

Commerce minister Piyush Goyal is in Bangkok for the RCEP meeting, which started on October 10.

RCEP is a mega free trade agreement of 10 ASEAN countries with their six free trade agreement (FTA) partners, India, China, Japan, South Korea, Australia and New Zealand.

Several Indian industries, including textile and dairy, have cautioned against opening up these sectors. India’s cumulative trade deficit with the RCEP nations is $105 billion, with the lion’s share being accounted for by China. India also has FTAs with Japan and South Korea. Indian industry bodies feel a raise in the volume of exports by these countries will be detrimental to the country, according to Indian media reports.

The most crucial negotiations on opening up the market with China remains stuck, primarily on account of India’s fears that its trade deficit with China will rise.

In the September round of negotiations, ASEAN nations firmly asked India to clear its position, whereas, India insisted on ensuring safeguard of domestic industry, farmers and their interests.

The other negotiating members are planning a parallel RCEP 15, a deal without India. The negotiations have gone through 28 rounds and the deal is expected to be signed on November 21.

The BharatiyaMazdoorSangh, the LaghuUdyogBharati, the SwadeshiJagranManch (SJM), the BharatiyaKisanSangh and the GrahakPanchayat, affiliates of the RashtriyaSwayamsevakSangh (RSS), the ruling BharatiyaJanata Party’s (BJP) ideological parent, have firmly opposed the deal in the present structure. Academicians aligned to the BJP too are not backing the deal.

Agriculture minister NarendraTomar, textile minister Smriti Irani, steel minister Dharamedra Pradhan, mines and minerals minister Prahlad Patel have already either opposed the deal or are seeking protection for farmers and the domestic industry. They all fear cheaper dumps from China will wipe out local players, while the dairy industry fears Australian and New Zealand imports. Finance minister Nirmla Sitharaman has also shown her reservation.

A recent DBS Bank report cited various reasons for India’s reticence to participate in trade agreements. These include trade deficits with all the RCEP member countries, previous FTAs not materially improving India’s trade mathematics and certain unfavorable provisions turning to be sticking points.

“The early phase of adjustment [in RCEP] will be an uphill task as few import tariffs will have to be dismantled, leading to higher competition from imports and in turn hurting export competitiveness,” the DBS report said.