India’s RCEP Advantage Without China Risk

The evolving trade context

India’s RCEP Advantage Without China Risk: India’s trade strategy in the Indo-Pacific has entered a new phase. With the India–New Zealand Free Trade Agreement set to come into force, India will have trade agreements with all members of Regional Comprehensive Economic Partnership except China. This creates a unique economic position often described as “RCEP minus China”.

This approach allows India to integrate with major Asia-Pacific supply chains. At the same time, it avoids the vulnerabilities associated with unrestricted Chinese market access.

Static GK fact: India follows a selective trade liberalisation model, unlike blanket multilateral trade commitments.

What RCEP represents

RCEP is the world’s largest regional free trade agreement. It connects 15 Asia-Pacific economies covering nearly one-third of global GDP and population.

The bloc includes 10 ASEAN nations along with Australia, China, Japan, South Korea, and New Zealand. Its core objective is tariff reduction, simplified rules of origin, and deeper supply-chain integration.

Static GK fact: ASEAN was founded in 1967 to promote regional stability and economic cooperation.

Why India exited RCEP in 2019

India withdrew from RCEP negotiations in 2019 after nearly seven years of talks. The decision was driven primarily by economic and strategic considerations.

The most critical concern was the China-risk. RCEP would have allowed near duty-free access for Chinese manufactured goods, potentially widening India’s already large trade deficit with China.

Sensitive domestic sectors were another concern. Dairy and agriculture, which support millions of small producers, faced the risk of being overwhelmed by cheaper imports.

Static GK Tip: India is among the world’s largest milk producers, making dairy a politically and economically sensitive sector.

Unresolved structural concerns

India’s technical demands remained unaddressed during negotiations. These included safeguards against sudden import surges and flexibility in tariff base years.

Concerns also existed over investment rules. India sought recognition of its federal structure, especially in matters where states hold regulatory powers.

Joining RCEP was also viewed as conflicting with national initiatives like Atmanirbhar Bharat, Make in India, and Vocal for Local, all aimed at strengthening domestic manufacturing capacity.

The “RCEP minus China” strategy

Instead of joining RCEP, India adopted a bilateral path. By late 2025, India had signed FTAs with all RCEP members except China.

This approach ensures market access to ASEAN, Japan, South Korea, Australia, and New Zealand. At the same time, India retains tariff sovereignty over Chinese imports.

Bilateral FTAs allow selective liberalisation. Sensitive sectors such as dairy, agriculture, and certain manufacturing segments can be excluded or protected through safeguard clauses.

Static GK fact: Free Trade Agreements allow countries to maintain exclusion lists for sensitive goods.

Blocking indirect Chinese entry

Staying outside RCEP also prevents indirect entry of Chinese goods. Within RCEP, common rules of origin could have enabled Chinese products to enter India via third countries.

India’s current strategy ensures tighter control over origin verification. This protects domestic producers from disguised imports and unfair competition.

Strategic assessment

India’s trade policy now reflects calibrated openness. It combines global integration with economic security and strategic autonomy.

The “RCEP minus China” model demonstrates that trade integration does not require compromising domestic priorities. Instead, it shows how bilateralism can deliver flexibility without isolation.

Static Usthadian Current Affairs Table

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