Answer

Introduction

India’s ‘RCEP minus China’ strategy involves forging high-quality bilateral FTAs with RCEP members to secure regional value chain integration while bypassing China’s non-market practices. The recent deepening of trade ties and FTA negotiations with New Zealand exemplify this “de-risked” approach to the Indo-Pacific.

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Analysis of ‘RCEP minus China’ via New Zealand FTA

• Strategic Market Access: India seeks to gain preferential access to advanced dairy and agritech markets without the threat of Chinese dumping.
  Eg: India and NZ exploring cooperation in high-yield horticulture and carbon-efficient farming.
• Service Sector Synergy: Bilateral deals allow India to push for ‘Mode-4’ services (movement of professionals), which was a major sticking point in RCEP.
  Eg: India’s demand for easier visa norms for IT professionals and traditional medicine practitioners in NZ.
• Sectoral Protectionism: Unlike the multilateral RCEP, bilateral deals allow for “carve-outs” for sensitive sectors like domestic dairy, protecting local livelihoods.
  Eg: India has maintained a cautious stance on NZ dairy imports to protect 80 million Indian farmers.
• Supply Chain Resilience: By aligning with NZ, a key member of the ‘Indo-Pacific Economic Framework’ (IPEF), India strengthens a “China-neutral” supply chain.
  Eg: Both nations’ commitment to the IPEF’s Supply Chain Pillar to reduce dependency on single-source hubs.

Associated Concerns

• Limited Scale: Bilateral deals lack the “cumulative rules of origin” benefits that a mega-bloc like RCEP offers for manufacturing.
• Dairy Sensitivities: New Zealand’s primary export interest remains dairy, which is a “red line” for India’s Amul-led cooperative sector.
• Slow Negotiations: Bilateral tracks are often protracted; the India-NZ FTA has been in discussion for over a decade without full closure.
• Trade Diversion: There is a risk that trade might simply shift to bilateral partners without increasing India’s overall global export competitiveness.

To mitigate these concerns, India is adopting a “Sectoral Harvest” model—prioritizing non-sensitive sectors like agritech and education while using Tariff Rate Quotas (TRQs) for sensitive goods. This balanced approach directly informs how India manages its trade deficits and prevents third-party circumvention through strict origin protocols.

Addressing Trade Deficit & Indo-Pacific Integration

• Value-Added Exports: India focuses on exporting engineering goods and pharmaceuticals to NZ to balance the trade of raw materials.
• Investment Inflows: USD 20 billion investment commitment over 15 years, strengthening long-term economic and strategic cooperation.
  Eg: NZ interest in investing in India’s green hydrogen and infrastructure projects.
• Niche Market Focus: India targets NZ’s demand for organic textiles and jewellery, sectors where India has a comparative advantage.
  Eg:The rising demand for Indian “Handmade in India” luxury goods in the Auckland market.
• Digital Integration: Collaborating on digital trade standards ensures India remains central to the Indo-Pacific’s evolving digital economy.
  Eg: India-NZ talks on UPI-based payment linkages to facilitate seamless trade.

Addressing Rules of Origin (RoO) & Integration

• Strict Verification: Bilateral RoO prevent “back-door entry” of Chinese goods through NZ, a major flaw India feared in RCEP.
  Eg: CAROTAR 2020 rules are being integrated into new FTAs to ensure 35-40% value addition within the partner country.
• Product-Specific Rules(PSR): India uses PSRs to ensure that only genuine NZ-origin goods, like wool or kiwi fruit, get duty preferences.
  Eg: Rigorous certificate-of-origin protocols in the India-Australia ECTA, which serves as a template for NZ.
• Customs Cooperation: Real-time data sharing with NZ customs helps track the “origin” trail of intermediate goods effectively.
  Eg: Electronic Certificates of Origin (e-CoO) platform being discussed to prevent third-party routing.
• Regional Connectivity: Aligning RoO with Pacific partners allows India to plug into the “Gati Shakti” vision for regional logistics.

Conclusion

India’s bilateral approach with New Zealand effectively secures the advantages of the Indo-Pacific’s economic vibrancy while insulating its economy from China’s predatory trade. By prioritizing stringent Rules of Origin and sectoral safeguards, India is successfully crafting a “Goldilocks” trade policy balancing regional integration with national economic sovereignty.

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