File photo of PM Narendra Modi | Praveen Jain |ThePrint
File photo of PM Narendra Modi at Rashtrapati Bhavan, New Delhi | Praveen Jain | ThePrint
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Hours before India refused to join the China-led 16-nation Regional Comprehensive Economic Partnership or RCEP Monday, the US unveiled an updated status report on ‘A Free and Open Indo-Pacific’ or FOIP in which it applauded its strategic partnership with India, “a fellow democracy with 1.3 billion people”.

In contrast, US Secretary of State Mike Pompeo who signed off on the report, accused China of “practicing repression at home and abroad”, and described it as being intolerant of dissent and aggressively controlling media and civil society.

Significantly, as they sought to grow their respective trade groupings, both China and the US had the same countries in their line of sight – the 10 ASEAN nations, Australia, New Zealand, Korea, Japan and India.

Except for India, though, the remaining 14 out of the 15 countries across the Indo-Pacific decided they would join the RCEP as well as ally with the FOIP.

Prime Minister Narendra Modi cited Mahatma Gandhi’s talisman, besides his own misgivings, as his reason for saying ‘No’ to the RCEP. But there seems to be something else happening here that doesn’t quite square up.


Also read: Modi’s RCEP move shows sound political judgement. Don’t scoff, it’s rare these days


More than Gandhi’s talisman

Two weeks ago, Finance minister Nirmala Sitharaman said a US-India trade deal was going swimmingly well. While in Mumbai over the weekend, US Treasury Secretary Steve Mnuchin told key industrialists including Anand Mahindra, Adi Godrej and Harsh Goenka that the US wanted India to become, not a $5-trillion economy as Modi has often talked about, but a $10 trillion one.

None other than the Chinese Communist Party-owned Global Times seems to have understood what was being said.

In an editorial Tuesday, it said: “Washington wants to mobilise New Delhi and turn it into a ‘frontline’ in the confrontation against China.”

Global Times went on to pay Modi a compliment. “But India seems to be craftier than the US. It is enjoying diplomatic benefits provided by the US, while attaching importance on developing relations with China. Washington is driving a wedge between China and India, but Modi won’t fall into the trap,” it said.

Certainly, opinion is divided on India’s decision not to join the RCEP. Depending on where you stand, the Modi government has either capitulated to its own fears of the big, bad and grey nightmare called China, or has stood tall and upright, promising to protect its people in the face of Beijing’s relentless determination to flood the country with cheap exports.

With the economy in such bad shape and growth stagnating at 5 per cent, perhaps the decision for Modi was easier than ever. Key stakeholders like the dairy and steel industries were dead against the RCEP. RSS affiliate-Swadeshi Jagaran Manch had warned some time ago that foreign imports could not be allowed to devastate local industry – even though, for one short moment in late September when the PM went to the US, SJM’s Ashwani Mahajan met representatives from Walmart and Amazon, raising hopes of a compromise.


Also read: India’s rejection of RCEP trade deal is a sign of weakness


Perform or perish

It’s odd, though, that the ghost of the East India Company is rearing its head again. India had buried that particular nervous twitch with the P.V. Narasimha Rao-Manmohan Singh 1991 reforms, as it dipped into its reserves and opened itself up to the world. To be wealthy is glorious, India said, as it took a leaf out of Deng Xiaoping’s book, and never looked back.

In 1991, India pledged nearly 47 tonnes of gold with the Bank of England and the Bank of Japan to raise $400 million. Today, India’s foreign exchange reserves stand at $434 billion.

Oddly enough, the fear of the foreigner is back. This is even more confusing because PM Modi has travelled far and wide these past five years, meeting both commoner and king, and he realises that competition is the only way to either perform or perish.

In the beginning, that was the reasoning behind ‘Make in India’; import duties were raised when the first Modi government came in, so as to protect manufacturing at home. But demonetisation and a badly implemented GST, which exacerbated the economic, and more recently, the political situation – apparent in the Maharashtra and Haryana elections – seem to have contributed to Modi’s loss of nerve.

Perhaps the Americans, furious at the Chinese challenge their domination as a superpower, are indicating that they are willing to bail Modi out. Fact is, the PM has been more than willing to join security-related groupings, like the ‘Quad’ nations of the Indo-Pacific (consisting of India, US, Japan and Australia); foreign minister S. Jaishankar participated in a Quad ministerial meeting in New York in September with some alacrity.

Certainly, India’s refusal to join the RCEP is a decisive moment. But whether or not Modi turns right towards Donald Trump and the US, he knows he has to embrace a new generation of reforms.

Surviving either Trump or China’s Xi Jinping certainly won’t be easy. If India has to compete with the world again, Modi knows he will have to push some bitter medicine down the country’s throat, shed a few duties and tariff barriers, and make India leaner and meaner. In some ways, 2019 is like 1991.

Perhaps, the PM should read Robert Frost tonight:

“Before I built a wall, I’d ask to know
What I was walling in or walling out
And to whom I was like to give offense.”

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4 Comments Share Your Views

4 COMMENTS

  1. We are in this sorry pass because neither the UPA nor NDA had the wisdom or gumption to carry forward reforms that were initiated in 1991.
    The road to reform has been blocked by vested interests who support and finance our political parties. And then we have a mindless bureaucracy who are a bunch of status quoists, afraid of persecution by their political bosses. The result is decades lost to stasis.
    Rhetoric aside, if we are to be counted in comity of nations, we have to become an economic power and that too not my measuring GDP but by uplifting every Indian from the morass and unleashing human enterprise. In the early 1980’s both India and China were practically on par economically, yet China in the intervening decades have galloped ahead not on empty slogans but creating world-class infrastructure not merely in manufacturing but in education, healthcare, connectivity and more. Our successive governments have meanwhile fed platitudes to people. Forget creating smart cities we are unable to manage our urban sprawls which dot the country like festering wounds. We have failed to modernise our agriculture as a result we have one of the lowest farm productivity. We are for instance, the second largest milk producer in the world yet our diary industry is stuck in the past; in term of milk product consumption we lag behind. Is it any wonder we are afraid of New Zealand!
    What is perhaps most disappointing is Mr Modi had the mandate to bring about change but he frittered it away chasing ghosts.

  2. This is a relevant article. But he seems to miss a paragraph on the political backgrounds of the government’s decision. Is not a wink done with regard to what is left of the opposition in the country? The message that emerges from India’s rejection is therefore blurred at the international level and internally. If it is these considerations that prevailed in this decision one must be worried, and the quotation from R.FROST is appropriate. But if the decision is motivated by economic considerations, we have a lot of effort to do internally before integrating the RCEP, and especially we must not forget the weight of the human factor in the agricultural sector, the dairy sector, the small business sector … We must not forget that the opening of the big economies to the outside has been slow, and that of India goes back to 1990.

  3. Cheap exports … Each country goes through this phase, starting with Japan after 1945. Gradually price is overtaken by quality. If one studies the evolution of China’s export basket, they are moving swiftly up the value chain.

  4. Our friendship with the US and somewhat complex relationship with China have nothing to do with India’s No show at RCEP. The simple fact is that we are becoming progressively less globally competitive. Which major economy, with so may poor people, can afford the luxury of actually losing millions of jobs each year. It would be good to give up these delusions of grandeur – citizens of the other three Quad members earn in a fortnight what Indians do in a year – and put our house in order. 2. As Ajay Devgn once said, Game se nazar hati, toh game se hate gaye. Economic well being of ordinary citizens is the only worthwhile game in town.

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