India contemplates reassessing FTA Talks amid Bangladesh's RCEP entry
India is contemplating a potential reevaluation of its plan to engage in discussions for a proposed Free Trade Agreement (FTA) with Bangladesh.
A source closely monitoring the matter informed that India's Commerce Department intends to scrutinize the potential consequences for Indian industries should Bangladesh pursue entry into RCEP before advancing towards formal FTA negotiations with the country.
The possibility of Bangladesh's entry into RCEP following its forthcoming general elections has raised concerns in India. Given Bangladesh's existing substantial imports from China compared to India, the move is anticipated to further increase Chinese imports into Bangladesh.
This prospect has caused apprehension in India, as it might potentially facilitate the flow of Chinese goods into India through Bangladesh via the FTA route, thereby bypassing rules of origin (ROO), which could pose significant challenges for the Indian industry, the source noted.
During the visit of Bangladesh's Prime Minister Sheikh Hasina to India in September 2022, Prime Minister Narendra Modi had agreed to initiate negotiations for an India-Bangladesh Comprehensive Economic Partnership Agreement (CEPA) to boost bilateral trade and investments.
It's noteworthy that India's apprehension regarding the inundation of Chinese goods was a key factor behind its decision to abstain from joining the RCEP, which now includes ASEAN's ten members, Japan, South Korea, Australia, New Zealand, and China.
India faced a considerable trade deficit with China in 2022-23, reaching 83.19 billion US dollar, which accounted for almost one-third of its total trade deficit. This deficit soared as Chinese imports surged to $98.5 billion, while Indian exports declined to 15.3 billion dollar.
Meanwhile, Bangladesh aims to join RCEP and establish an FTA with India as it prepares to graduate from its Least Developed Country (LDC) status in 2026, thereby necessitating the relinquishment of associated concessions.
Despite India enjoying a trade surplus with Bangladesh, with exports amounting to $12.21 billion and imports at $2.02 billion during 2022-23, the evolving dynamics of trade and potential shifts in regional economic partnerships remain critical factors under consideration.
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