In a significant move reflecting its strategic autonomy, India has firmly declined to join the Regional Comprehensive Economic Partnership (RCEP), a trade bloc spearheaded by China. India’s Minister of Commerce and Industry, Piyush Goyal, articulated the nation’s concerns, emphasizing that the RCEP does not align with the aspirations of India’s small and medium enterprises and that it is fundamentally incompatible with India’s economic interests. He stated, “India is not going to join the RCEP because neither did it reflect the guiding principles on which ASEAN was started, nor is it in the nation’s interest to do a free trade agreement with China.”
The RCEP, which officially took effect in January 2022, encompasses 15 nations, including the ten ASEAN countries and key players like Japan, South Korea, Australia, and New Zealand. This agreement represents the world’s largest free trade bloc by GDP, accounting for about $26 trillion and nearly 2.3 billion people. However, despite its size, analysts have characterized RCEP as a loosely structured organization that lacks the dynamism of more robust trade agreements. Taiwanese economist Huang Shicong observed that RCEP has not been particularly active, indicating that the Chinese Communist Party (CCP) is still grappling with integrating it into a more cohesive market.
One of the central themes in India’s decision-making process is its relationship with China, which is both a trading partner and a competitor. In 2023, India exported $16.6 billion worth of goods to China while importing a staggering $101.7 billion, resulting in a trade deficit exceeding $85 billion. Goyal highlighted the challenges posed by the “non-transparent” nature of the Chinese economy, noting that the opaque practices of the CCP create an uneven playing field that is difficult for Indian industries to navigate. “When you see from the lens sitting outside the country, you don’t realize how difficult it is to compete against a non-transparent economy,” he remarked.
The potential implications of India’s non-participation in RCEP extend beyond trade. Experts suggest that India’s stance could disrupt the regional industrial chain that the CCP aims to construct. Yeh Yao-Yuan, a political science assistant professor, pointed out that India’s decision could hinder the CCP’s efforts to reorganize production chains under initiatives like the Belt and Road Initiative. “India has no intention to cooperate with China in the same regional industrial chain,” he noted, suggesting that this could necessitate a recalibration of certain production layouts.
India’s absence from RCEP is viewed by some as a strategic advantage. Huang posited that India and China are competitors in the manufacturing sector, vying for the title of the world’s factory. By opting out of RCEP, India may fortify its position in this competition, allowing it to cultivate deeper trade relationships with Southeast Asian nations, which regard both India and China as critical partners.
Moreover, the geopolitical ramifications of India’s decision could foster closer ties with Western nations, particularly the United States. Yeh Yao-Yuan emphasized that rejecting CCP-led RCEP might facilitate enhanced connections with the U.S., a move that could reshape alliances in the Asia-Pacific region.
As India navigates its path in a complex global landscape, its decision to forgo participation in RCEP is emblematic of a broader strategy aimed at safeguarding its economic interests and asserting its sovereignty. By prioritizing its own industries and maintaining a cautious distance from China’s economic influence, India is not only defining its trade policy but also signaling its intent to carve out a distinct role in regional and global geopolitics. In an era where trade agreements increasingly reflect underlying power dynamics, India’s choice to stay out of RCEP could very well shape the future contours of international commerce in Asia.
