RCEP Without the China Risk: India's Strategic Trade Calculus

Regional Comprehensive Economic Partnership (RCEP), a trade agreement linking ten ASEAN countries with five of their key Free Trade Agreement partners, is one of the largest trade blocs in the world.

  Illustration by The Geostrata

The RCEP treaty is significant due to its representation of nearly a third of the world’s gross domestic product, encompassing a population of over two billion people and an estimated $5.2 trillion in total exports.

Despite its scale and strategic significance in shaping Asia-Pacific economic integration, India remains outside the agreement. After participating in negotiations for more than seven years, India withdrew from the RCEP in 2019 due to concerns related to the agreement’s structure and China’s role within it. However, this withdrawal did not amount to a disengagement from the region’s evolving trade landscape.

Instead, India has continued to access RCEP-linked markets without assuming the full obligations of formal membership. This article examines how India’s strategic trade calculus has enabled it to mitigate China-related risks while securing economic engagement with other RCEP member economies.

THE FRAMEWORK OF THE RCEP

The RCEP emerged as a response to the fragmented trade arrangements in the Asia-Pacific, consolidating existing agreements into a more coherent regional framework. The Asian Financial Crisis of 1997 marked a critical turning point for regional economic thinking, exposing vulnerabilities arising from external dependence. A decade later, the Global Financial Crisis of 2008 again underscored the risks associated with excessive reliance on the United States and Europe, prompting East Asian economies to seek deeper regional integration.

Against this backdrop, the RCEP was envisioned at the 2011 ASEAN Summit in Bali, Indonesia, while negotiations on its establishment were formally launched during the 2012 ASEAN Summit in Cambodia. These negotiations brought together diverse economies with varying levels of development and trade priorities. This comprehensive partnership did not establish a completely new trade regime, but rather streamlined existing free trade arrangements into a single framework.

As a result, economic integration under RCEP extends beyond formal membership due to overlapping trade agreements and regional supply chains.  

INDIA’S STRATEGIC CONCERNS WITH RCEP

While RCEP offered participating economies a pathway for deepening regional integration, its implications were not uniform across all its members. For India, specifically, the agreement presented structural risks that outweighed its short-term trade benefits. One of the primary concerns was the prospect of near duty-free access for Chinese goods, raising concerns about detrimental impacts on the domestic industries.

New Delhi also feared trade circumvention, whereby Chinese products could bypass India’s high tariffs by indirect routing through other RCEP members (e.g., ASEAN nations).

Beyond manufacturing, the government expressed apprehension over duty-free imports from highly efficient exporters like Australia and New Zealand, which could cripple the Indian rural economy.

Another major consideration was the persistent geopolitical tension along the India-China border and concerns over reduced policy flexibility. In such situations, remaining outside RCEP aligned more closely with India’s Atmanirbhar Bharat doctrine and the “China Plus One” strategy for supply-chain diversification.

All of these concerns were encapsulated in PM Modi’s words when he remarked, “When I measure the RCEP agreement with respect to the interests of all Indians, I do not get a positive answer. Therefore, neither the talisman of Gandhiji nor my own conscience permits me to join RCEP.”

INDIA’S FTA NETWORK STRATEGY

Though not a formal member of the RCEP, India has ensured to gain market access without incurring strategic vulnerability. The Indian strategy for market access centers around establishing bilateral free trade agreements with the RCEP countries, allowing it to remain as a part of regional trade agreements without assuming the structural risks associated with bloc membership.

Over the last decade, India has successfully managed to secure trade agreements with a majority of RCEP members, most notably through the ASEAN-INDIA free trade agreement, as well as separate bilateral FTAs with Japan, South Korea, and Australia. In December 2025, India concluded negotiations for a Free Trade Agreement (FTA) with New Zealand. This marked India’s remarkable feat to secure FTAs with 14 out of 15 member states, deliberately excluding China to prevent manufacturing hollowing out while maintaining tariff sovereignty and policy autonomy.

Crucially, this network replicates many of the commercial advantages of RCEP, such as tariff concessions and trade facilitation, without binding India to a single multilateral framework. This approach reflects India’s preference for calibrated integration over comprehensive alignment. 

A MODEL OF SELECTIVE INTEGRATION?

The selective nature of India’s FTA strategy is equally important. By deliberately excluding China from its trade architecture, India has sought to avoid asymmetric exposure that could exacerbate manufacturing vulnerabilities and erode tariff sovereignty.

Currently, India and China are a part of the , which involves only limited tariff concessions on a narrow range of goods. By maintaining higher tariff flexibility outside comprehensive trade agreements, India preserves key policy tools to support industrial development, promote domestic value chains, and respond to unfair trade practices.

Such an arrangement with China helps India balance its excessive trade deficit while protecting sensitive domestic sectors. 

RCEP has major political and geo-economic significance as it serves as a key part of China’s strategy to build a “counterweight to the US global alliance system”. For India, what was initially perceived as a constraint for trade and commerce is now being transformed into a strategic advantage. India’s decision to remain outside sacrifices uniform access and long-term predictability in exchange for policy autonomy and risk insulation.

By pursuing a RCEP minus China approach, India secures the advantages of the Indo-Pacific’s economic vibrancy while insulating its economy from China’s predatory trade.

More broadly, it reflects a shift in India’s trade approach, one that prioritises selective integration over bloc dependence in an increasingly contested economic order. 

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BY KAVYANJALI SINGH TOMAR

TEAM GEOSTRATA

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