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Why India Can't Accept China's ‘Zero-Tariff' Offer Despite Its Market Appeal
New Delhi: After U.S. President Donald Trump signalled the possibility of higher tariffs on Indian exports, China renewed its pitch to bring India into a zero-tariff Asian trade market. Extending access to a massive consumer base, the offer has been positioned as a strategic opportunity. Analysts say the proposal, however, could pose a far more significant challenge for India than Trump's tariff threats.
India's market is enormous. A population of 1.4 billion, coupled with a growing middle class and strong purchasing power, makes it one of the most attractive markets in the world. Global powers cannot achieve maximum economic leverage in the region without India's participation.
In response to the rising pressure from Washington, China has once again invited India to join the Regional Comprehensive Economic Partnership (RCEP).
Beijing has been lobbying for New Delhi's inclusion in the RCEP since 2019, offering zero tariffs as a key incentive. Still, India has repeatedly declined. It is wary of Beijing's ambitions and the potential risks to its domestic industries.
Understanding RCEP
The RCEP is a free-trade agreement encompassing 15 countries: 10 ASEAN members and five of their Free Trade Agreement (FTA) partners – China, Japan, South Korea, Australia and New Zealand. The RCEP is the world's largest trade bloc, representing nearly 30 percent of global GDP and covering roughly three billion people.
The agreement aims to simplify trade rules, reduce barriers and integrate the markets of its member nations. Signed in November 2020, the RCEP came into effect on January 1, 2022. Its primary goals include lowering or eliminating tariffs, easing non-tariff restrictions and facilitating cross-border investment and commerce.
China's Perspective
China's state-run Global Times highlighted India's growing vulnerability due to its heavy reliance on the U.S. market, especially in light of Trump's proposed 50 percent tariff increases. The newspaper argued that diversifying toward Asian markets could not only mitigate risks but also provide India with strategic flexibility and greater market opportunities.
According to the daily, India must actively explore alternative markets. Asia's expansive economies and untapped potential could provide India with a more stable path for growth. The paper suggested that joining the RCEP would represent a critical step toward restructuring India's trade orientation within the region.
The publication also emphasised 'long-term benefits'. Over next 10 to 15 years, it says, RCEP's zero-tariff framework could apply to 90 percent of goods. For India, the daily says, this could act as a protective buffer against the volatility of U.S. trade policies, while opening access to a dynamic and growing market.
India's Concerns
India has consistently expressed reservations about the RCEP. The government believes the agreement does not adequately reflect India's interests and could have unbalanced outcomes. A primary concern is the potential impact on domestic industries. Cheap imports from China and other Asian nations could flood the Indian market, undermining local manufacturing and making it difficult for Indian products to compete.
China's production efficiency exacerbates this risk. India had proposed mechanisms to limit imports of certain goods exceeding set thresholds, but negotiations failed to yield consensus.
India also faces a significant trade deficit with China, which reached $99.2 billion in the 2024-25 fiscal year. Joining the RCEP without safeguards could worsen this imbalance. For China, India's inclusion is both an economic and geopolitical priority, supporting regional dominance and the Belt and Road Initiative.
India continues to prioritise national interests, self-reliance and strategic autonomy. The government aims to maintain control over supply chains and assert a strong position in any scenario that may challenge its trade or geopolitical stance vis-à-vis China.
