In the aftermath of the Asian Financial Crisis of 1997, regional economies devised various mechanisms including the enhancement of mutual cooperation and understanding amongst themselves to avoid any similar problems in the future. In the years to come, the ASEAN grouping – one of the worst hit by the crisis - developed various agreements between the grouping and its dialogue partners. The formation of groupings such as ASEAN+3 and the other ‘ASEAN +’ meetings among its major summit level partners including India have been important moves. One of the recent efforts which has been spearheaded by ASEAN, the Regional Cooperation Economic Partnership (RCEP), is testimony to the fact that economic matters still remain crucial to vibrancy of Asia. 

The economic revival of Asia has brought with it increasing interactions among Asian countries including growing ties in trade and commerce. This is evident from the increasing Free Trade Agreements (FTAs) between various countries in the region giving rise to what is commonly known by analysts as the Asian ‘noodle bowl’. The move to initiate discussions on the Regional Comprehensive Economic Partnership (RCEP) and include the ‘ASEAN+6’ framework to do so, has resulted in the one of the largest free trade areas in the world. There are a number of benefits from such an arrangement. The RCEP will be able to eliminate confusing and a large number of trade rules under various bilateral agreements among states, fusing them into one large region-wide agreement. More importantly, the agreement will bring three of Asia’s largest economies - Japan, China and India - within one agreement. The RCEP agreement will also be beneficial by encouraging more trade amongst Asian countries as there is large inequality between different states in the region in terms of development.

India has been a keen player interested in the success of the agreement. India started to take a keen interest in the region after the initiation of the Look East Policy in the early 1990’s. The steady growth and the elevation of the India-ASEAN partnership to a strategic partnership in 2012 coupled with the rising tensions in the South China Sea have prompted countries such as Vietnam to look for a more viable role for India in the region. Though India’s strategic stakes are increasing in the region, its economic performance remains less when compared to China. Though, India-ASEAN trade figures surpassed the USD 70 billion target of 2012, it remains far behind China’s figure, which is five times more. In spite of increasing tensions in its neighbourhood, China remains deeply entrenched in ASEAN through various forums such as ASEAN+ 3, ASEAN +6 and ASEAN+1. Hence, unless India substantially increases its relations with the region in economic terms, China will continue to play a more dominant role. The RCEP benefits India in increasing this much needed economic presence in the region.

There would be a number of challenges that India would have to consider when negotiating. Indeed the negotiations on India’s part would need, in the words of Minister for Commerce and Industry Anand Sharma, “a lot of immense effort, cooperation and compromise among the participants to arrive at a mutually satisfactory outcome which addresses the concerns of all the participants.” Internally, there would be a need to allay fears and create adequate provisions for groups that could potentially be affected by such a large scale regional agreement. It would be notable to review India’s difficulties in concluding the FTA with ASEAN and the challenges that were faced. India would have to take greater steps to decrease tariffs further and negotiate from a position of strength as it has a lot to gain in terms of trade in goods and a lot to offer especially in terms of services.

India would have a lot to do to successfully implement the agreement. The biggest part of the negotiations would be to reach an understanding on the terms of agreement with China, with which, as highlighted, India has a huge trade deficit. In an optimistic mood, on the side lines of the meeting recently concluded in Brunei, Anand Sharma urged his Chinese counterpart to consider measures to allow sectors such as IT and pharmaceuticals into China by which the deficit could be bridged. India would also need to increase its connectivity with the region which could also potentially expand India’s interests in the region. There would be a lot of strategic calculations to be considered as the agreement would prompt the need for renewed engagement among the regional powers. Hence, for maintaining the centrality of ASEAN, which relies on a viable balance of power among its major players, viable and reasonable cooperation and compromise is needed, especially among India, China and Japan so that the RCEP can contribute to the peaceful and prosperous growth of the region.