China Invites India to Join RCEP: Can This Move Reshape Bilateral Trade, Supply Chains, and Asia’s Economic Future?

Oct 13, 2025

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In a major geopolitical and economic development, China has invited India to reconsider joining the Regional Comprehensive Economic Partnership (RCEP) — the world’s largest free trade bloc. This invitation, coming amid shifting global trade equations, has triggered debates in policy circles about whether India should stay out or return to the negotiation table.

The question is not just about trade tariffs; it’s about strategic autonomy, manufacturing competitiveness, and economic diplomacy. With RCEP representing about 30% of the world’s GDP and 2.2 billion consumers, India’s participation could significantly alter regional supply chains and its own global trade footprint.

What Is RCEP?

The Regional Comprehensive Economic Partnership (RCEP) is a mega free-trade agreement signed in November 2020 among 15 Asia-Pacific nations — including China, Japan, South Korea, Australia, New Zealand, and the 10 ASEAN members.

Parameter	RCEP Overview
Full Form	Regional Comprehensive Economic Partnership
Launched	15 November 2020
Members	15 Asia-Pacific countries
Population Covered	~2.2 billion people
Combined GDP	Around $26 trillion
Share of Global GDP	Nearly 30%
Share of Global Trade	Over 27%
Headquarters	Jakarta, Indonesia (ASEAN Secretariat)

India initially participated in the RCEP negotiations but withdrew in November 2019, citing concerns over rising imports from China and fears of widening trade deficits.

Why India Walked Away in 2019

India’s decision to opt out of RCEP was driven by several economic and political factors:

Trade Deficit Concerns
India’s trade deficit with China had already crossed $57 billion by 2019. Policymakers feared that further tariff reductions would open the floodgates for cheap imports, harming local manufacturers.
Agriculture and Dairy Sensitivity
Domestic sectors like dairy, textiles, and small-scale manufacturing were vulnerable to low-cost imports from RCEP countries, especially from Australia and New Zealand.
Lack of Market Access for Indian Services
India’s strength lies in IT and services exports. RCEP’s framework was seen as too focused on goods trade, offering limited opportunities for Indian services professionals.
Rules of Origin Issues
There were concerns that Chinese goods might enter India through other RCEP members, bypassing direct trade restrictions.
Strategic Concerns
India also viewed RCEP as a potential tool for Chinese economic influence in Asia, particularly after the Galwan border clash in 2020.

China’s Renewed Invitation: What’s Changed in 2025

China’s recent invitation for India to reconsider its stance comes amid global trade realignments and supply chain diversification. Several developments make the timing interesting:

Factor	Recent Development	Impact on India
Global Inflation & Recession Risks	Supply chain disruptions post-COVID	Opportunity for India to attract FDI
China+1 Strategy	Western firms moving away from full dependence on China	India positioned as a manufacturing alternative
India’s FTAs with EU, UAE, Australia	Ongoing bilateral trade expansions	Strengthens India’s negotiation power
Digital Trade & Services Boom	Indian IT exports crossed $260 billion in 2024	Expands leverage in RCEP discussions

By inviting India back, China is signaling a diplomatic softening, perhaps also recognizing India’s growing economic and geopolitical clout.

Economic Potential: What India Stands to Gain

If India rejoins RCEP under favorable conditions, it could unlock major opportunities.

1. Access to a $26 Trillion Market

RCEP nations together represent almost one-third of global trade. Indian exports—especially in pharmaceuticals, machinery, IT, and food processing—could find new buyers and supply networks.

2. Reduced Trade Barriers

Lower tariffs would make Indian products more competitive in Southeast Asian markets. The long-term benefits could outweigh short-term import pressures.

3. Integration into Regional Value Chains

Joining RCEP could help India integrate into East Asian production networks, which dominate global electronics, automobiles, and textiles manufacturing.

4. Strategic Counterbalance to Western Dependence

While India maintains strong ties with the U.S. and EU, deeper integration with Asia-Pacific economies could offer balance and diversification.

5. Boost to “Make in India”

With proper safeguards, RCEP membership can attract investments aimed at producing within India for the wider Asia-Pacific market.

Concerns and Challenges

However, challenges remain significant.

Challenge	Explanation
Import Surge Risk	Fear of cheap goods undercutting local industries
Trade Deficit Expansion	India’s trade deficit with RCEP countries already exceeds $100 billion
Domestic Industry Readiness	MSMEs may struggle to compete without stronger support
Regulatory Transparency	Need for better monitoring to prevent dumping or origin manipulation
Strategic Autonomy	Maintaining independence amid China’s growing regional influence

Thus, India’s decision must balance economic opportunity with national interest.

What Experts Are Saying

Economists suggest India should seek a revised entry model with stronger safeguards.

Tariff Safeguards: Temporary protection for sensitive sectors.
Services Access: Greater inclusion of digital, IT, and skilled labor mobility.
Stringent Rules of Origin: To prevent trade diversion from China through other countries.
Periodic Review Clauses: To allow course corrections as needed.

Policy analysts also believe that joining RCEP could enhance India’s global competitiveness ranking, currently at around 40th, by improving export logistics and manufacturing scale.

Comparative View: India vs. Key RCEP Members

Country	GDP (2024)	Exports to RCEP Region	Trade Surplus/Deficit
China	$17.5 trillion	$2.3 trillion	Surplus
Japan	$4.9 trillion	$1.1 trillion	Surplus
Australia	$1.7 trillion	$450 billion	Surplus
India	$3.9 trillion	$220 billion	Deficit

This shows how India’s participation could rebalance the region’s trade architecture, adding diversity and demand.

Geopolitical Implications

Beyond trade, RCEP participation would also reshape India’s geopolitical position:

Strengthen its voice within Asian economic forums.
Reduce China’s monopoly as the main Asian power in trade.
Reinforce India’s image as a pragmatic player balancing East and West.

However, strategic caution remains key. India must avoid overexposure to China-dominated supply chains, ensuring self-reliance continues as the guiding principle.

Conclusion

China’s invitation to India to join RCEP is more than a diplomatic gesture—it’s a strategic test of India’s global economic maturity. The move presents both risk and reward: a chance to access vast Asian markets but also a challenge to protect domestic industries.

For India, the answer lies in smart negotiation, not outright rejection. A carefully structured re-entry—one that safeguards national interests while embracing economic opportunity—could redefine not only India-China trade but also the future of Asian economic cooperation itself.

Disclaimer

This article is based on publicly available information and expert analysis. It does not represent any official government position or policy statement. Readers are encouraged to verify figures and consult trade experts before drawing conclusions or making business decisions.

About the author

I’m Himanshu Dhar, a dedicated MIS trainer proudly associated with I Turn Institute. My journey in the realm of data management and automation spans over 14 enriching years. My passion for this field extends to freelancing projects, where I bring real-world practicality into my teaching. My impact in education is marked by the success of over 25,000 students I’ve had the privilege of mentoring, hailing from diverse backgrounds. Beyond the classroom, I’ve had the honor of conducting corporate training sessions and seminars, catering to the unique needs of businesses. Let’s unlock your potential together in the realm of data analysis and automation.