India rules out joining RCEP, accuses China of non-transparent trade practices

India's commerce minister rejected the idea of ​​joining the Regional Comprehensive Economic Partnership, the world's largest trade agreement, insisting that joining a free trade agreement with China was not in the country's interest.

Indian Commerce and Industry Minister Piyush Goyal told CNBC: “India will not join RCEP because it neither embodies the guiding principles on which ASEAN was founded nor has a free trade agreement with China. in India's interest.

this regional comprehensive economic partnership agreement The agreement was signed in 2020 by 15 Asia-Pacific countries accounting for 30% of global GDP and will take effect in January 2022. Japan, Australia and New Zealand.

RCEP negotiations began in 2013 and initially included India, which some members viewed as a check on China. However, in 2019, India chose not to join RCEP on the grounds that the issue of “core interests” had not been resolved. At the time, India did not elaborate further on some of these unresolved core interests.

Goyal pointed out that at that time, China had signed free trade agreements with ASEAN, Japan and South Korea.

He said: “This is not in the interest of our farmers. RCEP does not reflect the aspirations of our small, medium and micro industries and sectors and is in some form nothing more than a free trade agreement with China.”

“When you look at it from a foreign perspective, you don't realize how difficult it is to compete with an opaque economy,” the minister continued, referring to China. “Certainly no one in the country wants a free trade agreement with an opaque economy, whose economic practices are very opaque and whose trading system, political system, economy – the way it is governed – is completely different from foreign countries. The democratic world wants that.”

Goyal also accused China of exploiting World Trade Organization policies to benefit itself by flooding various economies with low-priced goods that often do not meet quality standards.

From solar panels to cars to steel, China has recently been producing more goods in a slow-to-digest economy, leading to a surge in cheap exports to foreign markets.

The minister also strongly supports India becoming Taiwan's “plus one” semiconductor country.

“China plus one” is a phrase used to describe a supply chain strategy that requires companies to diversify manufacturing and sourcing by expanding into other countries while continuing to operate in the mainland. This approach is designed to reduce the risks associated with complete reliance on a single country market or supply chain.

Departing from this idea, Goyal believes that India can be another option in the region for companies looking to diversify into semiconductors beyond Taiwan.

“We are strongly encouraging the semiconductor industry. We are starting to build the ecosystem, which is critical for us to see more and more foundries coming into the country to do actual wafer manufacturing,” Goyal said.

“We expect demand for semiconductor products to reach about $100 billion by 2030 and to grow exponentially thereafter,” he said, adding that interest in India's semiconductor industry was expanding “by leaps and bounds.”

India aims to establish itself as a major chip hub similar to the United States, Taiwan and South Korea, and is actively seeking foreign companies to do business in the country.

Earlier this year, Prime Minister Modi Three semiconductor factories completedbringing the total number of plants under development in India to four. One of the factories is a joint venture between Tata Electronics and Taiwan's Powerchip Semiconductor Manufacturing Company. The first batch of semiconductors is expected to be delivered by the end of 2025 or early 2026.

Asked whether India could become Taiwan's “plus one” in the semiconductor sector, Goyal said India's size, democracy and rule of law meant it was a “safe haven”.

“It offers an alternative to a life where you always have a young population, a huge need, and it's backed by the rule of law. I think it's a very forced situation,” he said.

Goyal added that the world recognized that excessive concentration in any one region was fraught with serious risks.

India's chip strategy has two main components: attracting foreign companies to operate and invest in the country, and establishing partnerships with other major semiconductor countries such as the United States. Government approves $10 billion incentive package For this industry, foreign companies are also available.

By 2024, Taiwan will become a global chip manufacturing powerIt is expected to occupy about 44% of the global market shareThis was followed by China (28%) and South Korea (12%), according to the report. The United States and Japan accounted for 6% and 2% respectively.

The author of the report, Taiwanese consulting firm TrendforceTaiwan’s global capacity share of advanced manufacturing processes is expected to drop to 40% by 2027, while South Korea’s share may fall by 2%. Over the same period, China is expected to grow between 3% and 31%.