RCEP Without China Risk: How India Played a Strategic Trade Masterstroke

When India decided in 2019 to stay out of the Regional Comprehensive Economic Partnership (RCEP) the world’s largest trade bloc it was widely seen as a bold, even risky, move. RCEP, which includes 15 Asia-Pacific economies such as China, Japan, South Korea, Australia, and ASEAN nations, accounts for nearly 30% of global GDP and trade. Critics warned that India would lose market access and strategic influence in the Indo-Pacific.

Yet, several years later, India appears to have achieved a delicate balance: securing many of RCEP’s economic and strategic advantages without exposing itself to the so-called “China risk.” This outcome reflects a carefully calibrated trade, industrial, and geopolitical strategy rather than isolationism.

At the heart of India’s RCEP concerns was China. Indian policymakers feared that joining the bloc would lead to a surge of cheap Chinese imports, further widening India’s already large trade deficit with China and hurting domestic manufacturing, agriculture, and MSMEs. Weak safeguards, limited flexibility on rules of origin, and concerns over non-tariff barriers made matters worse.

Rather than entering a multilateral framework where China had significant leverage, India chose to retain policy autonomy a decision that has since shaped its alternative trade strategy.

Instead of RCEP, India aggressively pursued bilateral and mini-lateral free trade agreements (FTAs) with several RCEP members on terms more aligned with its domestic priorities.

Key agreements include:

These agreements allow India market access to key Asia-Pacific economies while maintaining the ability to renegotiate terms, impose safeguards, and address non-tariff barriers flexibility that RCEP would have significantly reduced.

India has also benefited from a broader geopolitical and economic shift: global supply chains moving away from overdependence on China. Through initiatives like “China+1”, multinational companies are seeking alternative manufacturing hubs.

India capitalised on this trend via:

As a result, India attracted investment from companies looking to serve RCEP markets without producing in China, indirectly tapping into the bloc’s demand.

One of RCEP’s limitations is its relatively weak coverage of services, an area where India excels. By staying out, India retained the freedom to negotiate services-heavy trade agreements that better reflect its strengths in:

Agreements with countries like Australia and ongoing talks with the UK and EU have provisions that go far beyond RCEP’s services commitments, offering India a competitive edge.

By avoiding RCEP, India preserved crucial policy space in areas such as:

This autonomy has proven valuable as India navigates inflation, geopolitical uncertainty, and industrial policy competition among major powers.

India’s decision also carried geopolitical weight. While remaining economically engaged with the Indo-Pacific, New Delhi signalled that trade integration would not come at the cost of strategic vulnerabilit especially vis a vis China.

At the same time, India deepened cooperation through forums such as:

These platforms focus on standards, resilience, and trust, rather than tariff-heavy liberalisation dominated by one major economy.

India’s RCEP decision was not a retreat from globalisation but a recalibration of how it engages with it. By staying out of a China-centric trade bloc, India avoided the risks of import flooding and policy constraints, while simultaneously securing access to markets, investments, and supply chains through targeted bilateral agreements and strategic partnerships.

In doing so, India has demonstrated that trade integration does not have to be one-size-fits-all. Its experience shows how a large emerging economy can pursue openness on its own terms reaping many of RCEP’s benefits without paying the price of heightened China dependence. As global trade becomes increasingly strategic, India’s RCEP playbook may well become a model for others.