Why India did not sign an FTA with China, according to Piyush Goyal

India had signed trade agreements with economies such as Japan, South Korea and the ASEAN bloc before 2014, but China presented a different challenge, Commerce and Industry Minister Piyush Goyal said.Speaking at the PAFI 13th Annual Forum 2026 in New Delhi, Goyal said India’s FTAs before 2014 were largely with competing economies or countries with advanced industries. Those agreements gave India access to markets worth about $10 trillion, he said.China, however, was a different proposition.India was not part of the original negotiations for the Regional Comprehensive Economic Partnership, or RCEP, which included China, Japan, South Korea, Australia and New Zealand. Goyal said there had been a push within the government at the time for India to join the talks.But joining RCEP would effectively have meant entering into an FTA with China, Goyal said.He questioned whether such an agreement would have benefited Indian businesses, manufacturers and workers, given the scale of Chinese exports to India.Goyal also raised concerns over what he described as Chinese dumping, a lack of transparency and subsidies to exporters.The concern was not simply about signing another trade agreement. India already had a large trade deficit with China, and greater market access could have increased competitive pressure on Indian manufacturers, Goyal suggested.India still has a large China trade deficitIndia continues to engage with China on market access and other trade issues. Goyal met Chinese Commerce Minister Wang Wentao in New Delhi earlier this month.A spokesperson for the Chinese Embassy in India said China was ready to work with India to implement the consensus reached by the leaders of the two countries and expand mutually beneficial economic and trade cooperation.The spokesperson described India as an “important neighbour of China” and said both sides should address their economic and trade concerns in a balanced manner while ensuring that businesses and people in both countries benefit.India’s trade with China rose to $91.72 billion in the first six months of the current fiscal year, while the trade deficit stood at $67.1 billion.Imports from China were $131.63 billion in FY26, accounting for nearly 17% of India’s total merchandise imports.The size of that deficit helps explain why China has been a particularly sensitive issue in India’s debate over FTAs.The ASEAN experience is why India wants to revisit another FTAChina is not the only trade relationship that has raised concerns in India.While India stayed out of RCEP, it has continued to review its existing trade agreements. The most significant current example is the ASEAN-India Trade in Goods Agreement, or AITIGA.India is seeking changes to AITIGA because its trade deficit with the 11-member ASEAN bloc has widened sharply since the agreement came into force.India’s exports to ASEAN rose 65.23% from $26.63 billion in FY11 to $44 billion in FY23. Imports, however, increased 186% from $30.61 billion to $87.58 billion over the same period.In FY24, India exported $32.71 billion worth of goods to ASEAN and imported $66.55 billion. In FY25, exports were about $39 billion against imports of about $84 billion.The government’s argument is that the existing agreement has not delivered a sufficiently balanced outcome.India has therefore been seeking greater market access for its exporters while asking ASEAN members to offer more reciprocal access to their markets.India wants ASEAN countries to open their markets moreIndia recently participated in the 14th East Asia Summit Economic Ministers’ Meeting and the 23rd ASEAN-India Economic Ministers Consultation in Manila, Philippines.The discussions included the ongoing review of AITIGA, with India pushing for a pact that is more balanced, effective and easier for businesses to use.Bilateral trade between India and ASEAN reached $128.38 billion in FY26, with the bloc accounting for 10.55% of India’s total global trade.In May, the Ministry of External Affairs said India was seeking overall tariff liberalisation of 80% of tariff lines under the review, with each individual ASEAN country expected to liberalise at least 70%.MEA Secretary (East) P Kumaran said the demand reflected the different levels of development among ASEAN economies. Singapore, for instance, is a highly open economy, while some other members have higher levels of protection, he said.India also wants the level of market opening to be assessed based on the size of each economy rather than through a simple weighted average of tariff lines, Kumaran said.He said the two sides had reached an understanding on some issues, with details still being worked out.Government sources had also indicated last year that India could consider separate FTAs with individual ASEAN members. India already has FTAs with Singapore and Malaysia.Why India wants to change AITIGAThe government has pointed to the difference in tariff concessions under AITIGA as one reason for seeking changes.Government sources had earlier said India had opened 71% of its tariff lines under the agreement, compared with 41% for Indonesia, 66.5% for Vietnam and 67% for Thailand, despite India having a lower per-capita income.Indian industry has also raised concerns over cheap imports from ASEAN countries, particularly in sectors such as steel and electronics.Government sources have said subsidised goods from third countries had been dumped in India until anti-dumping duties were imposed.They have also pointed to India’s use of safeguard duties against steel imports and said the ASEAN agreement did not include a “melt-and-pour” clause, which could have helped address concerns over the origin of steel products.In October 2024, government sources told CNBC-TV18 that the positions of several ASEAN countries had changed since the agreement came into force in 2010.ASEAN is not a common customs union but a grouping of countries at different stages of development, the sources said. India was therefore seeking greater flexibility by negotiating with individual member countries.The broader message from the government’s approach is that India is not opposed to FTAs. Rather, it wants to negotiate them differently — seeking greater reciprocity and market access while limiting the risks it sees from large trade imbalances.That distinction is central to understanding both India’s decision to stay out of RCEP and its push to renegotiate AITIGA.

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