By Sanskriti Global Exports by Himanshu Gupta

The Empty Chair: India's Strategic Absence at APEC and the New Asian Trade Calculus

October 30, 2025 – The global business world has its eyes fixed on Seoul today, not just for the high-stakes handshake between US President Donald Trump and Chinese President Xi Jinping, but for the tectonic shifts in trade policy being announced on the sidelines of the APEC Summit. As the United States signals a major push to fast-track a revised goods trade agreement with the ASEAN bloc, a different story is unfolding for India. Prime Minister Narendra Modi’s decision to address the summit virtually, while physically absent from the negotiating tables, has created a significant vacuum—an empty chair that speaks volumes to the Indian import-export community.

This is not merely a diplomatic footnote; it is a critical juncture. While India continues to pursue its own path of bilateral agreements and champions its ‘Atmanirbhar Bharat’ (Self-Reliant India) mission, the world isn't waiting. A re-energized US trade policy in Asia, focused squarely on Southeast Asia, presents both a direct competitive threat and a moment for profound strategic reflection for every Indian business engaged in global trade. The deals being struck today in Seoul will redraw supply chains and market access maps for the remainder of the decade. The question for us is: Are we prepared for this new landscape?

A Summary of the Situation

Based on reports from the APEC Summit, the core developments can be distilled into a few key points. President Trump, in his second term, is aggressively re-engaging with Asia, but on his own terms. The centerpiece of this re-engagement is a concerted effort to strengthen economic ties with the Association of Southeast Asian Nations (ASEAN).

The Bloomberg report highlights that the US is pushing to “fast track a review of the goods trade agreement with the bloc.” This is significant. The ASEAN bloc, with a combined GDP rapidly approaching that of India's, represents a formidable economic force. A preferential trade agreement with the US would grant member nations like Vietnam, Indonesia, Malaysia, and Thailand enhanced access to the lucrative American market. This move is widely interpreted as a core component of Washington’s broader “de-risking” strategy, aiming to build resilient supply chains away from China by bolstering its allies in Southeast Asia.

Prime Minister Modi's virtual participation maintained India's diplomatic presence, but the tangible deal-making occurred in the corridors and meeting rooms of Seoul. His absence from these crucial in-person negotiations, where alliances are solidified and market access is bartered, stands in stark contrast to the proactive engagement from other regional leaders. This has left the Indian business community to read between the lines and prepare for the ripple effects.

The Analyst's Desk: Implications for Indian Import-Export

For Indian traders, manufacturers, and service providers, this is not a distant geopolitical event. The implications are direct, tangible, and will require immediate strategic adjustments. Here are the key takeaways for your business:

• Increased Competition in Key Export Markets: A streamlined US-ASEAN trade deal will lower tariffs and non-tariff barriers for ASEAN exports to the United States. Indian exporters in sectors like textiles and apparel, electronics assembly, automotive components, pharmaceuticals, and processed foods will face intensified competition from Vietnamese and Thai manufacturers who may soon enjoy preferential access. We must now compete not just on price, but on a playing field that is institutionally tilted in favor of our ASEAN rivals.
• Supply Chain Diversification May Bypass India: For years, the global narrative has been about a “China+1” strategy. India has positioned itself as a prime candidate for that “+1”. However, a robust US-ASEAN agreement could make Southeast Asia the default choice for American and multinational corporations looking to move manufacturing and sourcing out of China. This development is a direct challenge to India’s ambitions to become a global manufacturing hub. We risk being overlooked if the logistical, financial, and regulatory ecosystem in ASEAN becomes more attractive due to US backing.
• The RCEP Shadow Looms Larger: India’s decision to stay out of the Regional Comprehensive Economic Partnership (RCEP) was a strategic choice to protect domestic industries. However, this new US-ASEAN push effectively strengthens the intra-regional trade architecture of the RCEP bloc from the outside. As ASEAN nations deepen ties with both the US and their RCEP partners (including China), India risks further isolation from the two most powerful trading networks shaping the Indo-Pacific.
• Pressure on India’s Bilateral FTA Strategy: New Delhi's current strategy focuses on securing comprehensive bilateral Free Trade Agreements (FTAs), such as those with the UAE and Australia, with ongoing negotiations with the UK and EU. While valuable, this approach is piecemeal and slower compared to the sweeping regional deal now being fast-tracked. The question arises: can our bilateral wins compensate for being left out of the larger, US-backed regional framework? Businesses must now advocate more forcefully for the swift conclusion of the FTAs currently in the pipeline.
• Impact on Inbound Component Sourcing: For Indian importers, especially in the electronics and EV sectors, a more tightly integrated US-ASEAN supply chain could alter the flow and cost of critical components. It may lead to new sourcing opportunities from the region but could also create dependencies on supply chains where India has limited institutional leverage. Businesses need to re-evaluate their sourcing maps for resilience and cost-effectiveness in this new context.

Conclusion: A Call for Agility

Prime Minister Modi’s absence in Seoul should not be viewed as a failure, but as a stark reminder of India's independent and often cautious path in international trade diplomacy. However, independence cannot mean indifference to the shifting ground beneath our feet. The developments at APEC are a clear signal that major economic powers are actively forging the trade blocs of the future, with or without India at the table.

For the Indian import-export professional, this is a wake-up call. It is a moment to double down on competitiveness, to innovate relentlessly, and to diversify markets beyond traditional strongholds. It is also a time to engage with policymakers, providing on-the-ground feedback to ensure that our national trade strategy—be it through bilateral FTAs or domestic incentives like the PLI schemes—is agile enough to respond to a world that is not waiting for us to make our move. The game is changing, and we must be ready to play.

Source: Original