Is India ready to embrace CPTPP after walking out of RCEP in 2019?

Six years after leaving RCEP, India faces pressure to rejoin or consider CPTPP as US tariffs disrupt exports - but core trade, dairy, and policy hurdles persist

Nearly six years ago, in November 2019, India announced its withdrawal from the 16-member mega trading bloc — the Regional Comprehensive Economic Partnership (RCEP). This was a bold step by Prime Minister Narendra Modi, who declared India’s exit during the RCEP Leaders’ Summit in Bangkok. The announcement surprised many and immediately triggered a lively debate.

 

At the time, opinions in the country were sharply divided. Indian industry overwhelmingly supported the government’s decision to stay out of RCEP, while several trade policy experts lamented that India had lost a crucial opportunity to integrate into the Asia-Pacific value chain. For industry, the sticking point was clear — not to join any preferential trade deal that involved China.

 

 

After US President Donald Trump imposed punitive tariffs of 50 per cent on India, those same voices are once again urging the government to reconsider its stance. Many are suggesting that New Delhi not only reopen the RCEP chapter but also explore the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Adding weight to this view are recent remarks by a senior Chinese expert and the chief economist of the Asian Infrastructure Investment Bank, headquartered in Beijing.

 

Reasons for withdrawal from RCEP

 

Why did India step away in 2019 despite nearly seven years of negotiations? Three major reasons stood out.

 

First, the trade deficit with China had become unsustainable, and industry feared that deeper tariff liberalisation under RCEP would widen the gap.

 

Second, India refused to yield ground on dairy and agriculture, particularly to Australia and New Zealand, which were seeking greater access to the Indian market. For India, dairy is both politically and socially sensitive.

 

Third, India’s proposals on services market access, particularly concerning mobility of professionals, found little support from other members. 

 

Has the situation changed since 2019?

 

Six years later, have circumstances improved? Unfortunately, the answer appears to be no. India’s merchandise trade deficit with China has not narrowed. Instead, it has doubled, rising from $48.6 billion in 2019–20 to nearly $100 billion today. This figure alone explains why industry continues to view China as a threat rather than a partner.

 

On dairy and agriculture, India’s stance remains firm. Whether in talks with Australia under the FTA or in resisting US demands in bilateral trade discussions, New Delhi has consistently protected these sectors.

 

On services market access, little has changed. India continues to advocate liberalisation in mobility of professionals, but trading partners remain hesitant.

 

Does RCEP offer immediate relief amid US tariffs?

 

If these fundamentals remain the same, why is there renewed interest in RCEP today? Much of it stems from the shock of the 50 per cent tariffs imposed by the US, India’s largest export market. Sectors such as textiles, apparel, engineering goods, and marine products face serious risks.

 

However, joining RCEP does not offer a quick fix. The bloc was designed as a long-term integration framework, not an immediate market access solution. Membership would not shield Indian exporters from US tariffs or ensure sudden gains in Asia-Pacific markets. The present crisis demands short-term, targeted policy responses — and the government appears to be working on them. 

 

The option of joining CPTPP

 

If RCEP remains problematic, what about the other major Indo-Pacific bloc — the CPTPP? This grouping includes Canada, the UK, and ten other economies. The UK is the newest entrant, having joined through the accession process.

 

For proponents of CPTPP, the biggest attraction is clear — China is not part of it. Beijing applied to begin the accession process in 2021, but progress has stalled. The reasons are structural. CPTPP requires openness in three sensitive areas — financial services, free cross-border movement of data, and restrictions on monopolies enjoyed by state-owned enterprises. These conditions conflict with China’s domestic policies, making its accession unlikely anytime soon.

 

In contrast, the UK’s accession shows how smoothly the process can move for countries aligned with CPTPP principles. From its application in January 2021 to formally signing the treaty in July 2023, the process took barely two and a half years.

 

Is India ready to join CPTPP?

 

For India, the question is not China’s absence but its own preparedness. CPTPP requires members to commit to much deeper liberalisation than RCEP. It mandates strong provisions on intellectual property rights, labour standards, environmental safeguards, digital trade, and investment protection. It also sets strict rules on e-commerce and data flows and limits the role of state-owned enterprises.

 

Is India ready to take on these legally binding commitments? The RCEP experience suggests otherwise. India had pushed for safeguard clauses to protect domestic industry from import surges, indicating that full liberalisation remained politically and economically difficult.

 

Equally critical is the issue of policy space. Successive Indian governments have sought flexibility in e-commerce, data governance, investment rules, and industrial policy. Joining CPTPP would require concessions in these very areas. 

 

Short-term trade options for India

 

Neither rejoining RCEP nor acceding to CPTPP offers an immediate solution to the crisis caused by US tariffs. These are long-term strategic choices, not emergency responses. India’s short-term options lie elsewhere. Four priorities stand out:

 

• Intensify trade talks with the US to secure relief for sectors hit hardest by tariffs.

• Conclude the EU FTA quickly to access one of the world’s largest markets.

• Boost domestic demand to give industry a strong internal cushion.

• Leverage existing FTAs, many of which already cover countries in RCEP or CPTPP, to maximise benefits without taking on additional risks.

Conclusion: Strategic patience remains key

 

India’s decision in 2019 to walk away from RCEP was bold and decisive, but the underlying reasons remain unchanged. Trade deficits with China, agricultural sensitivities, limited services access, and concerns over China’s dominance still weigh heavily.

 

CPTPP may appear attractive on paper, but it demands commitments that India may not be ready to embrace. The challenge before India is to focus on pragmatic, short-term actions while preparing for a more integrated long-term trade future.

 

(The author is the former Chairman, NABCB and Chairman of Hi-Tech Gears Limited.) 

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(Disclaimer: These are the personal opinions of the writer. They do not reflect the views of www.business-standard.com or the Business Standard newspaper)