Why India Stayed Out of RCEP — and What It Means for Indian Trade

RCEP represents approximately 30% of global GDP and global trade. India was a participant from 2012 but withdrew in November 2019 citing three fundamental concerns: (1) Chinese goods surge risk through the 0% tariff regime and through RCEP members with less rigorous RoO enforcement; (2) Services asymmetry — RCEP did not deliver meaningful Mode 4 provisions for Indian IT professionals; (3) Agricultural sensitivity — Australian and New Zealand dairy products at 0% duty would devastate Indian dairy farmers.

The consequences: India RCEP non-membership creates a structural competitive disadvantage. Indian goods exported to Japan, South Korea, Australia, and ASEAN face MFN tariffs while goods from other RCEP members (China, Vietnam, Indonesia) enter at 0-5%. RCEP members are building integrated supply chains in semiconductor, automotive, and electronics from which India is currently excluded.

India bilateral FTA sprint as the response: India has pursued comprehensive bilateral FTAs: India-UAE CEPA (2022), India-Australia ECTA (2022), India-EFTA TEPA (2024), India-UK FTA (advanced negotiations), India-EU FTA (advanced negotiations), India-GCC FTA (relaunched). This bilateral approach provides targeted preferential access without the systemic risks India associated with RCEP.