India’s biggest non-ferrous metal companies have sounded a warning on the country joining the 10-member Regional Comprehensive Economic Partnership (RCEP) on fears of another blow to their business after their experience of the India-ASEAN free trade agreement, the Economic Times newspaper reported.
These companies — Hindalco, Vedanta, Hindustan Zinc, Hindustan Copper and Nalco — with a combined turnover of nearly Rs 1.25 lakh crore have petitioned the government to keep sensitive items relating to aluminium, copper and zinc products in the negative or exclusion list of the trade pact.
They are only in favour of allowing raw materials including bauxite, alumina and copper concentrates in the positive list of the trade pact. Nalco and Hindustan Copper are majority government owned.
RCEP includes the 10-nation Association of Southeast Asian Nations (Asean), China, India, Japan, South Korea and New Zealand.
Imports under free trade pacts such as those India has with Asean, Japan and South Korea now constitute 54 per cent of domestic consumption for aluminium, 30 per cent for copper and 20 per cent for zinc.
“The major reasons Indian companies could not take the advantage of the existing treaties have been structural,” the Economic Times said referring to a recent report by the Niti Aayog.
The report said India’s manufacturing competitiveness and export potential has been low due to technological backwardness, high logistics costs, greater compliance expenses and administrative delays.
“Under such circumstances, where existing trade agreements (cause damage) to our domestic manufacturing sector, India’s participation in the Regional Comprehensive Economic Partnership (RCEP) is poised for a bigger threat to India,” the representation said.
The threat, it said, is mainly from countries such as China, Australia, Japan and South Korea, which have large amounts of excess capacity as production exceeds domestic consumption in commodities such as aluminium, copper and zinc.