July 19 – GS2/International Relations: 2026 | UPSC Daily Answer Writing Practice PDF Download

Q: With the evolving trade architecture in the Asia-Pacific region, how can India balance its participation in regional trade agreements with its commitment to self-reliance and domestic economic development?  (250 words)

Introduction 

The trade landscape in the Asia-Pacific region is undergoing significant changes with the emergence of major agreements like the Regional Comprehensive Economic Partnership (RCEP), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Indo-Pacific Economic Framework for Prosperity (IPEF). These agreements are reshaping economic relationships and trade dynamics in the region.

Amidst this transformation, India faces the challenging task of balancing its participation in these evolving regional trade agreements (RTAs) with its commitment to self-reliance (Atmanirbhar Bharat) and domestic economic development. This requires a careful and strategic approach to leverage opportunities presented by these agreements while safeguarding national interests and ensuring sustainable development.

Evolving Trade Architecture in the Asia-Pacific Region

• Rise of Mega-Regionals vs. Traditional FTAs: Large, comprehensive trade agreements like the CPTPP are becoming more prominent, shifting the focus away from smaller, bilateral Free Trade Agreements (FTAs). 
• Focus Beyond Tariffs: Modern RTAs are expanding their scope beyond just tariff reductions to include areas such as intellectual property rights, digital trade, environmental standards, and labor regulations. 
• E-commerce & Supply Chain Integration: The growth of e-commerce and digital platforms is driving changes in trade practices. RTAs are adapting to facilitate cross-border e-commerce transactions and enhance regional supply chain integration. 
• Geopolitical Tensions & Trade Wars: Increasing geopolitical tensions, exemplified by the US-China trade war, are prompting countries to reassess their trade relationships, leading to a more fragmented and multipolar trade environment in the region. 

Strategies for Balancing Participation and Self-Reliance 

Strategic Engagement in RTAs:

• Focus on Mutually Beneficial Agreements: India should prioritize RTAs that offer tariff reductions for its exports while safeguarding sensitive domestic sectors. For instance, negotiating fair terms for agricultural products in exchange for access to advanced technological markets.
• Leverage RTAs for Technology Transfer: Utilize RTAs to attract foreign direct investment (FDI) with clauses for technology transfer. This strategy aims to upgrade domestic industries and reduce reliance on imports for high-end technology. A relevant example is India’s recent Free Trade Agreement (FTA) with the United Arab Emirates (UAE), which emphasizes knowledge-sharing in areas like artificial intelligence.
• Strengthen Rules of Origin: Negotiate stricter "rules of origin" within RTAs. These rules specify the criteria for determining the country of origin of a product, preventing countries from merely re-exporting goods to bypass domestic manufacturing requirements.
• Focus on Micro, Small and Medium Enterprises (MSMEs): Design RTAs to integrate MSMEs into global supply chains. This can be achieved through dedicated chapters addressing trade facilitation and capacity building for smaller businesses, ensuring they can compete effectively in international markets.

Boosting Domestic Capabilities:

• Invest in Infrastructure & Skill Development: Prioritize infrastructure development in areas such as logistics, power, and digital connectivity to reduce transaction costs and enhance export competitiveness. Additionally, invest in skill development programs to equip the workforce with the necessary skills for global trade demands, building on initiatives like the "Skill India" mission.
• Focus on Import Substitution: Identify strategic import substitutes and incentivize domestic production in these sectors. This can be facilitated through targeted tariff structures and production-linked incentives (PLIs) to boost local manufacturing and reduce import dependency.

Conclusion 

India’s decision to opt out of the RCEP in 2019, driven by concerns over domestic industry protection, reflects a prioritization of self-reliance while still engaging with regional blocs like BIMSTEC and SAARC. This approach allows India to pursue strategic partnerships and explore beneficial trade deals without compromising its economic interests, demonstrating a careful balance between participation in global trade frameworks and safeguarding national priorities.