Small, medium units in panic

Vijay C Roy in Chandigarh

Notwithstanding assurances by Commerce and Industry Minister Piyush Goyal that India will not sign the free trade agreement in a rush, the industry in the region, especially Ludhiana, is in panic mode and at the same time clueless about what the deal would portend.

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During the last two months, over 30 Ludhiana-based industrial associations, comprising MSMEs and farmers’ organisations, have been voicing concerns about the potential of the RCEP to inflict losses on the industry.

Many association members have also met Union ministers to caution against pushing through the deal without factoring in the long-term consequences. Perturbed, they have been demanding exclusion of their products from the deal amid fears of a Chinese deluge. 

“Since a free trade agreement aims to reduce the number of processes in place and also implies that there will be no tariff, the domestic industry is bound to suffer. Without any agreement, our trade deficit with these countries is around Rs 7.52 lakh crore, so one can well imagine the kind of impact it would have on the domestic industry,” says the Federation of Punjab Small Industries Associations (FOPSIA) president, Badish Jindal. 

A report by NITI Aayog shows that India imports more than it exports to countries with whom it has free trade agreements, and exporters don’t use regional trade agreements. The major impact of RCEP is likely to  be on the large labour-intensive sector in Punjab such as bicycle, textile, engineering goods and iron and steel. The MSMEs are already facing a huge challenge from cheap Chinese products imported by taking undue advantages of agreements like SAFTA and ASEAN.