In November 2019, India abruptly walked out of the Regional Comprehensive Economic Partnership (RCEP), a mega free trade deal with 15 other nations that it had actively pursued for eight years. Mind you, of the 15, it already had in place a free trade agreement with 12 member countries, and a 13th (Australia) was in the making. Soon after exiting the RCEP, India aggressively sought to sign free trade agreements with Australia (a member of RCEP), Canada, the UAE, EU and even the US. Did New Delhi walk away from the RCEP because of the China bogey? Indo-China trade has continued to grow in the past three years, the Ladakh clash of 2020 notwithstanding, and crossed $125 billion in 2021. From April to August, China was India’s second-largest export destination. Why was India apprehensive about the RCEP? It seems that the biggest factor was worsening trade deficits with ASEAN as well as China. This can change dynamically. But what was missed out is that RCEP’s ambition was not just trade, but also investment. It is about locating entire supply value chains within its free-trade territory. So, if India stays out, future investors will think twice about locating a part of their value chain in a country that’s outside the RCEP zone, for doing so could thwart the seamless movement across multiple borders of the chain’s various constituent elements. A loss of potential investment is a bigger concern than worsening trade deficits, since the latter can be made up by bilateral surpluses with other trading partners. Also, as Western companies think about their China-plus-one strategy for new investment locations to diversify away from China, a location within RCEP might seem more attractive. Witness the success that Vietnam has had. The RCEP saga shows that over the years, even though the benefits of free trade, opening up borders and lowering tariffs have been amply demonstrated, India’s commitment to openness remains ambivalent. Perhaps this is because of competing domestic interests and the influence of smaller but more vociferous opponents.