India is under pressure to allow e-commerce to be included in the regional comprehensive economic partnership (RCEP) agreement that it is negotiating with the 10-member Asean, Japan, China, South Korea, Australia and New Zealand.
In last week’s negotiating round in Kyoto, most of the participating members, including the Asean countries, Australia and New Zealand, supported Japan’s proposal of bringing the e-commerce sector within the ambit of the negotiations, a government official told BusinessLine .
India was also not able to convince other members to have low ambitions in the area of goods, with most members wanting steep duty cuts on a large number of items.
It is important for India to ensure that not too many items are subjected to sharp duty cuts as the Indian industry is apprehensive of competition from cheap Chinese products.
“Although India managed not to cave in to demands of bringing e-commerce into the ambit of the pact and lowering tariffs on most traded goods, the pressure is only going to grow at the Ministerial meeting of RCEP members in Kuala Lumpur next month,” the official said.
Commerce and Industry Minister Nirmala Sitharaman is likely to attend the meeting, which starts on July 13.
The upside The RCEP seeks to lower tariffs on goods, liberalise trade in services, ease flow of investments in the region and also put in place standard intellectual property rules.
When the pact is implemented, the RCEP members could become the largest trading bloc in the world.
Earlier this year, Japan floated a paper on liberalising the e-commerce sector as part of the pact. India does not allow FDI in business-to-consumer e-retail, but allows 100 per cent FDI in business-to-business e-commerce.
“There are a number of Asean countries such as Vietnam and Indonesia that do not individually favour FDI in e-commerce, but at the Kyoto meet, the Asean group as a whole supported its inclusion,” the official said. China spoke neither in favour nor against the move.
India argued that it does not have domestic rules for allowing FDI in e-commerce and, therefore, cannot participate in any negotiations that could lead to opening up of the sector.
However, its views did not meet with much sympathy, the official added.
Risky path New Delhi also fought with other members to keep to a minimum the number of goods on which duties would be reduced substantially.
It is risky for India to agree to a large list of items for duty cuts as the “deviations’’ that the RCEP would allow to shield certain goods coming from select countries against duty cuts may not be an effective tool to protect a large number of items.