India Explained
ImplementedBJPNarendra Modi

Decision not to join RCEP

On 4 November 2019 India announced it would not join the 15-nation Regional Comprehensive Economic Partnership, citing unresolved concerns. The pact took effect in 2022 without India.

Trade agreements

Facts

  • At the RCEP summit in Bangkok on 4 November 2019, Prime Minister Narendra Modi said India could not join because the agreement did not fully reflect its guiding principles or satisfactorily address India's outstanding issues [1].
  • Reported concerns centred on market access, rules of origin and imports from China; India had proposed an auto-trigger safeguard mechanism for imports crossing a threshold [1].
  • India's goods trade with China in 2019-20 was reported at about $16.61 billion exports and $65.26 billion imports, a deficit of about $48.6 billion, against about $53.56 billion in 2018-19 [2].
  • The remaining 15 members signed RCEP on 15 November 2020 and it took effect on 1 January 2022 for the first ten ratifying countries [3].
  • The RCEP leaders' statement said India could join at any time [3].

Why

Reasons given by those who did it

  • The Prime Minister said the agreement in its present form did not address India's outstanding issues and concerns, and referred to the interests of the poorest Indians as a test [1].
  • India's Ministry of External Affairs said significant issues of core interest remained unresolved [1].

Criticism of that reasoning

  • A Peterson Institute analysis by Petri and Plummer projected economic losses for India from staying out, while noting RCEP would be significant with or without India [3].

Benefits and concerns

Benefits (2)

  • Avoided committing to tariff cuts on imports that domestic producers said they could not compete with.Reported fears of cheap Chinese agricultural and industrial imports; India's deficit with China was about $48.6 billion in 2019-20 [1][2].
  • Kept India's negotiating position and the option to join later.RCEP kept membership open to India at any time [3].

Concerns (2)

  • India stayed out of the largest regional trade bloc and may forgo market access and supply-chain integration.Petri and Plummer's modelling projected losses for India; the bloc entered into force on 1 January 2022 [3].
  • Staying out did not by itself reduce the trade deficit with China.India's imports from China were about $65.26 billion in 2019-20 [2].

Evidence points

+0.5
points, mean of two scorers (scale −25 to +25)
−1 to +2
range between the two scorers' totals
Medium confidence
1 criterion where scorers differ
ReachHow many people did the action materially affect?
Mean 0.0A 0B 0
Outcome evidenceDo official or independent data show the intended result (or its opposite), compared with the era baseline and peers?
Mean −1.0A −1B −1
Cost and sustainabilityIs the fiscal cost proportionate, and is the effect durable?
Mean 0.0A 0B 0
Process and rightsWas it made with debate, consultation and legal soundness, and did it respect rights and court rulings?
Mean 0.0A 0B 0
DeliveryWas it implemented as announced, on time and at scale?
Mean +1.5A +3B 0Scorers differ

Positive meanNegative meanScorer AScorer B

Scorer A. Modelling projected losses from staying out while trade deficit with China did not fall; evidence is thin and the option to join remains open.

Scorer B. Modelling projects some losses from staying out while the China trade deficit concern was not resolved, so evidence is mixed and thin.

Context used when scoring

Era baseline
India had joined negotiations in 2012 and had existing free trade agreements with ASEAN, Japan and South Korea; India's goods deficit with China was large and widely discussed.
Lag before outcomes show
5 years
Shocks considered
covid-2020, galwan-2020
Uncertainty
Medium confidence. Scorer totals are +2 and −1. How uncertainty is shown.

In depth

RCEP negotiations began in 2012 among the ten ASEAN members and six partners including India. India took part until November 2019, when the Prime Minister announced it would not join. The stated reasons were that the text did not address core concerns, with reporting highlighting import surges, rules of origin and market access, especially with respect to China.

The remaining 15 members signed the agreement on 15 November 2020 and it took effect on 1 January 2022. The group stated that India could join later.

Supporters of the decision argue it protected sectors such as dairy, agriculture and small manufacturing from import competition, and preserved bargaining room. Critics argue India missed access to a large trading area and value chains; the Petri and Plummer analysis projected losses for India. Evidence on the counterfactual is modelled rather than observed, so scoring should treat outcomes as uncertain. One figure sometimes cited for the share of India’s deficit accounted for by RCEP members was not verified here.

Sources

Last reviewed .Report an error orchallenge a score.

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