Since U.S. President Donald Trump returned to office in January 2025, his administration has made clear its preoccupation with tariffs. In April, Trump announced one-sided, punitive “reciprocal tariffs” of up to 50 percent. While these tariffs were subsequently mostly paused for 90 days, the White House’s tariff policy is nonetheless causing turmoil worldwide.
In February, Indian Prime Minister Narendra Modi visited Trump in Washington D.C., reaffirming India’s defense and economic cooperation with the United States. This was not enough to spare India from the Trump administration’s subsequently announcing additional tariffs on many exported goods, including automotive parts, textiles, and jewelry. The United States is India’s largest export market, accounting for 18.6 percent of its total exports in 2024. However, with the new tariffs, Indian-made products will have reduced competitiveness in the U.S. market, putting at risk the export base the country has spent years trying to build.
In response, the Indian government has sought to shift its trade policy, for instance signing the India-UK Free Trade Agreement with the United Kingdom early last month. In March last year, India signed the European Free Trade Association (EFTA) and the Trade and Economic Partnership Agreement (TEPA). It is currently negotiating a free trade agreement with the European Union, aiming to reach a deal by the end of the year. The Modi government is now reassessing its earlier protectionist stance, which it adopted when it withdrew from the Regional Comprehensive Economic Partnership (RCEP), and has begun diversifying its export markets while reestablishing multilateral free trade.
Given these developments, a golden opportunity has emerged to reintegrate India into the regional economy. The ASEAN-India Economic Ministers’ meeting scheduled for this summer will serve as a strategically important platform for encouraging India’s return to the RCEP. Together with ASEAN, if Japan can present proposals that address India’s concerns regarding agriculture, investment, and rule of origin concerns, it could be the key needed to revive negotiations.
India as an Export Hub
An influx of multinationals is transforming India into an export hub, creating favorable conditions for a return to RCEP. In response to U.S.-China tensions, Apple is moving its production base from China to India. In March 2025, the company airlifted 1.5 million iPhones from India to the U.S., marking the full-scale launch of its India export base for U.S.-bound products. Given the impact of the heavy tariffs that Trump has imposed on China, Apple is also accelerating its transition from Chinese production to India and Vietnam. Moving forward, rebuilding a supply network with cooperation within the RCEP region will be essential to avoiding high U.S. tariffs.
A similar trend can be seen in the automotive industry. Suzuki and other companies that have expanded to India are positioning the country as an export hub for the Global South. While this also includes the ASEAN market, the current ASEAN-India Free Trade Area (AIFTA) does not allow for tariff elimination on complete vehicles or auto parts, creating a barrier. Rejoining the RCEP will be vital in overcoming this constraint.
RECP accounts for around 30 percent of the world’s GDP and trade, with 90 percent of tariffs within the region eliminated and unified rules of origin and customs procedures. Companies in the region benefit from greater institutional predictability and can avoid the spaghetti bowl effect. For India, a return to the RCEP would provide highly favorable conditions for both expanding exports and attracting companies pursuing a China Plus One strategy. It could also be seen as the realization of the “Make in India” initiative.
Global Implications
I previously noted that the RCEP going into effect without India symbolized Asia’s proactive efforts to rebuild the drifting free trade order. With the U.S. withdrawing from the TPP and the U.K. leaving the EU, confidence in multilateral agreements was wavering. Even so, RCEP demonstrated Asia’s intention to rebuild the free trade system.
If India were to rejoin this massive market of 1.4 billion people, RCEP would become a truly comprehensive economic zone, the effects of which would be felt by the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Free Trade Area of the Asia-Pacific (FTAAP), and other similar frameworks. Such a move could trigger a ripple effect and spark a new wave of large-scale free trade agreements.
The leaders’ statement issued at the time of the RCEP agreement clearly stated that “India’s accession to the RCEP Agreement would be welcome,” opening the door to the possibility. ASEAN has traditionally allowed flexible forms of participation through the “ASEAN-X Formula” and through its partnership with Japan, India could explore a landing point to safely rejoin.
RCEP is more than just a trade agreement. It serves as a litmus test for forming the economic order of the Asia-Pacific region. India’s return would add real substance to the “Free and Open Indo-Pacific” initiative. But turning Trump’s tariffs into an impetus for regional integration requires that Japan and ASEAN demonstrate wisdom and resolve.
Now is the time for Japan and ASEAN to restart diplomatic strategies that signal a path for India to rejoin RCEP. Doing so will not only advance regional economic integration but also sends a message of hope to a world economy mired in uncertainty.