India's Risk-Free RCEP Strategy

Context

• India's decision to stay out of the Regional Comprehensive Economic Partnership (RCEP) in 2019 appeared risky to many experts at the time. However, six years later, India has effectively reaped most of the economic benefits associated with RCEP without formally becoming a member.
• The recently concluded India-New Zealand Free Trade Agreement (FTA) is the most concrete confirmation of this strategy. With this, India now has free trade agreements in place with all RCEP member countries except China.
• This development indicates that India has adopted a balanced and well-thought-out trade policy, balancing market access, strategic autonomy, and economic security.

About RCEP

• RCEP is the world's largest trading alliance, comprising the 10 ASEAN countries: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam, along with Australia, China, Japan, South Korea, and New Zealand.
• The group encompasses approximately 30% of global GDP and population. Its objective is to reduce tariffs, integrate supply chains, and facilitate trade.

Reasons for India's decision to stay away from RCEP

• India's decision to stay out of RCEP was primarily driven by structural and strategic concerns. The biggest concern was that a significant tariff reduction could flood Indian markets with Chinese goods.
• China's highly competitive manufacturing capabilities and the already widening trade deficit, especially with China and ASEAN countries, could pose a serious risk to India.
• Furthermore, adequate safeguards were not in place for sensitive sectors such as agriculture, small and medium enterprises, and domestic manufacturing. The timeline for tariff liberalization also lacked the flexibility India needed.

'RCEP Minus China': An Alternative Path

• By staying out of RCEP, India has chosen a different but pragmatic path. It has bilateral free trade agreements with 14 of the 15 RCEP countries, but not with China.
• Essentially, this strategy aims to preserve tariff and policy sovereignty while maintaining market access. Experts view this as smart risk management. It is neither as risky as joining RCEP nor as sensitive as signing a full-fledged FTA directly with China.

India-China Trade: Limited and Controlled

• India and China are members of the Asia Pacific Trade Agreement (APTA), a limited preferential trade agreement that provides partial tariff concessions on selected goods.
• Its advantage is that dependence on Chinese imports can be controlled while avoiding comprehensive tariff elimination.

Reasons why RCEP is more risky for India

• RCEP's multilateral and integrated structure would have weakened country-specific safeguards.
• Limited control over rules of origin would have allowed indirect entry of Chinese goods through ASEAN or other member countries.
• Furthermore, there was no effective mechanism for phased liberalization that would accommodate India's sensitivities.

RCEP India's FTAs ​​with Countries: A Gradual Journey

Before 2014

• India signed agreements such as the ASEAN-India Trade in Goods Agreement (2010), the India-South Korea CEPA (2010), and the India-Japan CEPA (2011). However, India's trade deficit with ASEAN increased sharply after the AITIGAA, leading to a reconsideration process, but progress has been limited.

After 2014

• After 2014, India adopted a more cautious and balanced approach. The India-Australia Economic Cooperation and Trade Agreement (ECTA) was signed in 2022, and negotiations are now underway to extend it. The India-New Zealand FTA, scheduled to conclude in December 2025, is the latest in this series.

India-New Zealand FTA

• Under this agreement, Indian exports will gain zero-duty market access to New Zealand.
• Additionally, an investment commitment of approximately $20 billion will strengthen India's industrial and infrastructure capabilities.
• This agreement strengthens India's strategic presence in the Pacific and Indo-Pacific regions and complements the bilateral coverage of RCEP (excluding China).

Challenges and Way Forward

• While this strategy has been successful, challenges remain. The trade deficit with ASEAN countries remains a concern, and the pace of rebalancing old FTAs ​​is slow.
• Increasing productivity is essential to make small and medium-sized enterprises and the manufacturing sector competitive at the domestic level, giving real impetus to 'Make in India' and 'Atmanirbhar Bharat'.
• Amid geopolitical pressures, India must embrace strategic multilateralism—where selective participation is ensured but autonomy is not compromised. In a time of restructuring of global supply chains, FTAs ​​can be used to diversify away from China-centric structures.

Conclusion

• India's trade policy after leaving RCEP reflects a mature, realistic, and interest-based approach. The 'RCEP minus China' strategy provided India with market access while maintaining tariff and policy controls.
• The India-New Zealand FTA completes this strategic journey and establishes India as a selective and confident participant in global trade, not a passive follower. In the long term, this approach is fully aligned with India's goals of economic resilience, strategic autonomy, and sustainable integration into global value chains.