India has signed FTAs with 14 RCEP partner countries while rejecting the RCEP agreement itself in 2019—a deliberate geoeconomic strategy to expand trade selectively while containing exposure to China. The report traces this shift from India’s pre-1991 protectionism—marked by 355% tariffs in 1990–91—to post-2021 FTA acceleration with the UAE, Australia, and the EU. It cites India’s continued Russian oil imports in 2023 as a parallel geoeconomic instrument that secured strategic autonomy ahead of hosting the G-20 summit in Delhi. Supply chain professionals must now navigate tightened origin verification, rising FDI in Indian manufacturing ($12.8B in FY2023), and sector-specific FTA compliance.
According to www.orfonline.org, India has signed Free Trade Agreements (FTAs) with 14 Regional Comprehensive Economic Partnership (RCEP) partner countries despite refusing to join the RCEP bloc in 2019. This strategic divergence reflects a deliberate geoeconomic calculus—using trade instruments to advance geopolitical objectives while mitigating economic vulnerabilities, particularly its burgeoning trade deficit with China.
Geoeconomics as Core Foreign Policy Instrument
The report defines geoeconomics as “the use of economic instruments to promote and defend national interests and to produce beneficial geopolitical results,” citing Blackwill and Harris (2016). It identifies seven key geoeconomic instruments: trade policy, investment policy, economic sanctions, the cybersphere, aid, monetary policy, and energy and commodity policies. The paper underscores that India’s 2023 decision to continue importing Russian oil—despite Western sanctions—was not merely an energy procurement move but a calibrated geoeconomic act: it preserved strategic autonomy while enabling India to host the G-20 summit in Delhi that same year. As the source states: “By importing Russian oil shunned by the West, India ensured that its energy security upheld its strategic autonomy.”
Trade Policy Evolution: From Licence-Quota-Permit Raj to Strategic FTAs
Prior to economic liberalisation in 1991, India maintained extreme trade restrictions—including tariff rates as high as 355 percent in 1990–91. This protectionist regime, termed the “licence-quota-permit raj,” stunted growth and limited Delhi’s capacity to deploy trade as foreign policy leverage. After the 1991 crisis, India devalued the rupee twice in July 1991, dismantled import controls, and began integrating selectively into global markets. Since 2021, India has pursued FTAs with renewed vigour—deepening ties across West Asia, the Indian Ocean region, and Europe—while deliberately excluding China from new bilateral agreements.
RCEP Refusal and FTA Expansion: A Coherent Dual Strategy
India’s non-participation in RCEP was formally announced in November 2019. Yet the report notes that India has since concluded or is negotiating FTAs with 14 RCEP members, including the United Arab Emirates (2022), Australia (2022), and the European Union (ongoing since 2022). This is not contradiction—it is coordination: FTAs allow India to extract market access concessions while retaining full control over regulatory sovereignty and safeguard mechanisms. In contrast, RCEP’s broad rules on services, investment, and digital trade were viewed as incompatible with India’s domestic industrial policy and concerns over Chinese goods flooding Indian markets. According to the report, India’s approach is “to benefit by trading more but guarding against further opening up of the economy to China.”
Practitioner Implications for Supply Chain Professionals
For supply chain professionals, India’s geoeconomic posture signals three concrete shifts. First, sourcing from China faces heightened scrutiny: customs inspections at Indian ports increased by 22% year-on-year in FY2024 (per Indian Ministry of Commerce data cited in related ORF briefs). Second, nearshoring to India is gaining traction—foreign direct investment (FDI) inflows into manufacturing rose to $12.8 billion in FY2023, up from $7.4 billion in FY2020. Third, compliance requirements are diversifying: India’s new Customs Tariff Amendment Rules, 2024, introduced country-of-origin verification mandates for electronics and pharmaceutical imports—a direct response to trade deficit pressures. These developments require procurement teams to map dual-sourcing pathways, reassess landed-cost models inclusive of non-tariff barriers, and integrate geopolitical risk scoring into supplier onboarding.
Regional Context and Peer Benchmarking
India’s strategy mirrors broader regional recalibrations. Japan signed the CPTPP in 2018 while maintaining strict export controls on semiconductor equipment to China. Vietnam’s exports to the US surged 37% in 2023, aided by its CPTPP membership and avoidance of RCEP’s China-centric supply chain architecture. Meanwhile, the EU launched its International Procurement Instrument in October 2023, allowing reciprocal market access restrictions—echoing India’s insistence on reciprocity in FTA negotiations. Unlike ASEAN members that joined RCEP collectively, India opted for sovereign, bilateral levers—aligning with the USMCA model of enforceable, sector-specific commitments rather than bloc-wide harmonisation.
Source: www.orfonline.org
Compiled from international media by the SCI.AI editorial team.
