A little more than six years after India stepped away from joining the Regional Comprehensive Economic Partnership (RCEP), India is in a position to reap the benefits such a grouping would have provided it, without exposing itself to the risks.
India and New Zealand on December 22, 2025, announced the conclusion of negotiations on a Free Trade Agreement (FTA). Once this FTA comes into effect, India would have such FTAs with all the countries in the RCEP except for China. Trade experts say this strategy has given India market access without surrendering tariff control to China.
The RCEP countries are the 10 ASEAN members (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, Vietnam), Australia, China, Japan, South Korea, and New Zealand.
Backing out of RCEP
In November 2019, just as the soon-to-be members of RCEP were about to finalise their agreement, Prime Minister Narendra Modi announced that India would not be a part of the grouping in its current form.
“The present form of the RCEP agreement does not fully reflect the basic spirit and the agreed guiding principles of RCEP,” Mr. Modi had said at the time. “It also does not address satisfactorily India’s outstanding issues and concerns. In such a situation, it is not possible for India to join the RCEP agreement.”
While Mr. Modi did not expressly say it, government officials and trade experts were clear that the reason India did not join the grouping was because of the apprehensions related to entering into an FTA with China. The fear was that this would provide China virtually duty-free access to the Indian market.
“We could not have had an FTA with China,” Pankaj Chadha, Chairman of the Engineering Exports Promotion Council of India told The Hindu. “The reason not to sign RCEP was only China. Chinese manufacturing is far superior and competitive. I don’t think it’s possible to do anything except accept the fact that we cannot have China in the picture when it comes to these trade deals.”
‘RCEP minus China’
While India already had FTAs with several RCEP members at the time, it then strategically went about concluding negotiations with the remaining members, Mr. Chadha explained.
“This RCEP minus China outcome was part of the government’s strategy,” he said.
Ajay Srivastava, founder of the Global Trade Research Initiative and a former Director General of Foreign Trade, said that this ‘RCEP minus China’ strategy is a far superior one to joining RCEP itself.
“India’s decision to stay out of RCEP reflects smart risk management: by signing bilateral FTAs with 14 of the 15 RCEP members and keeping China limited to a narrow APTA framework, India secures market access without surrendering tariff control,” Mr. Srivastava said.
India and China are currently signatories to the Asia Pacific Trade Agreement (APTA), which is a preferential trade agreement that provides lower tariffs on a few items rather than an FTA, which typically lowers most tariffs to zero.
In fact, Mr. Srivastava added, joining RCEP would have even been worse for India than signing a direct FTA with China because a bilateral deal with China would allow India to exclude sensitive sectors and pace liberalisation. On the other hand, RCEP’s integrated structure would have diluted safeguards and enable indirect entry of Chinese goods via other members, he said.
“The current strategy delivers access without systemic vulnerability — and is far superior to a China-centric multilateral pact,” Mr. Srivastava said.
Dealings with other RCEP members
Most of India’s trade deals with the RCEP members came into effect before the Modi government came to power in 2014. However, a few key ones have been finalised since then.
The India-ASEAN FTA came into effect in January 2010, as did the India-South Korea Comprehensive Economic Partnership Agreement (CEPA). Soon after, in August 2011, the India-Japan CEPA came into effect.
The India-Australia Economic Cooperation and Trade Agreement (ECTA) came into effect in December 2022, with the two countries currently negotiating how to widen the scope of the deal.
Finally, the negotiations on an FTA with New Zealand, the final non-China RCEP country, ended on December 22, 2025.
Published – December 27, 2025 02:32 pm IST
