India Shuts the Door on RCEP, Permanently, but Leaves a Window Open for Chinese Capital — With Conditions

India has closed the file on the Regional Comprehensive Economic Partnership. Commerce and Industry Minister Piyush Goyal, speaking at the Financial Express Best Banks Awards on Sunday, said there is "absolutely no chance" the government will sign the 15-nation Asia-Pacific trade pact, and that he does not foresee India joining "for many years." The statement is the most definitive closure of the RCEP question since India walked away from negotiations in 2019, and it removes a source of policy uncertainty for trade negotiators and foreign investors who had wondered whether the door might eventually reopen.

The reasoning Goyal offered was specific. India already has free trade agreements with the 10 ASEAN nations and, at the time of the RCEP negotiations, was at an advanced stage with Australia. The marginal benefit of joining a larger arrangement that included China was, in his view, insufficient to offset the risk to domestic manufacturing. He said the government conducted roughly 200 stakeholder consultations before the final RCEP meeting in November 2019, and only three participants supported joining. Indian industry, farmers and other groups, he said, feared that membership would expose domestic producers to competition that would widen trade imbalances.

Investment screening: a calibrated opening

On the separate but related question of Chinese investment, Goyal struck a more nuanced position. "We have no problem with Chinese investments as long as they are in desirable segments and are not aimed at opportunistic acquisition of underpriced assets," he said. He emphasised that Press Note 3 of 2020 — which requires government approval for investments from countries sharing a land border with India — applies to all such neighbours, not solely China. The policy was introduced, he said, to protect the domestic economy from opportunistic takeovers during periods of stress.

A subsequent amendment, Press Note 2 of 2026, raised the threshold for automatic scrutiny: beneficial ownership of up to 10% will no longer trigger review. The change is modest but commercially significant for portfolio investors and minority-stake private equity funds that had been caught by the earlier, more restrictive interpretation.

Goyal also addressed India's rising trade deficit with China, cautioning that the composition of imports must be examined before drawing conclusions — a suggestion that much of the import bill reflects industrial inputs and intermediate goods rather than finished consumer products, a distinction that matters for any assessment of whether the deficit is structural or cyclical.

For foreign businesses, the twin signals from Sunday's speech are consistent with the trajectory of Indian trade policy over the past several years: bilateral FTAs are the preferred instrument; multilateral arrangements that include China are not; and foreign capital is welcome, but it will be screened, and the screen is gradually being calibrated to distinguish between strategic and commercial exposure. The RCEP door is closed. The investment door, for those willing to accept the conditions attached to it, is not.