August 13, 2017

From Look East to Act East: Enhancing India-ASEAN Integration

India has turned to South East Asia to accelerate national economic development. Of late, South East Asia has become a pivotal foreign policy priority for the Indian government. It is worth recollecting thatIndia embarked on a historic Policy of Economic Reforms in 1991 and subsequently on its Look East Policy (LEP) – a dynamic foreign policy initiative which sent out a strong and positive signal indicating the country’s genuine interest in forging strategic and economic cooperation with South East Asian countries.The policy, referred to as LEP,aimed to enhance infrastructural development and expansion of transportation network inorder to bring better connectivity to the Northeast region, with the twin objectives of a) providing better security and b) facilitating developmental process. However, since the inception of this initiative, there has been no significant and visible forward movement. This stagnation, therefore, has resulted in Prime Minister Narendra Modi giving further impetus by kick-starting the innovative policy of ‘Acting East’, whichis complementary to India’s Asia Policy that seeks to galvanise relations with the economically vibrant region.

Within the region, China has become more assertive vis-a-vis its territorial claims in the oil and gas – rich South China Sea which is also a major international maritime trade route. The US President Donald Trump has given mixed signals about his commitment to the region, thereby creating strategic uncertainties and putting a question mark over the ability of the US to be the leader here . In the face of the political challenges confronting East Asia and the increasing uncertainty in the relations among the major powers, there has been a greater demand for India to play an increased security role in the region. At the same time, India also needs to give a strong signal about its commitment to a long term presence in the Asia Pacific.

The year 2017 marks 50 years of ASEAN’s existence, 25 years of ASEAN-India Dialogue Partnership, 15 years of India’s Summit Level interaction with ASEAN and 5 years of India-ASEAN Strategic Partnership. The Plan of Action (POA) 2016 – 2020 to sustain the India-ASEAN Partnership for ‘Peace, Progress and Shared Prosperity’ focuses on political and security cooperation, economic cooperation and socio-cultural cooperation. India has been actively associated with security cooperation initiatives of the ASEAN nations plus Australia, China, Japan, New Zealand, Republic of Korea, Russia and the United States through the ASEAN Regional Forum (ARF), the ASEAN Defence Ministers’ Meeting (ADMM) and the Expanded ASEAN Maritime Forum (EAMF). India established a Diplomatic Mission to ASEAN (2015) to widen and deepen the India-ASEAN Strategic Partnership. The way India contributes to building a dynamic strategic equilibrium and power equation in the Asia-Pacific region through bilateral and multilateral institutional frameworks stands testimony to its commitment to building a viable ASEAN-centric security architecture .

Enhancing connectivity is crucial to deepening India’s diplomatic, economic and cultural ties with the extended neighbourhood. India has advocated fast-tracking a host of connectivity projects that will accelerate regional integration and endorsed the Master Plan on ASEAN Plus Connectivity (MPAC). Geopolitical considerations dictate India to open up the North Eastern Region to South East Asia and capitalise on enhanced connectivity through land, water and air routes. The Act East Policy envisages that North East Region (NER) must be developed with adequate infrastructure and human resource capital in order to facilitate people-to-people contacts on social, cultural, academic and economic platforms. The idea is about physical connectivity to be complemented with soft connectivity. The connectivity projects like the Asian Highway and Trans-Asian Railway shall be complemented by cross-border transport projects, includingIndia-Myanmar-Thailand Trilateral Highway and Kaladan Multimodal Transit Transport Project, linking India and Southeast Asia. Increasing the maritime and air connectivity between India and ASEAN, transforming the connectivity corridors into economic corridors, and extension of India – Myanmar – Thailand trilateral Highway to Cambodia, Laos and Viet Nam will facilitate movement of passenger and cargo vehicles across the region. Asian Development Bank (ADB) is funding the connectivity projects in India’s Northeast, including the Imphal-Moreh (NH39) highway. Construction of railway from Jiribam to Imphal via Tupul is expected to be completed by 2017.It would be quite feasible to build an economic zone around Moreh (India) and Tamu (Myanmar) border area which is the junction of the land connectivity corridors. With connectivity advantage and access to markets, such economic zone can convert one of Asia’s laggard regions into a versatile growth centre. Development of economic corridors in the region will help attract investment and stimulate economic growth in India’s southern and north eastern regions, Myanmar and Cambodia, Laos, Myanmar and Vietnam (CLMV) countries. Strong backend integration through multimodal links between the eastern, north eastern and south eastern parts of India is essential to reap the benefits of India-ASEAN integration. It is important to make the soft side of connectivity, such as harmonisation of the political, legal and regulatory regimes between India and ASEAN, go together with the development of hard connectivity. Prime Minister Narendra Modi displayed a foreign policy master stroke by announcing a “Line of Credit of USD 1 billion to promote projects that support physical and digital connectivity between India and ASEAN and a Project Development Fund with a corpus of INR 500 crore to develop manufacturing hubs in CLMV countries at the 13th ASEAN-India Summit held in Malaysia in November 2015. It is the way forward for regional trade and economic partnership between the two sides.

ASEAN-India trade and investment relations have been growing steadily. ASEAN is India’s 4th largest trading partner, accounting for 10.2percentof India’s total trade. India is ASEAN’s 7th largest trading partner. As per data maintained by Department of Economic Affairs (DEA), Foreign Direct Investment (FDI) flows from ASEAN into India between April 2000 and May 2016 was estimated at USD 49.40 billion, while outflows from India to ASEAN countries, from April 2007 to March 2015, was about USD 38.67 billion. The ASEAN-India Agreements on Trade in Service and Investments came into force on 1 July, 2015. Both ASEAN and India are also working on enhancing private sector engagement. India and ASEAN need to develop and implement a comprehensive trade facilitation programme that aim at simplifying, harmonising, and standardising trade and integrating customs processes. The External Affairs Minister while informing the Parliament about Prime Minister Narendra Modi’s proactive and innovative policy of ‘Act East’ stressed that India needs access to capital, technology, energy, markets, a peaceful neighbourhood and a global trading system .

The Act East Policy can significantly factor in ending the geographical isolation of India’s North Eastern Region and transforming it into a bridgehead for India to the booming ASEAN markets. Given the economic potential as well as the geo-political importance of the region vis-a-vis a dynamic South East Asia, New Delhi’s perception of the North East has changed. The focus is now on economic development and addressing ‘trust deficit’ rather than seeking military solution to restore stability in the region. The opening up of the landlocked NER economically to ASEAN countries is considered as a potent means of conflict transformation. The fact that there is a growing people-to-people interaction and congruence of strategic interests as wellwill go a long way in the global effort to enhance regional integration. In essence, India chants the connectivity ‘mantra’ to galvanise relations with ASEAN. Connectivity is much more than geographical and physical. What sustains India’s relations with ASEAN are (soft) ‘cultural and spiritual connections, grounded in history and a shared civilizational space’.

(Dr.ShristiPukhremis a Senior Research Fellow at India Foundation.)

(This article is carried in the July-August 2017 issue of India Foundation Journal.)


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