Once the FTA with New Zealand comes into force, India would have trade deals with all RCEP countries except China.
About Regional Comprehensive Economic Partnership (RCEP)
- It is a comprehensive free trade agreement among 15 Asia-Pacific countries.
- Members: 10 ASEAN Member States - Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam along with five of ASEAN’s major trade partners: Australia, China, Japan, South Korea, and New Zealand.
- India withdrew from the RCEP negotiations in 2019.
Reason for India to opt out of RCEP
- The "China Risk" and Trade Imbalances: RCEP would provide China virtually duty-free access to the Indian market leading to a massive influx of superior and more competitive Chinese manufactured goods
- Protection of Domestic Industry and Agriculture: Safeguarding sensitive sectors such as dairy and agriculture.
- Unaddressed Technical and Legal Demands: India’s concerns on tariff base rates, modification of MFN status and recognition of its federal structure in investment decisions were not addressed.
- Threat to Self-Reliance: Joining RCEP was seen as potentially undermining domestic programs like Atmanirbhar Bharat (Independent India), Make in India, and Vocal for Local.
How India secured RCEP’s advantages?
- The "RCEP minus China" Formula: By late 2025, India signed FTAs with all RCEP members except China, securing market access while retaining tariff control over Chinese imports.
- Selective Liberalization and Safeguards: Bilateral agreements allow India to exclude sensitive sectors such as dairy and agriculture.
- Preventing indirect entry: Staying out of RCEP prevented the indirect entry of Chinese goods.
Conclusion
India’s decision to stay out of RCEP reflects a calibrated trade strategy that balances openness with strategic autonomy. By pursuing the “RCEP minus China” approach through bilateral FTAs, India secured market access, protected sensitive sectors, preserved tariff sovereignty and avoided systemic vulnerabilities demonstrating that integration need not come at the cost of economic security.
