India’s Gain From RCEP Without Risking China

Syllabus: GS2/International Relation; Global Grouping

Context

• India has since managed to strategically position itself to reap many of the benefits of Regional Comprehensive Economic Partnership (RCEP) without formally joining the bloc or compromising its economic sovereignty or exposing itself to the vulnerabilities associated with Chinese market dominance.

RCEP and India’s 2019 Exit

• The RCEP includes the 10 ASEAN nations(Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam) plus Australia, China, Japan, South Korea, and New Zealand.
  • It covers nearly 30% of global GDP and population.
• India, in November 2019, announced that it would not join RCEP ‘in its present form’, citing the agreement’s failure to address India’s core concerns, like:
  • Unrestricted Chinese access to its markets;
  • Lack of safeguards for domestic industries like agriculture and manufacturing;
  • Inadequate protection for services and data localization;

India’s Alternative Strategy To RCEP Members

• India pursued a bilateral and minilateral trade strategy to secure access to key markets while avoiding overexposure to Chinese imports, rather than joining RCEP.
• Bilateral FTAs with RCEP Members: India has signed or is negotiating Free Trade Agreements (FTAs) with nearly all RCEP members except China.
  • India now has trade agreements with 14 of the 15 RCEP countries, effectively integrating itself into the RCEP trade network, minus China.
  • India ensures market access while maintaining tariff sovereignty, by securing FTAs with 14 of the 15 RCEP members.

• Strategic Decoupling from China: India avoids automatic tariff reductions on Chinese goods, which could have flooded Indian markets and hurt domestic industries by staying out of RCEP.
  • It aligns with India’s broader China+1 strategy, aimed at reducing economic dependence on China amid geopolitical tensions.
• Focus on Trusted Supply Chains: India has joined initiatives like the Supply Chain Resilience Initiative (SCRI) with Japan and Australia to diversify trade and reduce reliance on China.
  • These efforts complement India’s Production-Linked Incentive (PLI) schemes, which aim to boost domestic manufacturing and exports.
• Limited Engagement with China via APTA: India and China remain part of the Asia-Pacific Trade Agreement (APTA), a preferential trade pact offering limited tariff concessions on select goods.
  • APTA is far less extensive than a full FTA and helps India maintain policy flexibility while managing its trade exposure to China.

India’s Approach: A Calculated Trade-Off 

• India’s approach reflects a calibrated trade policy that balances openness with strategic caution.
  • It forgoes the formal benefits of RCEP membership like dispute resolution mechanisms and deeper integration.
• It gains market access through bilateral deals, policy autonomy to protect sensitive sectors, geopolitical leverage by avoiding entanglement with China-dominated trade rules.
• India’s current trade architecture delivers strategic balance, broad regional access without overexposure to China.
• By staying out of RCEP, India has retained its economic autonomy, and through carefully negotiated bilateral agreements, it has effectively replicated RCEP’s benefits on its own terms.

Source: TH