RCEP Without RCEP: How India Quietly Secured Market Access While Avoiding a China-Centric Trade Trap

When India announced its decision in November 2019 to step away from the Regional Comprehensive Economic Partnership (RCEP), the reaction was sharply divided. Critics warned of missed opportunities, lost export competitiveness, and India’s self-isolation from the world’s largest trade bloc. Yet, six years later, the evidence suggests a more nuanced reality. India did not reject regional integration; it rejected a framework that was structurally tilted in favour of China. What has emerged since is a calibrated, geopolitically informed trade strategy that has allowed India to secure most of RCEP’s commercial benefits without surrendering tariff sovereignty or exposing domestic industry to Chinese overcapacity.

RCEP, which came into force in 2022, brings together the ten ASEAN nations along with China, Japan, South Korea, Australia, and New Zealand. Together, the bloc accounts for nearly 30 percent of global GDP and population. On paper, it represents an impressive economic architecture. In practice, however, China is the largest economy in the grouping, the dominant exporter, and the primary agenda-setter. For India, this imbalance was not theoretical. China was already India’s largest bilateral trade-deficit partner, with deficits widening year after year even outside RCEP.

India’s principal concern was that near-zero tariffs under RCEP would have enabled a surge of Chinese imports into the Indian market, either directly or through indirect routing via ASEAN members. The agreement’s rules of origin were insufficiently stringent to prevent such “trade deflection,” raising fears of Chinese goods entering India with minimal value addition elsewhere. For sensitive sectors such as agriculture, dairy, steel, chemicals, and light manufacturing, the risks were acute. RCEP also fell short on India’s demands for stronger safeguards, meaningful access for services, and credible commitments on data localisation and digital trade.

Seen in this light, India’s exit was less a retreat from trade and more a refusal to lock itself into a China-centric supply chain architecture at a time of growing geopolitical uncertainty. The more interesting story lies in what India did next.

Rather than joining RCEP, India pursued a deliberate bilateral and minilateral strategy aimed at replicating market access to RCEP members while excluding China. Over the past decade, India has signed or upgraded trade agreements with almost every RCEP country except China. Today, India has functional trade arrangements with 14 of the 15 RCEP members, effectively integrating itself into the regional trade network on its own terms.

The foundation of this approach lies in earlier agreements such as the ASEAN–India Trade in Goods Agreement (AITIGA), operational since 2010, and Comprehensive Economic Partnership Agreements with Japan and South Korea. While AITIGA contributed to a widening trade deficit, India is now renegotiating the agreement to tighten rules of origin, rebalance concessions, and correct structural asymmetries. More recent agreements reflect a sharper strategic lens. The India–Australia Economic Cooperation and Trade Agreement, concluded in 2022, marked a shift towards trusted supply chains, critical minerals, and services-led growth. Negotiations with New Zealand, concluded in late 2025, complete what can be described as the “RCEP-minus-China” framework.

This approach delivers several advantages. First, India secures preferential access to major Asia-Pacific markets without committing to blanket tariff reductions that could undermine domestic industry. Second, it retains policy flexibility to deploy industrial tools such as the Production-Linked Incentive schemes, which would have faced constraints under RCEP disciplines. Third, it avoids being bound by dispute settlement mechanisms and trade rules in which China would wield disproportionate influence.

India’s strategy also aligns with broader geopolitical shifts. Initiatives such as the Supply Chain Resilience Initiative with Japan and Australia reflect a shared interest in diversifying away from China-centric manufacturing and logistics networks. For Indian SMEs, this has practical implications. Export opportunities are expanding in markets that are actively seeking alternative suppliers, while domestic manufacturers benefit from a more protected runway to scale, modernise, and integrate into global value chains.

China, meanwhile, remains engaged with India only through the Asia-Pacific Trade Agreement, a limited preferential framework offering selective tariff concessions. This allows India to manage trade relations with China without deepening dependence or diluting regulatory control. It is a conscious choice to keep engagement narrow, conditional, and reversible.

The trade-off is real. By staying out of RCEP, India foregoes some formal benefits such as cumulative rules of origin across the bloc and deeper institutional integration. Yet, what it gains is arguably more valuable: autonomy over tariffs, the ability to shield vulnerable sectors, and strategic leverage in a fractured global trade environment.

For SMEs and exporters, the lesson is clear. India’s trade policy is no longer about maximising agreements at any cost. It is about constructing resilient trade corridors, prioritising trusted partners, and ensuring that integration strengthens, rather than hollowing out, domestic capability. In retrospect, India’s RCEP exit was not a defensive move. It was an early recognition that in an era of weaponised trade and concentrated supply chains, strategic absence can sometimes deliver more than premature alignment.