In a significant departure from its decade-long protectionist stance, India is aggressively reshaping its global trade architecture. By distancing itself from China-centric blocs and aligning with high-income Western democracies, New Delhi is signaling a “New India” approach to international commerce that prioritizes strategic security alongside economic growth.
The Pivot Away from RCEP
The turning point in India’s trade trajectory occurred in November 2019, when Prime Minister Narendra Modi announced that India would not join the Regional Comprehensive Economic Partnership (RCEP). Despite years of negotiations, the government concluded that the mega-trade deal did not provide adequate safeguards against a potential surge in Chinese imports, which threatened to hollow out India’s domestic manufacturing sector.
This exit was not an isolationist move but a strategic recalibration. By stepping back from RCEP, India avoided locking itself into a trade ecosystem dominated by Beijing, instead choosing to focus on bilateral agreements where it could leverage its massive consumer market more effectively.
Targeting the ‘Five Eyes’ and Western Markets
Since the RCEP withdrawal, India has pivoted toward the “Five Eyes” economies—the United States, United Kingdom, Canada, Australia, and New Zealand—along with the European Union. This shift reflects a desire to integrate with value-driven economies that share concerns over supply chain resilience and intellectual property protection.
Successes have already materialized. India signed the Economic Cooperation and Trade Agreement (ECTA) with Australia and a Comprehensive Economic Partnership Agreement (CEPA) with the UAE in record time. Negotiations with the UK and the European Union are currently at advanced stages, focusing on services, digital trade, and sustainable development—areas where India sees its future competitive advantage.
A Strategy of ‘Friendshoring’
The reimagined geo-trade policy is grounded in the concept of “friendshoring”—routing supply chains through politically allied nations. This alignment with Western powers isn’t just about tariffs; it’s about becoming a central hub in the “Plus One” strategy for global corporations looking to diversify away from China. Through the Production Linked Incentive (PLI) schemes, India is positioning itself as a high-tech manufacturing alternative, backed by trade deals that ensure market access in the West.
Conclusion: The Road Ahead
India’s trade transformation represents a sophisticated balancing act. While the nation continues to protect its sensitive agricultural sector, it is showing an unprecedented willingness to open its markets to advanced economies. As these new alliances solidify, India is moving from the periphery of global trade talk to becoming a foundational pillar of the new democratic economic order.
