India’s RCEP-Plus Strategy: Market Access without China Risk

Why in News ?

More than six years after opting out of the Regional Comprehensive Economic Partnership (RCEP) in 2019, India has effectively secured most economic benefits of the grouping without formally joining it. The conclusion of the India–New Zealand Free Trade Agreement (FTA) marks a key milestone, as India now has FTAs with all RCEP members except China, reflecting a calibrated strategy balancing market access, strategic autonomy, and economic security.

Background & Context

Mega trade agreements like RCEP aim to deepen regional integration through tariff liberalisation and harmonised rules. However, for developing economies such as India, such arrangements can also constrain domestic policy space and expose vulnerable sectors to import surges.

India’s decision to stay out of RCEP in 2019 marked a departure from blanket trade liberalisation towards a selective, bilateral, and risk-calibrated trade approach. Since then, India has progressively negotiated FTAs tailored to its economic sensitivities while avoiding systemic exposure to Chinese manufacturing dominance.

What is RCEP ?

• The world’s largest trading bloc, comprising:
  • 10 ASEAN countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam
  • Plus Australia, China, Japan, South Korea, and New Zealand
• Accounts for nearly 30% of global GDP and population
• Aims at:
  • Tariff liberalisation
  • Supply chain integration
  • Trade facilitation and common rules of origin

Why India Opted Out of RCEP (2019)

Key Concerns

• China Factor
  • Risk of near duty-free entry of Chinese goods into Indian markets
  • Potential de-industrialisation due to China’s manufacturing dominance
• Manufacturing Asymmetry
  • Indian MSMEs and manufacturing lacked competitiveness against East Asian supply chains
• Trade Deficits
  • Fear of widening deficits, especially with China and ASEAN countries
• Inadequate Safeguards
  • Weak protection for sensitive sectors such as agriculture and MSMEs
  • Limited flexibility in tariff liberalisation timelines

Official Position

The Prime Minister stated that RCEP, in its existing form, failed to reflect agreed guiding principles and did not address India’s “outstanding issues and concerns”.

The ‘RCEP Minus China’ Strategy

Core Idea

• Secure bilateral FTAs with 14 of the 15 RCEP members
• Exclude China from a comprehensive FTA
• Retain tariff sovereignty and domestic policy space

Strategic Assessment

• Described by experts as “smart risk management”
• Delivers market access without systemic vulnerability
• Considered superior to:
  • Joining RCEP, or
  • Signing a direct India–China FTA

India–China Trade Framework

• Asia Pacific Trade Agreement (APTA)
  • A preferential trade agreement with limited tariff concessions on select goods
• Significance
  • Prevents blanket tariff elimination
  • Limits exposure to large-scale Chinese imports
  • Preserves defensive trade flexibility

Why RCEP Would Have Been Riskier for India

• Integrated structure diluted country-specific safeguards
• Limited control over rules of origin, enabling indirect entry of Chinese goods via ASEAN
• Absence of phased liberalisation aligned to India’s sectoral sensitivities
• Reduced ability to deploy corrective trade remedies

India’s FTAs with RCEP Members

Pre-2014 Agreements

• ASEAN–India Trade in Goods Agreement (AITIGA) – 2010
• India–South Korea CEPA – 2010
• India–Japan CEPA – 2011

Issue: AITIGA contributed to a sharp rise in India’s trade deficit with ASEAN.

Status: Renegotiation of AITIGA underway, though progress remains limited.

Post-2014 Developments

• India–Australia Economic Cooperation and Trade Agreement (ECTA) – 2022
  • Early-harvest deal
  • Talks ongoing to expand scope
• India–New Zealand FTA – Concluded in December 2025
  • Completes India’s bilateral trade coverage of RCEP members (excluding China)

Key Highlights of India–New Zealand FTA

• Zero-duty market access for Indian exports
• Investment commitment of USD 20 billion
• Strengthens India’s footprint in the Pacific and Indo-Pacific trade architecture
• Reinforces India’s selective integration into regional supply chains

Challenges and Way Ahead

Persistent Trade Deficits

• Ongoing deficits with ASEAN countries
• Slow progress in renegotiating legacy FTAs like AITIGA

Way Forward:

Rebalance FTAs with stronger safeguards and reciprocity-based market access.

Domestic Competitiveness

• MSMEs and manufacturing require productivity upgrades

Align trade strategy with Make in India and Atmanirbhar Bharat initiatives.

Geopolitical Pressures

• Growing push towards bloc-based trade alignments

Adopt strategic plurilateralism—engage selectively without compromising autonomy.

Global Supply Chain Realignments

• Shift away from China-centric supply chains

Leverage FTAs to enhance supply chain resilience and diversification.