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Prelims Capsule

International Relations

Regional Comprehensive Economic Partnership explained, Should India rethink about joining RCEP?

Regional Comprehensive Economic Partnership explained, Should India rethink about joining RCEP?


  • GS 2 || International Relations || International Organizations || Miscellaneous

Why in the news?

India had been a part of negotiations to join RCEP for almost nine years till it pulled out in November 2019

What is RCEP?

  • Launched in 2012, RCEP is a trade pact between the 10-member ASEAN bloc, along with China, Japan, South Korea, Australia and New Zealand.
  • India had been due to sign but pulled out last year.
  • The deal includes 2.1 billion people, with RCEP’s members accounting for around 30 percent of global GDP.
  • Its main aim:
    • Its aim is to lower tariffs, open up trade in services and promote investment to help emerging economies catch up with the rest of the world.
    • RCEP is expected to help reduce costs and time for companies by allowing them,
    • To export a product anywhere within the bloc without meeting separate requirements for each country
    • It also touches on intellectual property, but will not cover environmental protections and labour rights.
    • A key priority area for further RCEP negotiations is likely to be e-commerce.
    • It is unclear when the pact will be ratified but it could come into force next year.

Why RCEP matters for India?

  • It mainly matters because it sets new trade rules for the region — and has China’s backing but does not include the United States.
  • Observers say it solidifies China’s broader geopolitical ambitions in the region,
  • Where it has faced little competition from the US since President Donald Trump pulled out of a trade pact of its own

Why India said no to RCEP?

  • India withdrew last year over concerns about cheap Chinese goods entering the country.
  • It raised alarm about market access issues, fearing its domestic producers could be hard hit if the country was flooded with cheap Chinese goods.
  • Textiles, dairy, and agriculture were flagged as three vulnerable industries.
  • Prime Minister faced mounting pressures at home to take a tougher stance on the terms, and Proved unbending as the RCEP negotiations came to a close.

Should India have joined it?

  • Economic Stagnation due to Covid-19: The RCEP will serve as a bulwark in containing the free fall of the global economy and re-energizing economic activity with global trade and the economy facing a steep decline due to the Covid-19 pandemic.
    • The RCEP also offers a unique opportunity to support the economic growth, inclusive development and job creation of India, thus helping to reinforce regional supply chains.
  • Need for Economic Realism: Broadly, views on RCEP are divided between two schools of thought.
    • The first believes that the RCEP is vital for India as it accounts for 25% of global GDP, 30% of global trade, 26% of FDI flows, and 45% of the total population.
    • The second states that India’s experience with FTAs has not been good and its trade deficit with major FTA partners has increased significantly
  • Strategic Need: It is not just because gains from trade are significant, but the RCEP’s membership is a prerequisite to having a say in shaping RCEP’s rules.
    • This is necessary to safeguard India’s interests and the interests of several countries that are too small to stand up to the largest member, China.
    • Moreover, staying out of RCEP may also affect India’s Act East policy.

Reasons for India to review:

  • Global Economic Stagnation as a Result of Covid-19: With global commerce and the economy on the slide as a result of the Covid-19 pandemic, RCEP can function as a bulwark in halting the global economy’s free fall and re-energizing economic activity. Furthermore, the RCEP provides an once-in-a-lifetime chance to aid India’s economic recovery, inclusive growth, and job creation while also strengthening regional supply networks.
  • Why Economic Realism Is Required: India should avoid seeing the RCEP solely through the lens of China. India should recognize that the trade bloc accounts for 30% of global GDP and population, with over 2.2 billion people, and that opting out of the RCEP might result in suboptimal economic development without leveraging Asia-Pacific demand. In this sense, India may learn from Japan and Australia, who opted to put their geopolitical issues with China aside in order to focus on what they perceive as a mutually advantageous commercial agreement.
  • Strategic Need: Membership in the RCEP is a requirement for having a role in setting the RCEP’s regulations, not only because the benefits of trade are considerable. This is required to protect India’s interests as well as those of many other nations that are too tiny to stand up to the largest member, China. Staying out of the RCEP might also have an impact on India’s Act East strategy.

What are India’s options now?

  • Observer in RCEP meetings: RCEP signatory states said they plan to commence negotiations with India once it submits a request of its intention to join the pact “in writing”, and it may participate in meetings as an observer prior to its accession.
  • RCEP not connected to its vision on Indo-Pacific: Indian government has made it clear that India was not about to step back from its Act East policy, nor was the decision on RCEP connected to its approach to the Indo-Pacific
  • Can join in future: Japan worked hard to keep the RCEP agreement “open for accession by India” and also said that India may participate in RCEP meetings as an “observer”.
  • Exploring other alternatives: There is also a growing view that it would serve India’s interest to invest strongly in negotiating bilateral agreements with the US and the EU, both currently a work in progress.


Given the current and near-future global economic scenario, it will be in India’s interest to scrupulously examine its position on the RCEP and introduce structural reforms that will help India mitigate some of the repercussions arising from the RCEP. The RCEP members have left the door open for India to invite India to be an observer member and have also waived a crucial 18-month cooling period for interested applicants, acknowledging the economic heft and importance of India as a market.

Mains oriented question:

In view of the global economic scenario in the near future, it would be in India’s interest to examine its position on RCEP in a dispassionate manner. Discuss.