1. Introduction

ASEAN and India have a rich history of maritime trade and ancient cultural linkages. Maritime relations between India and Southeast Asia date back to ancient times. India’s trade from ports such as Lothal, its coastal temples at Mahabalipuram and ancient links with My Son in Vietnam show the strength of its ties with ASEAN1. The process of acculturation of India and Southeast Asia began in ancient times from the 3rd century onwards. The exchanges via trade, the influence of Sanskrit and Indian epics in Southeast Asia are well documented2. Indian culture is an inseparable part of Southeast Asia’s customs.

In early 1990s, if one were looking around the world to find the most promising region for international cooperation, ASEAN certainly appeared at the top of the list. In 1992, India joined ASEAN as a sectoral partner, at a time when India was relatively an inward-looking economy. India started its journey to prosperity through Look East Policy (LEP). This journey has been quite well-thought since ASEAN-India relations are firmly embedded in economic, culture and strategic areas. Today’s LEP, which was in force for more than two decades, has been transformed into the Act East Policy (AEP) with ASEAN at its core. Starting as a sectoral partner of ASEAN in 1992, India became a dialogue partner of ASEAN in 1996, a summit-level partner in 2002 and a strategic partner in 2012. The ASEAN-India relations have gained constant momentum throughout this period. Undoubtedly, ASEAN and India have made impressive progress in the last 25 years to deepen their relations3.

ASEAN is more important than ever and so also India to ASEAN4. Both share land and maritime boundaries with each other. As India gained momentum, India and ASEAN became more closely interconnected. At present, India and ASEAN are home to 1.8 billion people and have an economic size of US$ 3.8 trillion and a substantial share of world resources. In three decades, webs of networks developed in different areas of cooperation, from commerce to culture to connectivity, between ASEAN and India. India is strategic partner of ASEAN. Both have strong strategic vision and complement each other regionally and globally. India’s accession to the Treaty of Amity and Cooperation in Southeast Asia (TAC) in October 2003 reflects the recognition of India by ASEAN as a major player in the region and the strong commitment and valuable contribution India is making to regional peace and stability.

This paper briefly presents major develop-ments occurred in last 25 years of ASEAN-India partnership and a list of recommendations as way forward.

 

2. Current Engagements

Overtime, the landscape of ASEAN-India relations has widened. Economic, strategic and cultural relations between ASEAN and India are deep rooted. India’s participation in ADMM+, EAS, ARF, MGC, ACD and RCEP are part of this process. Today, there are 30 dialogue mechanisms between India and ASEAN, including a Summit and seven Ministerial meetings in a wide range of sectors such as Foreign Affairs, Commerce, Tourism, Agriculture, Environment, Renewable Energy and Telecommunications. In the last two years, President, Vice President and the Prime Minister of India visited all the ASEAN countries which indicate the importance India attaches to ASEAN.

Table 1: Present Scenario of ASEAN-India Engagements

ASEAN-India FTA	·  Completed with the Services and Investment agreement in 2015	· Bilateral trade: US$  71 billion in 2016-17 (India’s export to ASEAN US$ 30 billion, India’s import from ASEAN US$ 41 billion) · Growing value chains, but slowly · Rising trade deficit is a matter of concern · Low utilization of FTA
RCEP	·  Being negotiated	· Till November 2017, total 20 rounds of RCEP negotiation were held.
Trade facilitation	·  Unilateral initiatives ·  WTO TFA	· ASEAN single window under implementation and India’s SWIFT working already
ASEAN-India maritime transport agreement	•Being negotiated	•Target date of signing of agreement – 2018
ASEAN-India air transport agreement	•Proposed	·         High imbalance between carriers; major ASEAN airlines (e.g. SQ or TG) utilise 100% slots ·         Ministry of Civil Aviation is planning to host the 1st meeting of the JWG in early 2018
Land transport	•Trilateral Highway & extension to CLV •Kaladan MMTTP	•Ongoing
Digital network	·  Optical fibre network between India and ASEAN	· Being negotiated

Source: Author’s own

 

Table 1 presents the current scenario of engagement of ASEAN-India relations. Economic ties between India and ASEAN are deepening day by day. In 2016, ASEAN was India’s 4th largest trading partner, accounting for 10 percent of India’s total trade. In the same year, India was ASEAN’s 7th largest trading partner. When India undertook LEP in 1992, India’s total trade with ASEAN was less than US$ 5 billion. Today, total trade between them has exceeded US$ 70 billion.

Barring the Philippines, India has completed the task of tariff liberalisation under this Agreement in December 2016. Investment flows between them have been growing constantly with more inward FDI coming for ‘Make-in-India’. The Free Trade Agreement (FTA) in goods, implemented in 2010, and the services trade and investment agreement in 2015 between ASEAN and India represent an important effort to enhance ASEAN-India integration. India has also signed bilateral CEPAs/CECAs with Japan, Korea, Singapore, Malaysia, along with a regional FTA with ASEAN. India is a partner of the Regional Comprehensive Economic Partnership (RCEP), which is a comprehensive free trade agreement being negotiated between the 10 ASEAN members and ASEAN’s FTA partners, i.e., Australia, China, India, Japan, Korea and New Zealand. ASEAN India-Business Council (AIBC), set up in March 2003, has been entrusted to bring key private sector players from India and the ASEAN countries on a single platform for business networking and sharing of ideas.

2.1 Trade relations

India’s export to ASEAN has increased to US$ 30 billion in 2016-17 from US$ 25 billion in 2015-16 (Table 2). India’s import from ASEAN is very important elements to growing value chains. Driven by rising and favourable commodity prices, India’s trade with ASEAN has increased to US$ 70 billion in 2016-17 from US$ 65 in 2015-16.

 

Table 2: Trends in India-ASEAN Trade in Goods

Year	Indian Export to ASEAN	Indian Import from ASEAN	Total Trade
	(US$ billion)
2009-10	18.11	25.80	43.91
2010-11	25.63	30.61	56.24
2011-12	36.74	42.16	78.90
2012-13	33.01	42.87	75.87
2013-14	33.13	41.28	74.41
2014-15	31.81	44.71	76.53
2015-16	25.15	39.91	65.06
2016-17(P)	30.12	40.69	70.81

Note: P: Data for March 2017 is provisional

Sources: Authors own based on Export-Import Databank, Department of Commerce, Government of India and DGCIS, Kolkata

 

 

Table 3: India’s Trade with ASEAN in 2016-17*

S.No.	Country	Export	Import	Total
		(US$ billion)
1	Brunei	0.04	0.57	0.61
2	Cambodia	0.11	0.04	0.15
3	Indonesia	3.31	13.87	17.18
4	Lao PDR	0.03	0.17	0.20
5	Malaysia	5.22	8.72	13.94
6	Myanmar	1.10	1.00	2.10
7	Philippines	1.52	0.57	2.10
8	Singapore	9.11	7.44	16.55
9	Thailand	3.17	5.61	8.79
10	Vietnam	6.51	2.69	9.20
	ASEAN Total	30.12	40.69	70.81

Note: *Data for March 2017 is provisional

Sources: Authors own based on Export-Import Databank, Department of Commerce, Government of India and DGCIS, Kolkata

 

Indonesia, Malaysia and Singapore are India’s top three trade partners in ASEAN (Table 3). India’s exports to Malaysia, Indonesia, Singapore, Brunei and Vietnam witnessed higher than average growth. However, traditional import sources are yet to stabilize. India is gaining production linkages with Malaysia (e.g. electronics), Thailand (e.g. automobiles), Singapore (e.g. digital networks), etc. in ASEAN.

 

3. Regional Value Chains

 

Illustrated in Table 4, parts and components have contributed almost 25 per cent (US$ 6.27 billion) of India’s export to ASEAN in 2014, followed by 18 per cent (US$ 4.60 billion) to EU, 14 per cent (US$ 3.49 billion) to USA and 7.7 per cent (US$ 1.95 billion) to China. In terms of import of parts and components, India has imported 15 per cent (US$ 5.48 billion) from ASEAN, 25 per cent (US$ 9.39 billion) from China and 18 per cent (US$ 6.81 billion) from Japan in 2014 (Table 5). Overall, India’s export of final, parts and components, and processed goods to ASEAN was about 20 to 30 per cent of India’s total export to world, whereas, India’s import from ASEAN was roughly about 15 per cent in 2014. This shows that India is getting more engaged in production networks with ASEAN countries in both export and import of parts and components and processed goods[i]. Among ASEAN countries, Thailand, Singapore, Malaysia and Vietnam are India’s major import sources of parts and components.

 

Table 4: India’s Export to Major Countries and Country Groups

	Export Value (US$ Billion)						Export Share in World (%)
	Final Goods		Parts and Components		Processed Goods		Final		Parts and Components		Processed Goods
	2006	2014	2006	2014	2006	2014	2006	2014	2006	2014	2006	2014
USA	4.03	6.51	1.80	3.49	4.27	9.17	25.50	15.39	15.56	13.76	15.44	13.37
EU	3.34	6.67	2.05	4.60	5.98	11.87	7.78	4.26	7.12	7.70	9.23	12.40
Japan	1.99	2.67	1.78	2.13	2.04	3.88	21.11	15.77	17.75	18.15	21.61	17.30
South Asia	0.44	1.52	0.38	1.10	1.88	5.57	12.59	6.31	15.45	8.42	7.38	5.66
China	1.23	1.80	0.82	1.95	2.55	8.51	2.78	3.58	3.25	4.35	6.79	8.11
ASEAN	2.75	6.80	3.64	6.27	5.23	11.76	17.42	16.07	31.49	24.75	18.91	17.15
World	15.80	42.31	11.55	25.33	27.67	68.61	100.00	100.00	100.00	100.00	100.00	100.00

Note:Shaded columns represent the size of value chains. The selection of HS 6 digit level product is based on BEC.

Source:AIC’s calculations based on WITS Database, the World Bank.

 

Table 5: India’s Import from Major Countries and Country Groups

	Import Value (US$ Billion)						Import Share in World (%)
	Final Goods		Parts & Components		Processed Goods		Final Goods		Parts & Components		Processed Goods
	2006	2014	2006	2014	2006	2014	2006	2014	2006	2014	2006	2014
USA	1.39	2.20	1.70	2.82	2.25	5.39	9.27	6.31	11.62	7.73	6.37	6.02
EU	3.52	5.98	2.79	5.35	4.70	9.43	23.39	17.12	19.08	14.66	13.31	10.52
Japan	2.78	4.49	3.79	6.81	4.75	8.51	18.52	12.87	25.90	18.65	13.46	9.49
South Asia	0.10	0.33	0.05	0.25	0.83	1.60	0.64	0.95	0.35	0.67	2.37	1.78
China	2.98	12.92	1.71	9.39	4.60	17.16	19.82	37.00	11.72	25.72	13.03	19.15
ASEAN	2.05	5.61	2.92	5.48	4.67	10.83	13.62	16.05	19.96	15.01	13.22	12.09
World	15.04	34.93	14.63	36.51	35.29	89.63	100.00	100.00	100.00	100.00	100.00	100.00

Note:Shaded columns represent the size of value chains. The selection of HS 6 digit level product is based on BEC.

Source:AIC’s calculations based on WITS Database, the World Bank.

 

Automobile industry is an emerging sector where ASEAN and India are building regional as well as global value chains. Among ASEAN countries, India’s export of automobile parts and components to Thailand was almost 41 per cent (US$ 282.10 million) in 2014. In case of import of parts and components of automobile products, India’s import was almost 71 per cent (US$ 720.49 million) from Thailand. In terms of value chain of automobile products, India has been maintaining closer ties with Thailand, Indonesia, and Vietnam among the ASEAN countries. Indian cars manufactured by Suzuki, Toyota, Honda, TATA, etc. are getting higher market access in Southeast and East Asia. Further negotiations in ASEAN-India FTA for the automobile products having high trade potential that fall under sensitive and exclusion lists would possibly strengthen the production networks between the ASEAN and India.

Indian textile and apparels have demand in both domestic and export markets.  India’s trade relation in textiles industry among ASEAN countries like Vietnam, Malaysia, Indonesia, Singapore and Thailand have been growing, among which India’s trade with Vietnam in textiles has been rapid. There are huge opportunities in textiles and apparel industry in Vietnam. Textiles and apparel industry in both India and Vietnam are more complementary than competing in nature. Both India and Vietnam have strong export market for textiles and garments, mostly to USA and EU. Both the countries have huge trade potential in textile industry to supplement and to grow in textiles value chains. Textile industry in India has specialized in complete value chain process of textile productions and also in value chain segments. Compared to Vietnam, India is raw material-sufficient, whereas Vietnam is dependent on import of raw materials from other countries, mostly China, for its textile inputs. India can be raw material supplier for manufacturing textiles products for Vietnam exports and also gain huge market in Vietnam garment business. Having huge trade potential for textile products, both ASEAN and India have to cooperate with each other for strengthening the trade and resolve the trade barriers such as Non-Tariff Measures (NTMs).

Better connectivity is the core factor for strengthening the production networks as several forward and backward linkages within and across the region have been taking place to supply intermediate parts to manufacturing units to produce finished goods. Both efficient time management (i.e., just in time) and low transportation cost would bring potential link for the value chains between India and Thailand. With the introduction of GST in India, Regional Value Chain (RVC) sectors are likely to grow as the market becomes more efficient.

4. Physical and Digital Connectivity

Aiming to boost connectivity between ASEAN and India, connectivity projects such as the India-Myanmar-Thailand Trilateral Highway (TH), extension of TH to Cambodia, Lao PDR and Vietnam, and the Kaladan Multimodal Transit Transport Project (KMTTP) are at different stages of implementation. India is already working with Myanmar in the areas of border area development, capacity building, infrastructure development, connectivity projects, and institutional development. India, Myanmar and Thailand are already negotiating the Trilateral Motor Vehicles Agreement (MVA). The ASEAN-India Maritime Transport Cooperation Agreement is being negotiated. An ASEAN-India Civil Aviation Task Force has been established to oversee optimization of air connectivity. India has called the first meeting of the ASEAN-India Working Group on Regional Air Services Arrangement in January 20186. In addition, ASEAN and India have agreed to establish a Maritime Transport Working Group between India, Myanmar, Thailand, Cambodia and Vietnam to examine the feasibility of shipping networks7. India is also working together for an early conclusion of the Agreement on Maritime Transport between ASEAN and India.

Digital connectivity is the high-speed catalyst to ASEAN and India partnership. In digital connectivity, ASEAN needs a comprehensive overhaul of both in-country and cross-border (regional) regulations, addressing both supply-side and demand-side objectives. On the supply side, countries within ASEAN should strive to strengthen the business case for investment in digital infrastructure, revisit regulations for key sectors (such as financial services), and boost the local digital ecosystem. On the demand side, ASEAN countries aim to create a Single Digital Market and take steps to aggressively expand access to broadband. Radical steps could open avenues toward boosting the ASEAN Digital economy with a clear focus on developing the ICT infrastructure. India has been setting up optical fibre network from India to Cambodia, Laos, Myanmar, Vietnam (CLMV) countries, Thailand, Malaysia and Indonesia. India’s offer of Gigabit-capable Passive Optical Network (GPON) technology has been welcomed by ASEAN. Telecom Export Promotion Council (TEPC) has been entrusted to implement the project. Nevertheless, the potential energy security remains to be explored.

To further encourage cooperation in connectivity, India has set-up Special Facility of US$ 1 billion to facilitate projects that support physical and digital connectivity between India and ASEAN. In addition, India has set-up a Project Development Fund of US$ 77 million to develop manufacturing hubs in CLMV countries. India has three major ASEAN-India Cooperation Funds, namely, ASEAN-India Fund, ASEAN-India S&T Development Fund, and ASEAN-India Green Fund.

Plan of Action (POA) for the period 2004-2010 was developed to implement the ASEAN-India Partnership. Most of the obligations of the 2nd POA (2010-15) have been implemented. The 3rd POA (2016-20) was adopted by the ASEAN-India Foreign Ministers Meeting held in August 2015. ASEAN and India have finalised a list of priority areas for the period of 2016-2018, which would contribute towards successful implementation of the 2016-2020 Plan of Action. Out of 130 activities identified in the 3rd Plan of Action, a set of 54 activities have been already implemented.

5. People to People Contacts

To boost people-to-people contacts with ASEAN, India has been organising various programme including training programme for ASEAN diplomats, exchange of parliamentarians, participation of ASEAN students in the National Children’s Science Congress, ASEAN-India Network of Think Tanks, ASEAN-India Eminent Persons Lecture Series, etc. India is establishing four Centres of Excellence in Software Development & Training (CESDT) in CLMV countries, including the setting up of an IT Resource cum Study Centre at CDAC, Noida consisting of one existing Lab and one new Lab as well as the development of 12 e-learning courses in six identified areas. India has facilitated visit of ASEAN Musical Bands, ASEAN Youths, ASEAN Artists as part of 25 years of celebration.

To deal with such wide ranging activities, dedicated institutions are essentials. India has set-up a separate Mission to ASEAN in Jakarta in April 2015 and ASEAN-India Centre (AIC) in New Delhi in 2013 to help facilitate India’s engagements with ASEAN. To facilitate Track II dialogue, India has set-up the ASEAN Studies Centre (ASC) in Shillong in 2016, and conducted series of dialogues, seminars and conferences across the country. Delhi Dialogue (DD) is one of the flagship projects, which has gained popularity in both ASEAN and India. Besides, India has extended the e-visa facility to all ASEAN countries.

6. Other Areas of Cooperation

India has been cooperating with ASEAN by way of implementation of various projects in the fields of Agriculture, Science & Technology, Space, Environment & Climate Change, Human Resource Development, Capacity Building, New and Renewable Energy, Tourism, People-to-People contacts and Connectivity etc. For example, Space Project envisaging establishment of a Tracking, Data Reception/Data Processing Station in Ho Chi Minh City, Vietnam and upgradation of Telemetry Tracking and Command Station in Biak, Indonesia; Setting up of Centres of Excellence in Software Development & Training in CLMV countries are some of the major projects under implementation.

In the field of agriculture, India and ASEAN have projects such as Exchange of Farmers, ASEAN-India Fellowships for Higher Agricultural Education in India and ASEAN, Exchange of Agriculture Scientists, Empowerment of ASEAN-Indian Women through Cooperatives etc. In the S&T field, there are projects such as ASEAN-India Collaborative Project on S&T for Combating Malaria, ASEAN-India Programme on Quality Systems in Manufacturing, ASEAN-India Collaborative R&D Project on Mariculture, Bio-mining and Bioremediation Technologies, etc.

India has been supporting ASEAN specially CLMV countries under the Initiatives for ASEAN Integration, which include projects on Training of English Language for Law Enforcement Officers in CLMV countries and Training of professionals dealing with capital markets in CLMV by National Institute of Securities Management Mumbai.

In case of security, ASEAN countries also look to working closely with India in securing the trade routes, freedom of navigation in international waters, over flights, threat or use of force to intimidate, reducing piracy along the Malacca Straits, cooperating in addressing traditional and non-traditional security challenges, including in areas of de-radicalization, prevention of violent extremism and cyber crime. They also look to India’s support in dealing with natural disaster management. The Tsunami of 2005 made us all aware, how important and essential it was to work together when faced with natural disasters. India supports ASEAN’s efforts in handling disasters and risk reduction as envisioned in ASEAN Community Vision 2025 on Disaster Management and also support ASEAN in the realization of ASEAN Declaration on One ASEAN, One Response.

7. Way Forward

There is immense importance of the human factor and cultural links in today’s contemporary discourse, where strategic ties and infrastructure and geopolitical formations have taken centre stage. Youth is needed to be engaged in this process of interaction between India and ASEAN countries in a more systematic way.

Safety of cultural heritage is related to national security and requires greater coordination and cooperation to end such transnational crimes between ASEAN and India.

ASEAN has redesigned the Master Plan on Connectivity (MPAC) 2025, which ASEAN leaders have adopted at the ASEAN Summit in Vientiane, Lao PDR in 2016. This master plan has updated design and strategy for connectivity improvement in ASEAN as well as Dialogue Partners such as India. The MPAC 2025, which succeeds the Master Plan on ASEAN Connectivity 2010, focuses on five strategic areas: sustainable infrastructure, digital innovation, seamless logistics, regulatory excellence and people mobility. We have to make a synergy with MPAC and design strong implementation mechanisms to ensure that effective coordination takes place among various agencies as well as with dialogue partners such as India. Such cooperation has the potential to absorb large investments in infrastructure and industry. India and ASEAN should improve physical and digital connectivity; develop industrial or special economic zones, logistics and customs systems, etc.

ASEAN and India shall aim for harmonisation of standards and mutual recognition, which would lead to encourage more trade and investment between the two partners. Harmonisation of standards will not only boost export competitiveness but will also improve the ease of doing business. ASEAN and India may consider setting up a mechanism for greater cooperation between the standards setting bodies of the two partners.

India may set up separate project monitoring cell of 3-4 members with necessary expertise and experience to follow on these projects with a clear mandate to ensure quality and timely execution.

ASEAN and India shall fast-track the digital connectivity projects. Connectivity with islands of the Philippines and Indonesia shall be considered in the ASEAN-India Connectivity Master Plan.

Thailand has also prepared Master Plan for CLMV countries. India can utilise the opportunity to be a part of Master Plan for CLMV countries. On the other, ASEAN shall also invest in connectivity projects being implemented in India at present. To guide designing of the ASEAN-India Connectivity Master Plan, ASEAN-India Connectivity Task Force may be constituted with participation of ASEAN HoMs.

Greater involvement of Northeast in India’s Act East Policy (AEP) is essential. Northeast India has the potential to build two gateways: one at Guwahati and another at Shillong. Infrastructure development in India’s Northeast should be our utmost priority. There is a great need to factor Northeast in ASEAN by making borders of the region vibrant, particularly in Manipur, Mizoram, Tripura, Meghalaya and Assam, in terms of connectivity, infrastructure, investment, which in turn will make the region a hub for health, education and tourism.

8. Concluding Remarks

India and ASEAN are becoming more economically integrated and there is ample scope for deepening this integration process. ASEAN and India shall continue to work closely to build or maintain strong working relations, converge towards connectivity development issues and to protect the global trading system on which both ASEAN and India so heavily depend. Time is ripe for India to continue strengthening economic partnership with ASEAN.

Given India’s diversity and geographical contrasts, an integrated transport network with Southeast Asia in particular is required to support the integration process. Stronger connectivity across India’s Northeastern Region will build a stronger network of cross-border production chains, particularly with Southeast Asia. To facilitate the production networks, free flow of investment and movement of skilled labourers across the region are must. Indian government under the leadership of Prime Minister Narendra Modi has taken up huge infrastructure development projects in Northeast India. India has remained committed to working closely with ASEAN with a view to bringing the ASEAN-India Strategic Partnership to new heights. A series of events have been organised throughout 2017-18 on the theme “Shared Values, Common Destiny”, and there will be many more in coming months.

Finally, ASEAN-India 25th year celebration will reach its culmination on the Republic Day of 26th January 2018, when all ASEAN Heads of the States will be the guests at the Republic Day 2018 and a special Commemorative Summit will be held at Delhi. The ASEAN-India relations have achieved much over the last 25 years. But its success has given rise to new challenges. It will continue to play a central role in promoting economic integration in Asia and the Pacific and inclusive development over the next 25 years.

References:-

1 Refer, Saran (2018), which presents a set of freshly written research articles on ASEAN-India civilizational links.

2  Refer, the Inaugural Address delivered by Prof. Lokesh Chandra, President, ICCR at the International Conference on “ASEAN-India Cultural Links: Historical and Contemporary Dimensions”, organised by ASEAN-India Centre (AIC) at New Delhi on July 23, 2015, available at Saran (2018)

3  Also read, External Affairs Minister’s speech delivered at RIS on 22 June 2017, http://mea.gov.in/Speeches-Statements.htm?dtl/28550/Keynote+Address+by+External+Affairs+Minister+on+ASEANIndia+Partnership

4   A series of studies were conducted on ASEAN-India relations in recent years. Refer, for example, De (2014a), De and Suthiphand (2017), AIC-RIS (2014a, 2014b, 2015a, 2015b).

5 Refer, for example, AIC-RIS (2015a, 2017) for further discussion on RVCs between India and some of the ASEAN countries.

6  Based on author’s own communication with a senior officer of Ministry of Civil Aviation (MoCA) on 15 December 2017.

7  Refer also De (2014b), AIC-RIS (2015a) and RIS (2012)

ASEAN-India Centre (AIC) – Research and Information System for Developing Countries (RIS) (2013) ASEAN-India Strategic Partnership: Perspectives from the ASEAN-India Network of Think-Tanks, AIC-RIS, New Delhi

ASEAN-India Centre (AIC) – Research and Information System for Developing Countries (RIS) (2014a) ASEAN-India Maritime Connectivity Report, AIC-RIS, New Delhi

ASEAN-India Centre (AIC) – Research and Information System for Developing Countries (RIS) (2014b) Dynamics of ASEAN-India Strategic Partnership, AIC-RIS, New Delhi

ASEAN-India Centre (AIC) – Research and Information System for Developing Countries (RIS) (2015a) ASEAN-India Economic Relations: Opportunities and Challenges, ASEAN-India Centre, New Delhi

ASEAN-India Centre (AIC) – Research and Information System for Developing Countries (RIS) (2015b) ASEAN – India Development and Cooperation Report 2015, Routledge, New Delhi

ASEAN-India Centre (AIC) – Research and Information System for Developing Countries (RIS) (2016) ASEAN-India Air Connectivity Report, AIC-RIS, New Delhi

ASEAN-India Centre (AIC) – Research and Information System for Developing Countries (RIS) (2017) Mekong-Ganga Cooperation: Breaking Barriers and Scaling New Heights, AIC-RIS, New Delhi

De, Prabir (2014a) ASEAN-India: Deepening Economic Partnership in Mekong Region, Bookwell, New Delhi

De, Prabir (2014b)“India’s Emerging Connectivity with Southeast Asia: Progress and Prospects”, ADBI Working Paper # 507, Asian Development Bank Institute (ADBI), Tokyo

De, Prabir and Suthiphand Chirathivat (eds.) (2017) Celebrating the Third Decade and Beyond: New Challenges to ASEAN – India Economic Partnership, Knowledge World, New Delhi

Research and Information System for Developing Countries (RIS) (2012) ASEAN-India Connectivity: India Country Study, RIS, New Delhi

Saran, Shyam (ed.) (2018) Cultural and Civilisational Links between India and Southeast Asia: Historical and Contemporary Dimensions, Palgrave Macmillan, Forthcoming

(Prof. Prabir De is a Professor at Research and Information System of Developing Countries (RIS) and

Coordinator, ASEAN-India Centre (AIC), RIS, New Delhi. Views are author’s own.)

 

(This article is carried in the print edition of January-February 2018 issue of India Foundation Journal.)

The end of the Cold War, a complicated security environment to India’s north-west that inhibited the development of India’s historic relations with Central Asia and beyond, and a domestic balance of payments crisis provided the context and opportunity for Prime Minister Narasimha Rao to overcome Cold War differences with the ASEAN and effect a strategic and economic turn in India’s external relations towards an economically rising South East Asia with the announcement of India’s ‘Look East’ policy in 1991. In the 25 years since India became a Sectoral Dialogue Partner in 1992, India’s relationship with ASEAN and South East Asia, has become one of it’s most defining external relationships marked not only by the steady elevation of its formal status to Full Dialogue Partnership in 1996, Summit level partner in 2002 and Strategic Partnership in 2012; Free Trade Agreements in 2003, 2009 (in goods) & 2014 (in services and investments); and participation in 30 dialogue mechanisms including the ASEAN Regional Forum (ARF) and other security related fora, but also a robust people to people relationship grounded in history, culture, trade, investments, the Indian diaspora, travel, tourism, entertainment, and growing economic integration. For the ASEAN too, a rising India is seen as a stabilizing factor in the emerging Indo-Pacific region challenged by a powerful and assertive China and doubts about US leadership in the 21st century.

Prime Minister Modi’s initiative to invite all ASEAN Heads of State to the upcoming Republic Day for a Commemorative Summit marking the 50th Anniversary of ASEAN and 25th anniversary of our formal relationship could therefore have not taken place at a more propitious time when the world is in flux, the strategic underpinnings of ASEAN are being called into question, and new alignments are developing in the Indo-Pacific in response to the rise of China. It could mark a watershed in our relationship with a political, economic and cultural grouping that grew around a post World War II economic and political order in Asia anchored by the US, but as the Cold War came to a close and China emerged as an economic powerhouse, drew in its communist and military-led neighbours into its fold to create a very heterogeneous grouping molded by a culture of consultation and consensus, and established progressively stronger economic ties with China. In the absence of an obvious strategic adversary after the Cold War, it did not feel the need to, nor perhaps would it have had the capacity to, provide for its own collective security. Its strategic underpinning was implicitly provided by the US.

Today, that situation has changed. The remarkable rise of China over the last 30 years and more led by the Communist party of China, accompanied by its growing political, strategic and economic self confidence manifested in major diplomatic and charm offensives world wide; its shedding of inhibitions to project its political and economic models as examples for others to follow or benefit from; its calibrated military assertiveness and rapid and ambitious modernization; its strategic economic projection through the Belt and Road Initiative, the Asian Infrastructure and Investment Bank (AIIB) and other initiatives; and the unrivalled position of President Xi Jing Ping and his policies enshrined at the 19th Communist Party Congress recently, have changed the equilibrium, and equations, in the region that countries are still trying to grapple with. Just when there is a need for a steady and firm US hand in Asia, questions about its current leadership and decision-making have left a region a little nervous and looking for stabilizers.

Little wonder then that new alignments and hedging strategies are shaping up as countries from Japan to India try to safeguard their own security and strategic interests. It has catalyzed voices in Japan to review its defence and nuclear postures (possibly causing some nervousness in some quarters on account of their World War II experiences, though the context today is very different and such a scenario unlikely). Australia, Japan, the US and India have come together, albeit still tentatively, in a democratic ‘Quadrilateral’ unwelcome to China. Regional powers have accelerated naval and military exercises to deal with imaginable challenges and threats.

ASEAN itself is in a bit of a disarray on how to deal with China, the US, and contested claims in the South China Sea testing its unity and the limits of diplomacy in dealing with unilateralism and force in the matter of territorial claims and freedom of navigation as enshrined in the UN Convention on the Law of the Sea. The Indo-Pacific has emerged as a new theatre of maritime competition.

Faced with concerns about China’s intentions and possible future trajectory and US unpredictability and inconsistency, the Special Japan-India Strategic and Global Partnership for peace and prosperity in the Indo-Pacific and the world forged by Prime Ministers Narendra Modi and Shinzo Abe through their annual summits, most lately in September 2017, provides an opportunity for an alternative strategy to deal with the destabilizing aspects of China’s rise through an enhanced economic partnership with ASEAN countries that relies on competition rather than confrontation and could form a part of the 25th anniversary of India-ASEAN relations and the 5th anniversary of their Strategic Partnership. Its key elements follow.

First, most current approaches to dealing with the hard aspects of China’s rise are primarily security-driven and geo-political in nature. However, a purely military-political strategy without economic content would be brittle and tend towards confrontation.

The rise of China and its global projection (through the BRI, AIIB, BRICS etc,) has been built on its economic rise, and on huge infrastructure and connectivity projects intended to power its economy and project its strategic influence worldwide. The India-ASEAN response too should be economic, but not imitative, and capitalize on their strengths. It should focus on manufacturing and services, value adding, employment generation, developing value chains, and people-centered development utilizing existing and planned infrastructure, ASEAN, Chinese, Indian and others. It should also always keep environmental protection, sustainability and impact on climate change at the forefront.

Second, such a response should address the diversity of South East Asia by crafting separate but complimentary strategies for continental or terrestrial, and maritime, peninsular or littoral South East Asia. Its littoral dimension would be suitable for large corporate-driven investment in manufacturing, services, infrastructure and the blue economy in maritime South East Asia from Philippines to Malaysia, as part of the regional and global value chains stretching from East to India, Africa, Europe and the Atlantic.

Its terrestrial and continental dimension would however require a priority towards much more bottom-up approaches building on local resources and products. The two approaches are of course not mutually exclusive. They could compliment each other and integrate as the latter grows.

Third, while acknowledging that connectivity is an imperative for economic growth, it should, particularly in its terrestrial dimension, rebalance the current mantra of connectivity with a better balance between connectivity and productivity, and between large, medium and small investments, including through cooperatives (modeled on the highly successful dairy cooperative movement of India), micro-credit and self help strategies.

It should accord priority to building on the existing rural economy of those who live off the land, water and forests (who still constitute the majority of people in the region) through environmentally sustainable development of agriculture, livestock, fisheries, forests, education, health, physical and digital connectivity and a multitude of other small projects on a large scale over large, top-down, corporate or state driven projects prioritizing large power and transport infrastructure projects that are usually environmentally and socially disruptive.

Such an approach would develop a much broader ownership and employment base benefiting a much wider cross-section of people at the base of the economy, and bring political dividends for host countries and partners. It would slightly alter the relationship between connectivity and productivity. It would use existing transport infrastructure to start with the ‘first mile’, improving and getting the local product to wider markets, with infrastructure growing organically with markets rather than starting big and worrying about the ‘last mile’ later.

Fourth, Japan could be a key partner with the Special Japan-India Strategic and Global Partnership and the proposed Africa-Asia Growth Partnership linked through ASEAN and India as its pillars. This does not mean others are excluded but that the Japanese partnership could provide the spine for the strategy, and enlarge choices for ASEAN and other countries.

Fifth, US political, diplomatic and economic support for Japan and ASEAN would remain critical, but the strategy would not be US-centric or US driven; it would be regionally driven.

Sixth, such an economic strategy should not be seen as anti-China; rather it should be seen as an alternative to China. It would be competitive, not confrontational.

As we know, competing on its own, Japan has been losing ground to China economically, globally and in Asia. India too cannot yet compete strongly with China in South East Asia and elsewhere in infrastructure building or manufacturing and exporting goods out of India taking into account cost of production, tariffs and transaction costs. But India can compete with China on the combination of cost, quality, technology, reliability and service with a suitable branding, if it invests in ASEAN, taking advantage of the ASEAN Economic Community (AEC) and local factors of production in the Cambodia, Laos, Myanmar, Vietnam (CLMV) in particular.

A well-crafted India-Japanese economic partnership can complement each other capitalizing on their respective strengths, and revitalize and enhance Indian and Japanese competitiveness across a range of industries from small to big, agro-based and light industries, machine tools and infrastructure, generating local employment, adding value of natural resources and primary products, raising economic productivity and lifting up the industrial and technological base of the economy in general. With its diverse economic base, ASEAN could be an integral partner.

Seventh, such a strategy will require some revamping of our investment and official development partnership policies. So far, the primary instruments of our external economic policies have been on trade and more recently, development partnership including Government-to-Government Lines of Credit. The focus of our investment policy has been almost entirely on attracting inward investment. There is not much policy support for outward investment.

Perhaps this is because we tend to think of outward Indian investment as a net outflow of capital. This is an outdated view. In a globalized economy, capital flows are circular and can be ploughed back one way or another. Virtually every other major country in the world, be it Japan or China, or the US, or Germany, looks at foreign investment in terms of global economies of scale, comparative advantages, and value chains, and in strategic terms. Unlike trade which is almost by definition transactional, foreign investment conveys a long-term stake in the country and creates an economic interdependence from which both investing and host nation benefit. We need to adopt foreign investment in our extended neighborhood including ASEAN as an arm of our foreign policy.

This also means that we need to compliment the concept of Make in India with the idea of ‘Make in Partnership with India’ in our near abroad wherever possible through joint ventures with host country partners taking advantage of tariff advantages offered by the ASEAN Economic Community and local factors of production to invest in South East Asia, especially in the least developed economies of the CLMV.

Likewise, in our development partnership, virtually all our investments have been government investments in development projects and Government-to-Government Lines of Credit. This is true for our various funds to the ASEAN as well. While this is important from the point of building bilateral relations in general, we need to facilitate cheaper, commercial, buyers and sellers Lines of Credit to stimulate private sector trade and investment between India and Southeast Asia, and direct at least some of our Lines of Credit away from large, long gestation G2G credit lines to more innovative projects with more direct social impacts on the grassroots. While this may involve greater outlays on cheaper credits and risk insurance, the overall burden on the government budget should be much less.

Eighth, we need to give a special place in our investment and development policy to small and medium enterprises especially in employment intensive and livelihood based sectors like agriculture and agro-industries, but also light industries like textiles, consumer goods, pharmaceuticals, electronics and machinery; social development sectors education, health, IT, skills development etc.; and environment friendly techniques, industries and technologies.

A suitable financing facility for SMEs is of particular importance. Typically, it is much easier to find financing for large companies investing in big projects that are frequently socially and environmentally disruptive even as the dominant development narrative marketed by international and bilateral financial and development institutions is high on the jargon of ‘inclusive, equitable and sustainable’ growth. In reality, it is quite the opposite. Some handholding would also be required in the form of consultancies, entrepreneurship development, management training, and skills development. The Government of India has made a welcome beginning in this direction with a Special Purpose Vehicle of the Eximbank of India for such investments in the CLMV countries. This can be expanded much further.

Ninth, no doubt the India-Japan economic partnership has a strategic dimension, but participating in it is not an either-or choice. Rather, it will enhance ASEAN’s and member countries’ choices.

Lastly, this economic and strategic partnership does not preclude a security or political dimension or other partnerships. Ideally, this should take place through existing ASEAN fora such as the ARF, ADMM+ and EAMF, but diplomacy may have its limits against brute power and alternatives such as bilateral cooperation and collective security strategies may also need to be explored. The recent meeting of the ‘Quad’ could be a message in this direction or a hedging strategy. The ‘Quad’ also needs to find a way to include ASEAN in its dialogue on freedom of navigation and security in the Indo-Pacific which it straddles, affects it closely, and upholds.

These principles could be translated or implemented in many ways. One way, proposed here could be through the development of economic corridors for continental and maritime South East Asia.

In continental South East Asia or the GMS, we can build upon PM Modi’s idea of a North East India-Myanmar Industrial Corridor, the Trilateral Highway, and the East West Corridors of the Master Plan for ASEAN Connectivity (MPAC) to build upon a number of terrestrial economic and investment corridors from the North East of India through the Greater Mekong Sub-region up to Vietnam. These could be called the India-Greater Mekong Sub-region land corridors. Such corridors should integrate as a priority the North East of India and the CLMV countries that suffer a development deficit. The latter also enjoy some measure of protection and a grace period to harmonize their tariffs and fully integrate into the ASEAN Economic Community.

These corridors would consist of a series of agro-processing, light industrial, and services hubs based on local resources, produce and human resources utilizing existing connectivity infrastructure and building upwards and outwards to newer and bigger markets, somewhat inverting the current emphasis on connectivity first and the rest later.

To start with, it would survey the productive potential of the regions that could be serviced along these routes based on natural resources, primary produce and availability of labour; identify possible industrial hubs and zones; fill in missing links in connectivity; find energy (preferably renewable), funding and capacity-building solutions; and summon the political will to develop these east-west corridors. These corridors should be based on the development of local agriculture (rice, beans and pulses, oilseeds, horticulture, vegetables, plantation crops like rubber, cashew, tea, coffee etc.) and agri-based and traditional industries such as bamboo, cane and other local sustainable forest based products, light industries, value-adding to some extractive industries mindful of environmental and climate change impacts and implications, and the required social infrastructure. Joint ventures, consortia and other partnerships involving Indian, ASEAN, Japanese and other East Asian or Australasian companies could enable comprehensive solutions for energy, training, financing and logistics, enhance scale, and cushion risk.

Such a processing and manufacturing based strategy should avoid the Chinese model of investment in extractive industries and development of arteries of import of raw material and export of manufactured goods. If anything, it should add value to natural resources and primary produce. Indeed, competition from cheap manufactured goods from China has arguably had the effect of throttling the development of manufacturing industries in the CLMV.

Leaving aside possible rail networks for the moment and concentrating on the highways in the GMS that are part of the ASEAN Highway Network, the first of these corridors would be the Trilateral Highway connecting the North East of India at Moreh-Tamu on the India-Myanmar border southeast-ward up via several cities and crossroads to Myawaddy-Mae Sot on the Myanmar-Thailand border described as the Western Corridor in the MPAC.

The second is the East-West Economic Corridor from Mawlamyine through Thailand and Laos to Da Nang, Vietnam1. India has offered extensions of this highway northeastwards through Laos and eastwards through Cambodia which can be developed.

The third is the Southern Corridor from Dawei (Myanmar) via two routes: Bangkok–Phnom Penh–Bavet (Cambodia)–Ho Chi Minh City–Vung Tau (Viet Nam), or Bangkok–Siem Reap–Sung Treng (Cambodia)–Quy Nhon (Viet Nam).

While the first two corridors would be connected through the Asian Highway 1 from points in Northeastern India via Mandalay, the third would connect from the eastern seaboard of India by sea to Dawei on the Andamans sea coast of Myanmar, and then follow a new road to the Thai border land and routes through Thailand thereafter.

There is also a relatively neglected northern corridor starting from the AH1 at Meiktila via via Taunggyi on the Shan plateau across the Salween (Thanlyn in Myanmar) to Kyaingtong on the eastern Shan, and south to Tachilek on the Thai-Laos border to Laos and Vietnam.

A new variation to this corridor can also be developed from Kyaingtong via the newly opened Laos-Myanmar Friendship bridge over the Mekong at Xien Kok through Laos via Luang Namtha, to northern Vietnam at Pang Hoc near Dien Bien Phu and on to Hanoi and Haiphong. Apart from some stretches in NE India and Myanmar which are in the process being upgraded by 2020 and are common to all east-west routes touching India, and a short stretch from Tale to Xien Kok on the Laos border that needs up-gradation, the rest of the route is already motorable, though there are also insurgency affected areas on the India-Myanmar border and Shan plateau that will need to be addressed.

This will be the shortest and most direct route between India and Vietnam. If this cannot be incorporated into the MAPC, it could be taken up as an India-Myanmar-Laos-Vietnam corridor with Myanmar and Vietnam as investment partners.

Each of these planned and possible corridors would ultimately connect India to the Vietnamese cities and ports of Hanoi, Haiphong, Da Nang, Ho Chi Minh City, Nam Cam, Vung Tau and Quy Nhon through Myanmar, Laos, Cambodia and/or Thailand linking the fertile Brahmaputra, Chindwin, Ayeyawady, Mekong and Da and Red river valleys and the Shan plateau and unlocking the untapped agricultural, natural, industrial, tourism and other productive potential from the Northeast of India through Shan state and the Mekong up to Vietnam.

The second arm of this strategy would be the maritime-littoral corridor. This would link the eastern seaboard of India, the Bay of Bengal and the Andaman Sea, through Malaysia, Singapore and Indonesia, Brunei, Thailand Vietnam and the Philippines to the East Asian economies. This would in some ways retrace ancient trade routes linking the Kalingas, Pallavas and Cholas to Southeast Asia, but link them with special, industrial and trade zones in the region to form part of a regional and global value chain linking Japan, Korea, China, Taiwan, Vietnam, Brunei, the Philippines, Thailand, Indonesia and Malaysia to India and eventually as part of the Asia-Africa Growth Corridor, to Africa, the Gulf and Europe. This artery is already receiving the attention of think tanks, industry bodies and policy makers across the region. Indo-Japanese partnership along this corridor could add synergy to it. This could be called the Asia-Africa Maritime Route. One link that could be explored on this route for industries and shipping is a Chennai-Medan corridor touching also the Andaman and Nicobar islands of India.

The third arm would use Myanmar as a springboard for a mixed corridor starting with the Kaladan Multimodal Transit Transport Project, but also the Bay of Bengal, the eastern seaboard of India and the Special Economic Zones of Kyaukphyu, Tillawa and Dawei through the East West Corridors of the Master Plan for ASEAN Connectivity to ports of Vietnam and beyond. These would involve transshipments at some points, of which Dawei could be the shortest and most important. The potential of this has hardly been explored, and should be examined urgently. This could be called the BIMSTEC-GMS corridor. Both this and the maritime corridor would be suitable for the sustainable development of the Blue Economy.

These corridors may also necessitate a revision of the regional and sub-regional cooperation architecture involving India and the Greater Mekong Sub-region like the BIMSTEC, MGC and CLMV countries. It may well be desirable to enlarge BIMSTEC to include the CLMV countries as observers and/or members in the greater BIMSTEC-GMS cooperation forum within the ASEAN.

Some of these corridors and ideas may at first sight appear unorthodox, unrealistic and contrary to current economic thinking from both a conceptual and funding point of view. In fact, funding requirements for manufacturing industries as this strategy emphasizes, are much less than for mega connectivity and infrastructure projects and can be addressed through existing initiatives with only a little additionality focusing mainly on commercial credit lines, risk coverage and technical assistance for the private sector in general and SME sector in particular.

A number of Indian initiatives like the Trilateral Highway and its proposed extensions, the Kaladan project, the US$ 1 bn Line of Credit for physical and digital connectivity in the ASEAN, the Duty Free Trade Preference (DFTP) Scheme of the Ministry of Commerce of India, ongoing bilateral Indian Lines of Credit to the CLMV countries, and the Eximbank fund for SMEs in the CLMV could be leveraged to advance the process. Initiatives under the BIMSTEC, MGC, and those oriented towards the CLMV could also be subsumed under it. Regional and international development banks like the ADB, New Development Bank (NDB), World Bank and IFC, Asian and international investors, and the international community at large too could be attracted to the idea. Indeed many of them are already advocating and working in this direction. The India-Japan strategic and economic partnership and incipient Asia Africa Growth Corridor too could be leveraged.

In the final analysis, whether or not such a strategy could work is more a question of political and economic philosophy, persuasion, strategic vision, political will and husbanding resources than funding per se.

1  Khon Kaen-Mukdahan (Thailand)-Savannakhet (Lao PDR)-Dong Ha-Da Nang (Vietnam)

 

(Shri Gautam Mukhopadhaya is a former diplomat who served as the Ambassador of India to Syria, Afghanistan and Myanmar. He has also worked in the UN Headquarters in New York as a Consultant on Social Development and has been a visiting scholar at the Carnegie Endowment for International Peace.         This article has been adapted from a lecture at the National Institute of Advanced Studies, Indian Institute of Science, Bengaluru, organized jointly with the South East Asia Research Group on December 8, 2017.)

 

(This article is carried in the print edition of January-February 2018 issue of India Foundation Journal.)

On the occasion of 50th anniversary of ASEAN while creating a balance sheet of India-ASEAN partnership we look at the 25 years of missed opportunities for India – from the period 1967- 1992 and thereafter at 25 years of engagement – from 1993-2017, in an attempt to understand India and ASEAN engagement over the years, particularly in the context of the changing geo-politics of the Indo-Pacific region. The Paper begins with a brief snapshot of ASEAN and its partnership with India. In this Golden Jubilee year of the establishment of ASEAN and Silver Jubilee year of its dialogue partnership with India, this Paper endeavours to venture into the multi-dimensional nature of ASEAN and its multi-faceted relationship with India at large.

ASEAN: A Snapshot

Fifty years is usually not a long time in the lifetime of a nation-state. But for ASEAN, a regional conglomeration of ten separate nation-states in Southeast Asia, fifty years has spelled a transformational experience for the region as indeed also the world. Ever since its founding, the regional grouping apart from driving the regional conversations forward around multiple regional and global subjects in a more orderly and well-defined fashion, has injected a sense of predictability and pattern to the way regional multilateralism is conducted in this part of the world. In fact in time, it has evolved as the most institutionalised regional association in Asia. As a collective identity, the ASEAN has not only addressed a welter of issues within the grouping but projected a more potent force for action and bargaining when dealing with players and institutions exogenous to the region. In some ways, it may well be argued that the enduring and lasting success of ASEAN as a regional institution has been the primary reason why other regional entities have not quite proved to be as promising and as fulfilling as the Southeast Asian grouping, notwithstanding the different contexts and purposes for which they were founded in the first place. Perhaps it has something to do with the characteristic resilience of ASEAN as an organisation. When it started out, the Bangkok Declaration of 1967 chiefly had ‘economic, social, cultural, technical, scientific and administrative fields’ in mind apparently even as the underlying motive and the context may have been altogether different. Then the Zone of Peace, Freedom and Neutrality (ZOPFAN) in 1971 had reflected the shifting great power balance in wider Asia. Hallmark of a cautious and thinking institution, it had taken no less than almost a decade for ASEAN to meet at a summit level in 1976 when it accomplished the Declaration of ASEAN Concord and the Treaty of Amity and Cooperation (TAC) with the latter formalising the core principle of non-interference as underpinning the terms of engagement among member states. Buoyed by their individual economic successes in the 1970s and 1980s, the ASEAN 6 had taken their economic agenda to a new level when they decided to establish ASEAN Free Trade Area (AFTA)
in 1992.

As Cold War eventually wound up, the ASEAN’s more formal initiative on regional security fructifying in the ASEAN Regional Forum (ARF) had once more been clearly demonstrative of the organisation’s innate ability to reinvent itself and retain its leadership role as the foremost ideologue of regional multilateralism. When the 1997 Asian financial crisis had scarred virtually all of ASEAN economies, the overtures to the three East Asian nations and shaping up of ASEAN Plus Three (APT) was an exercise emblematic of making virtue out of adversity. From shaping the contours of ASEAN Plus 3 to being at the core of the East Asian Summit, ASEAN has not only retained the reins of regionalism in its own hands, it has expanded its diplomatic weight and footprints from Southeast Asia to the broader East Asia and Asia Pacific. The 2007 Charter besides bestowing on the institution a legal personality, also sets it well on course to truly become an Economic (AEC), Political-Security (APSC) and Socio-cultural (ASCC) community.

Without doubt, ASEAN’s normative benchmarks as constituting renunciation of use of force, non-interference and peaceful settlement of disputes have served the region well for nearly five decades now. Southeast Asia once speculated as the ‘Balkans of the Orient’ has refused to fall apart simply not living up to its borrowed name, and thankfully so – unlike what befell the original Balkans in Europe unfortunately. Boasting of the world’s third largest market on the back of a population of 625 million people and with a combined GDP of US$ 2.6 trillion, ASEAN is already the 7th largest economy in the world projected to be the fourth largest by 2050. No wonder, in a glorious run over fifty years since 1967, the iconic grouping has transformed the region from one of battlefields to marketplaces! As EU increasingly gets weighed down by the post-BREXIT tremors and globalisation pushes back in the reverse, what better time than now to re-examine ASEAN and how it could perhaps carry the flag of regional multilateralism.

Balance-Sheet of
India-ASEAN Partnership

Transformation of India’s foreign policy from the rhetoric of ‘Look East’ to the action oriented ‘Act East’ has reiterated its focus on the extended neighbourhood in the Asia-Pacific. The ‘Act East’ policy was crystallised to underline the importance of East Asian neighbours of India and make them a priority in our foreign policy. It promises to inject new energy into India’s engagement with Asia in the economic, political and security domains. “It has widened the canvass by drawing Australia into India’s Eastern Strategy and the South Pacific back on Delhi’s political radar”1. In this most recent proposition to woo the Southeast Asian neighbours by reviving historical and civilisational ties and engaging in defence and security cooperation, India has raised alarms for the rival powers in the neighbourhood. Given the history of United States realpolitik of shifting alliances, priorities and commitments and its recent rebalancing strategy in the Asia-Pacific and the China’s rising influence in the region, the Southeast Asian countries are welcoming greater Indian involvement in the regional architecture of Asia. In the context of such a geo-strategic mix, they have been following interactions between China and the United States and thereby trying to maximize their strategic independence. In the shifting balance of power in the world politics, India’s Act-East policy emerges as a noteworthy characteristic determining the ‘Great Game’ politics in the Indo-Pacific.

India as a close friend and partner of ASEAN is equally affected by the developments in its extended neighbourhood. Rooted in deeper historical and civilisational ties, augmenting India-ASEAN relations have been the primary focus of our ‘Act East Policy’. In fact, India places ASEAN at the heart of its ‘Act East Policy’ and centre of its dream of an ‘Asian Century’. As ASEAN celebrates fifty years of its existence, India also celebrates 25 years of India-ASEAN Dialogue Partnership. In this relationship, we have graduated from a Dialogue Partner to Summit level interactions and finally to Strategic Partnership in recent times thereby learning lessons of deeper economic integration and comprehensive engagement with Southeast Asian neighbours. Given this background, the next section seeks to make an assessment of the Balance sheet of India-ASEAN partnership by dwelling upon the first 25 years of missed opportunities and the later 25 years of engagement and honeymoon period of India and ASEAN.

25 Years of Missed Opportunities

According to Prime Minister Narendra Modi, “ASEAN began in times of a great global divide, but today as it celebrated its Golden Jubilee, it shone as a beacon of hope; a symbol of peace and prosperity”2. “In 1967, when the whole region was seething with buzz of uncertainties, establishment of ASEAN prevented the ‘Balkanisation of Southeast Asia’, and established the thrust on search for common values, replacing conflict with economic, political, cultural and strategic cooperation”3.

Nevertheless, establishment of ASEAN was viewed with doubts in an ideologically polarised Southeast Asia where “intra-regional ideological polarisation and intervention by the external powers were marked features of geo-political landscape of Southeast Asia”4. This prevented the newly established regional community in Southeast Asia – ASEAN, to embrace India openly in spite of the cultural, religious and cvilisational linkages between the two regions. During the politics of Cold War, India-ASEAN relations were subjected to distrust and doubts about each other’s intentions and ideologies. “The narrative of India-ASEAN relations during the Cold War could be summarized as missed opportunities due to political mistrust, economic uncertainties and occasional military threats”.5

India’s opposition to the United States during its intervention in Vietnam also created suspicion in its expected role in ASEAN6.  During the Cold War politics, India and ASEAN were in ideologically opposed camps. This was seen by India as a means to contain communism, which was on the rise due to the spill over from the Vietnam War. “While South East Asian nations had approached India as early as 1967 to join the ASEAN, India remained lukewarm to their overtures because of overall geopolitical situation in the region and the ongoing Cold War redux in Indo-China at that time”7. India’s support to Vietnam as opposed to the ‘hegemonic’ desires in Indo-China during 1960s resulted in the reciprocal loss of support from the United States. Opportunity cost was in the form of the United States President Johnson postponing the planned visit by Indian Prime Minister Lal Bahadur Shastri to the United States. It further resulted in the cancellation of a planned visit by the United States President Ford to India a decade later, thereby widening the gap between India and ASEAN member countries irrespective of the geographical proximity and historical and cultural ties between the people of the two regions8.

Another case of lost opportunity during the first 25 years of the establishment of ASEAN was visible in the India’s support to the Vietnam’s backed Heng Samarin regime in Cambodia and its strategic ambitions in rest of Indo-China. This further alienated India’s place in the United States policy prescriptions and its approach towards ASEAN member states9. “After the collapse of the Khmer Rouge regime, India recognized the new government and re-opened its Embassy in Phnom Penh in 1981 when much of the world shunned Cambodia”10. This turned out to be a major diplomatic miscalculation. The resultant strategy of Prime Minister Indira Gandhi’s cancellation of the scheduled discussions with ASEAN and internationally embracing the communist regime signified growing bitterness in India’s approach towards existing ASEAN members 11. The stalemate continued until the collapse of Soviet Union, when India became a Sectoral Dialogue with ASEAN in 1992 and established full Dialogue partnership in 1995.

Southeast Asia witnessed a major change in its political atmosphere in the aftermath of the Cold War – especially after the settlement of the Cambodian crisis and change in the ASEAN’s perception towards Vietnam as a potential ally. This contributed in a big way to the emergence of a strong strategic and defence ties between India and ASEAN member countries. This period also saw “the beginning of India’s Look-East Policy which was intended to reach out to the countries of East and Southeast Asia which had been neglected by India in spite of cultural, religious, geographical proximity and historical links”12. With the launching of India’s economic liberalisation programme in 1991, ASEAN came to be identified as being ‘pivotal’ to India’s policy in the Indo-Pacific region.

25 Years of Engagement

Post Cold War era witnessed a significant increase in the engagements between India and ASEAN member countries. They have leveraged from the large potential in synergies between their economies13. “The resolution of the Cambodian conflict brought about a fundamental change in Indo-ASEAN relations”14. There was an expansion in the membership of ASEAN to include all countries which are physically part of Southeast Asian region – irrespective of their ideological orientations and regime types. Furthermore, “the emergence of China as an ‘economic dynamo’ and its increasing trade and commercial interests and cooperation with ASEAN countries has been another motivating factor for India to enhance its own linkages with the ASEAN”15.

India-ASEAN partnership has been a noteworthy feature and provides significant underpinning to the ‘Act East Policy’ today. Though, actually envisaged at “bolstering strategic and economic ties” with Southeast Asian countries, it aims at tapping the region for greater investment and connectivity16. According to Prime Minister Narendra Modi, “our ties with South East Asia are deep rooted. Strengthening relations with ASEAN nations is an important part of our ‘Act East’ policy. It is central to our dream of an Asian century, where India will play a crucial role”. With this background, the following section looks at the political and security engagements; economic cooperation; physical connectivity; people to people relations and development partnership between India and the countries of the Southeast Asian region.

– Political and Security Engagements

The up-gradation of the relationship into a Strategic Partnership in 2012 was a natural progression to the ground covered since India became a Sectoral Partner of the ASEAN in 1992, Dialogue Partner in 1996 and Summit Level Partner in 200217. India is also an active participant in several security based ASEAN forums like the ASEAN Regional Forum (ARF), ASEAN Defence Ministers’ Meeting + (ADMM+) and Expanded ASEAN Maritime Forum (EAMF). India has set up a separate Mission to ASEAN in Jakarta in April 2015 with a dedicated Ambassador to strengthen engagement with ASEAN and ASEAN-centric processes.18 The ASEAN Post Ministerial Conference (PMC) 10+1 Sessions with The Dialogue Partners also provides opportunity for ASEAN and the Dialogue Partners to review their cooperation over the past year and further deepen their cooperation, strengthen their engagement, as well as to ensure the effective implementation of the respective Plans of Action to elevate cooperation in all areas. These meetings also served as avenues for the Ministers to exchange views on regional and international issues of mutual interest and concern, collectively and constructively address global developments and existing, emerging and trans-boundary challenges and strengthen development cooperation with ASEAN19. Measures like the signing of a “Joint Declaration for Cooperation to Combat International Terrorism,” maritime exercises with the navies of ASEAN countries, information-sharing initiatives, and defense agreements with individual ASEAN countries have added a new dimension to ASEAN-India relations.20

– Economic Engagements

For enhancing economic ties with ASEAN member countries, India signed a Free Trade Agreement (FTA) in goods in 2009 and an FTA in services and investments in 2014 with ASEAN. The ASEAN-India Free Trade Area has been completed with the entering into force of the ASEAN-India Agreements on Trade in Service and Investments on 1 July 201521. Apart from this, India has a Comprehensive Economic Cooperation Agreement with various countries of the ASEAN region. This has resulted in concessional trade and a rise in investments22.

The ASEAN members and India together consist one of the largest economic regions “with a total population of about 1.8 billion and a combined GDP of $3.8 trillion. ASEAN and India together form an important economic space in the world”23. It is currently India’s fourth largest trading partner, accounting for 10.2 per cent of India’s total trade. India is ASEAN’s seventh largest trading partner. “India’s service-oriented economy perfectly complements the manufacturing-based economies of ASEAN countries. There is, however, considerable scope for further growth”24. As per the Ministry of External Affairs report, “India’s trade with ASEAN has increased to US$ 70 billion in 2016-17 from US$ 65 billion in 2015-16. India’s export to ASEAN has increased to US$ 31.07 billion in 2016-17 from US$ 25 billion in 2015-16. India’s import to ASEAN increased by 1.8% in 2016-17 vis-à-vis 2015-16 and stood at US$ 40.63 billion. Investment flows are also substantial both ways, with ASEAN accounting for approximately 12.5% of investment flows into India since 2000″.25

ASEAN and India have been also working on enhancing private sector engagement. ASEAN India-Business Council (AIBC) was set up in March 2003 in Kuala Lumpur as a forum to bring key private sector players from India and the ASEAN countries on a single platform for business networking and sharing of ideas. AIBC is an organization that builds relationship between India and ASEAN countries to foster stronger ties in trade and economy. It was conceptualized to provide an industry perspective to the broadening and deepening of economic linkages between ASEAN and India26.  The AIBC consists of eminent Leaders of Business in ASEAN Member States and India. They meet on the sidelines of ASEAN-India Economic Ministers’ Meeting27.

– People to People Relations

People-to-people exchanges continue to remain an important pillar of India-ASEAN relations today, and “we aim to expand them through various initiatives, such as through the exchange of artists, students, journalists, farmers and parliamentarians, as well as a multiplicity of think-tank initiatives”28. People of the two regions connect not only through political and diplomatic means, but there are historical and civilisational linkages. Ramayana and Mahabharata – two great Indian mythologies find a meeting ground in ASEAN region. Similarly, Buddhism and Bollywood are two great popular cultures capturing the imagination of the people of the region. Besides, a large number of Indian Diaspora in Southeast Asia, provide a fertile ground for linking of people and culture since long.  The cultural and intellectual exchanges between the people of two region has enabled us a better understanding of the relations between India and ASEAN. At the level of the Government, several activities leveraging people-to-people connectivity are held annually to increase interaction between India and ASEAN Community. These include, ASEAN-India Network of Think Tanks, Exchange of Parliamentarians, ASEAN-India Media Exchange Programme, Students Exchange Programme, ASEAN-India Eminent Persons Lecture Series, Special Course for ASEAN Diplomats and their training at the Foreign Service Institute (FSI) in New Delhi29. Recently held India-ASEAN Youth festival in August 2017 is an example of identifying Youth as cultural ambassadors for a deeper understanding of socio-cultural linkages between the two regions.

– Physical Connectivity

ASEAN-India connectivity has been a priority for India and central to its ties with ASEAN. In 2013, India became the third dialogue partner of ASEAN to initiate an ASEAN Connectivity Coordinating Committee-India Meeting. While India has made considerable progress in implementing the India-Myanmar-Thailand Trilateral Highway and the Kaladan Multimodal Project, issues related to increasing the maritime and air connectivity between ASEAN and India and transforming the corridors of connectivity into economic corridors are under discussion. A possible extension to India-Myanmar-Thailand Trilateral Highway to Cambodia, Laos and Vietnam is also under consideration. A consensus on finalising the proposed protocol of the India-Myanmar-Thailand Motor Vehicle Agreement has been reached. This agreement will have a critical role in realizing seamless movement of passenger, personal and cargo vehicles along roads linking India, Myanmar and Thailand. PM announced a Line of Credit of US$ 1 billion to promote projects that support physical and digital connectivity between India and ASEAN and a Project Development Fund with a corpus of US $ 50 million to develop manufacturing hubs in CLMV countries at the 13th ASEAN India Summit held in Malaysia in November 201530.  India-ASEAN Connectivity Summit was also organised in December 2017 in New Delhi. According to M. J. Akbar, “While the road component is progressing apace, maritime connectivity – the mainstay of our historical trade relations, requires urgent modernisation in the context of current geopolitical realities”. According to him, “connectivity will address investment opportunities in ASEAN-India Islands Connectivity and discuss the challenges that need to be addressed in order to sustain the progress”31. To add further, the need for not only physical connectivity but digital connectivity has also been emphasised.32

– Act East and North-Eastern Region of India

The North-eastern India as a region is landlocked, sharing most of its boundary with neighbouring countries of South and South East Asia. It is supposed to be an essential factor in extending linkages with the Southeast Asian countries and critical for India’s ambitious Act East policy to succeed. Given its strategic location, bordering on Bangladesh, Bhutan, Nepal, Myanmar and China, the region could be developed as a base for India’s growing economic links. “Though considered as the country’s most economically laggard regions, no other region in India can rival it in terms of the availability of natural resources and its potential for international connectivity”33. Over the years, “geo-political distancing of the region from its main port of Kolkata, combined with economic insulation, has weighed down the Northeast’s economy”34. Nevertheless, India has been trying to bridge this isolation through the ‘Act East’ policy by promoting trade and physical connectivity through its north-eastern borders with Southeast Asian region.

–Development Partnership with CLMV Countries

Serving as a platform for deepening and strengthening its relationship with ASEAN, the CLMV countries (Cambodia, Lao PDR, Myanmar and Vietnam) have also been a special focus area for India. “At a time when manufacturing facilities are shifting to lower-cost economies, both India and the CLMV countries enjoy an advantage. With ‘Make in India’ emerging as a key campaign for manufacturing, developing new global value chains in partnership with the four least-developed economies of ASEAN would bring benefits to both sides”35. Over the years, special focus has also been on building up of the road, rail and waterways network for developing the infrastructural links between the North-east India and its engagement with the Southeast Asian countries. India has set up a Project Development Fund for CLMV countries and EXIM Bank also provides lines of credit for projects in power, irrigation and railways. Besides, facilities for English language training, entrepreneurship development, and IT skills have also been set-up by India for capacity building in these countries.

Conclusion

India-ASEAN relations are a critical component of India’s overall external engagement with the Indo-Pacific and beyond. A balance-sheet of India-ASEAN relations over the years reveal two and a half decades of missed opportunities resulting from the  ideological misgivings and conflicts in the internal politics of the countries of the region. However, the end of Cold War and collapse of Soviet Union was a critical juncture in the world politics. It brought about a major shift in the balance of power in Southeast Asia also bringing about transformation in the internal political dynamics of the countries of the region. The end of Cold War also marked a turning point in India-ASEAN Relations in the wake of liberalisation and market oriented reforms. In the changing architecture of global politics, India adopted itself to the emerging world order, thereby beginning a new chapter as the ‘Look East Policy’ now being transformed as ‘Act East Policy’ in its foreign policy paradigm. For the last 25 years – driven by geo-strategic and economic realities, India and ASEAN moved on the path of strong political and diplomatic engagements followed by economic and strategic partnership between countries of the region.

Encompassing shared heritage of centuries old civilisational ties – India and ASEAN have provided foundation to the close cultural and historical bonds, upon which lays the edifice of deeper economic and strategic partnership between the countries of the region. To conclude, in the words of Prime Minister Narendra Modi, “for the near future, South and South East Asia will be the growth engine of the world. Hence, building connectivity with ASEAN is a key objective for India”.

References:-

1 Rajamohan (2015), Modi’s World: Expanding India’s Sphere of Influence, Harper Collins.

2 Key Points at Prime Minister’a Address at 12th East Asia Summit in Manila, 14 November 2017.  Online Edition.Accessed on 10 December 2017. URL: https://www.narendramodi.in/key-points-from-prime-minister-s-address-at-the-12th-east-asia-summit-537799

3 Speech of M. J. Akbar at the Regional Conclave on ASEAN@50 and India – ASEAN Relations, 7-8 December 2017, Bengaluru.

4 Acharya, Amitav (2001), Constructing a Security Community in Southeast Asia, Routledge. p. 4

5 The Diplomat (2017), “Revisiting ASEAN-India Relations”. Online Edition.Accessed on 11 December 2017. URL: https://thediplomat.com/2017/11/revisiting-asean-india-relations/

6 Clark, Helen (2016), “Why Vietnam has India in its Side” Lowy Institute.Online Edition.Accessed on 11 December 2017. URL:https://www.lowyinstitute.org/the-interpreter/why-vietnam-has-india-its-sights

7 Anand, Vinod (2017),”India-Vietnam Defense and Security Cooperation”, Vivekanand International Foundation.Online Edition.Accessed on 10 December 2017. URL: http://www.vifindia.org/article/2017/may/12/achievements-india-vietnam-defence-and-security-cooperation

8 Brewster D (2009),The Strategic Relationship between India and Vietnam. Online Edition.Accessed on 12 December 2017. URL:

   https://openresearch-repository.anu.edu.au/bitstream/1885/13058/1/Brewster,%20D.%20India%27s%20S trategic%20Partnership%20with%20Vietnam%202009.pdf

9 Mohammed Ayoob (1990), India and Southeast Asia: Indian Perceptions and Policies, Institute of Southeast Asian Studies. pp 53-72.

10 Ministry of External Affairs (2017), India-Cambodia Relations, Online Edition.Accessed on 15 December 2017. URL: http://www.mea.gov.in/Portal/ForeignRelation/1_Cambodia_November_2017.pdf

11 Brewster D (2009),The Strategic Relationship between India and Vietnam, pp. 8.

12 Ahmad, Asif (2012), India – ASEAN Relations in 21st  Century: Strategic Implications For India – Analysis, Eurasia Review. Online Edition.Accessed on 12 December 2017. URL:

   http://www.eurasiareview.com/09072012-india-asean-relations-in-21st-century-strategic-implications-for-india-analysis/

13 Anand, Mohit (2009), India-ASEAN Relations: Analysing Regional Implications, Institute of Peace and Conflict Sudies Report 72.  Online Edition.Accessed on 12 December 2017. URL:

   http://www.ipcs.org/pdf_file/issue/SR72-Final.pdf

14Ahmad, Asif (2012), India – ASEAN Relations in 21st  Century: Strategic Implications For India – Analysis, Eurasia Review.

15 Hong, Z. (2006), India’s Changing Relations with ASEAN: From China’s Perspective, The Journal of East Asian Affairs, 20(2), pp. 141-170. Online Edition.Accessed on 12 December 2017. URL: https://www.jstor.org/stable/23257942?seq=1#page_scan_tab_contents

16Trivedi Sonu (2014), “Act East Policy vis-a-vis Pivot to Asia”, The Global New Light of Myanmar, November 16.

17 Ministry of External Affairs, India-ASEAN Relations. Online Edition.Accessed on 12 December 2017. URL:

   http://www.mea.gov.in/aseanindia/20-years.htm.

18 Ibid.

19 ASEAN.Online Edition.Accessed on 12 December 2017. URL:

   http://asean.org/chairmans-statement-of-the-asean-post-ministerial-conference-pmc-101-sessions-with-the-dialogue-partners-3/

20 The Diplomat (2017), “Revisiting ASEAN-INDIA Relations”.Online Edition.Accessed on 12 December 2017. URL:  https://thediplomat.com/2017/11/revisiting-asean-india-relations/

21 Indian Mission to ASEAN.Online Edition.Online Edition.Accessed on 15 December. URL: http://www.indmissionasean.com/index.php/asean-india

22 The Diplomat (2017) “Revisiting ASEAN-India Relations”,Online Edition.  Accessed on 15 December. URL: https://thediplomat.com/2017/11/revisiting-asean-india-relations/

23 IDSA (2016), “India ASEAN Approach”.Online Edition.Accessed on 15 December. URL: https://idsa.in/idsanews/india-asean-approach_080416

24Pant, Harsh V, (2017), “The ASEAN Outreach”, The Hindu, November 17.

25 Ministry of External Affairs, India-ASEAN Relations. Online Edition.Accessed on 15 December. URL:  http://www.mea.gov.in/aseanindia/20-years.htm

26ASEAN-India Business Council.Online Edition.Accessed on 15 December. URL:  http://www.asean-india.org/

27Indian Mission to ASEAN.Online Edition.Accessed on 15 December. URL: http://www.indmissionasean.com/index.php/asean-india

28Pioneer (2017), “ASEAN: sharing Values and Common Destiny”, September 6. Online Edition.Accessed on 14 December. URL:

29Indian Mission to ASEAN.Online Edition.Accessed on 15 December. URL:  http://www.indmissionasean.com/index.php/asean-india

30 Ministry of External Affairs, India-ASEAN Relations. Online Edition.Accessed on 13 December. URL:  http://www.mea.gov.in/aseanindia/20-years.htm

31 Assam Tribune (2017), “Connectivity Central to ties with India”. 12 December. Online Edition.Accessed on 15 December. URL: http://www.assamtribune.com/scripts/detailsnew.asp?id=dec1217/at061

32 Speech by Hon Minister for Electronincs & Information and Technology, Ravi Shankar Prasad at Valedictory Session on India-ASEAN Partnership@25, Kalinga International Foundation, 13 December 2017.

33 De, Prabir (2017),”Can Act East Address Northeast India’s Isolation?”.Online Edition.Accessed on 16 December. URL: http://www.eastasiaforum.org/2017/10/27/can-act-east-address-northeast-indias-isolation/

34 Ibid.

35 Banerjee Chandrajeet (2017), “From Look East to Act East”, The Hindu Business Line, February 26.Online Edition.Accessed on 16 December. URL: http://www.thehindubusinessline.com/opinion/developing-new-global-value-chains-in-partnership/article9560295.ece

(Ms. Sonu Trivedi teaches Political Science at Zakir Husain Delhi College, University of Delhi.)

(This article is carried in the print edition of January-February 2018 issue of India Foundation Journal.)

India-ASEAN relations today are more strategic than economic in character. India  today eyes ASEAN as a major East Asian entity vital to promote Indian geopolitical interests in the region. The twenty-five years of India’s engagement with ASEAN via thirty dialogue mechanisms has undoubtedly strengthened the mutual attachment. The strategic aspect of India’s ASEAN policy became vivid further under the Act East Policy of the Narendra Modi government which intended to accelerate ‘across-the-board engagement between the two growth poles of Asia’.1 Year 2017 marks the 25th anniversary of India-ASEAN Dialogue Partnership which was initiated in 1992 when the decision was taken to set up a Sectoral Dialogue Partnership between ASEAN and India at the 4th ASEAN Summit in Singapore. In his congratulatory message to the ASEAN Chair Rodrigo Duterte, the Philippine President, Prime Minister Narendra Modi termed Act East Policy as the ‘reflection of the importance we attach to our strategic partnership with ASEAN’.2 Responding to Prime Minister Modi’s message President Duterte noted that ASEAN-India relations have contributed to the maintenance of peace, stability and prosperity in the region.3 Tranquil Southeast Asia is beneficial for India whose trade with ASEAN was $71 billion in the 2016-17 financial year, which accounts for 10.85% of India’s global trade.4 Therefore, security of land and sea route is vital for India for which collaboration with the ASEAN countries is necessary. Today, ASEAN is an important strategic ally of India in East Asia where India wants to expand her footprint as was evident from the statement of former Indian Prime Minister Dr. Manmohan Singh: “Our strategic footprint covers the region bounded by Horn of Africa, West Asia, Central Asia, South-East Asia and beyond.”5

In the context of today’s India-ASEAN strategic relations, it will be interesting to introspect whether the strategic aspect of India’s Act East Policy is a later phenomenon or it has its roots in the past. When did independent India look east? How old is India’s strategic considerations vis-à-vis Southeast Asia? In this case it is pertinent to analyse Jawaharlal Nehru’s Southeast Asia policy.

Nehru Looking East

Contrary to the general perception, India looked (and acted) east immediately after independence.  The centrality of India in the Southeast Asian affairs in the eyes of Nehru is best reflected in his speech at the Constituent Assembly on 8th March, 1949 where he said, “If you have to consider any question concerning South-East Asia, you cannot do so without India.”6

The prime concern of Nehru in Southeast Asia was the communist militancy which was the most common problem in all the decolonized states of Asia during that time, including India. The post-war Southeast Asia was experiencing strong anti-imperialist liberation struggle which got intertwined with the communist revolutionary fervor targeting the nationalist factions within the countries. Nehru disapproved this militancy both in India and Southeast Asia saying, “There are communists, who quite apart from their communism, are at present engaged in creating as much trouble as possible not only in India but much more so in Burma, Malaya etc….”7 Not only Nehru, even his deputy and Home Minister Sardar Vallabhbhai Patel expressed concern with the communist extremist militancy in post war Southeast Asia. In his address to the nation on 15th August 1947, Sardar Patel said, “The condition in Malaya, Indo-China and Burma was disappointing…If the undesirable elements in the country were not put down with a firm hand immediately, they were sure to create the same problem as they found existing in some other Asiatic countries.”8

The two prime objectives of India’s Southeast Asia policy post 1947 have been: first, to liquidate colonialism and second, to thwart any major or medium power domination of the region in the name of filling the vacuum which Nehru termed as cloak for imperialism.9 Nehru believed that the continuation of the colonial rule in Southeast Asia would only promote communist rebellion: “If colonialism continues anywhere in South-East Asia, the natural result will be a growth of communism.”10 In an interview with Earnest K. Lindley, when the interviewer asked Nehru whether the communists’ gains in ‘Burma, Malaya and other areas close to India’ would be a concern for Nehru, the Indian Prime Minister answered in affirmative.11 Both Nehru and Patel, during their visits to Southeast Asia, had condemned communists for their ‘extra territorial character’ and confirmed that the victory of communists in Burma and Malaya would be a matter of concern for Indian government. Nehru even deplored the communists for turning Southeast Asia into ‘one of the great danger spots of the world’ and termed their expansionist and interference policy as ‘danger to peace and freedom’.12

Nehru saw instability arising from the communist rebellion in the non-communist Southeast Asian states as a threat, and so was active in thwarting the scenario from worsening further. In a way Nehru saved entire Southeast Asia from turning communist. This was best witnessed in Nehru’s activeness in liberating Indonesia from Dutch rule for which he even convened a conference in New Delhi in 1949 whose resolution was instrumental in the liberation process. Besides, Indonesia was also a major rice supplier to India coping with severe food crisis in the post war years and thus stable non-communist regime in Indonesia was helpful for Nehru’s India. His Malaya policy was apparently contradictory to his anti-imperialist stance since Nehru preferred the British rule there to continue for longer period in order to suppress communist rebellion and help to handle the Indian migrant affairs in Malaya. Besides, he disapproved of the guerrilla tactic of the Malayan communists as ‘terrorist acts’.13

Burma had occupied a very important part of Prime Minister Jawaharlal Nehru’s neighbourhood policy, especially in the context of the Indian migrants there who were soon to become the victims of ultra-nationalist policy of the government there as also because of its strategic importance. He was aware of the importance to have a friendly government in Burma, and thus chose to keep a low profile over the anti-Indian policies of the government there. Although expressing displeasure with the Land Acquisition Act 1948 saying that it hits ‘Indian interests in land hard’14, he opined, “Although the attitude of the Burmese Government has been unyielding thus far, we must recognise that they are facing a most difficult situation in their own country. There is rebellion and disorder and they cannot easily take any step which may weaken their position with the general public.”15 Clearly he was not inclined to put the Burmese government in any difficulty internally. Do we find any similarity between this policy with the ongoing Rohingya crisis vis-à-vis Indian policy towards today’s Myanmar?

Traditional China factor

The Statesman (Kolkata edition) published a report on 14th December 2017 with the headline ‘With China on mind, India woos ASEAN nations’. Referring to an invitation extended to the ten ASEAN leaders as chief guests to the Republic Day parade on 26th January 2018 the report read, “Amid growing challenge from China on regional issues, India is pulling out all the stops to accord an unprecedented welcome to leaders of ten ASEAN nations who will be chief guests at the Republic Day parade on 26th January.”16 There is almost unanimous conclusion among the scholars that China is a major factor in India’s current Southeast Asia policy. Eminent scholar S.D. Muni opined that in many subtle and explicit ways India’s Look East Policy has been driven by China’s rise.17 It is opined that China factor played a role behind the India-Southeast Asia collaboration in the security arena in the post Cold War years.18 But is this China factor a post Cold War phenomenon?

Jawaharlal Nehru said in 1952, “Never forget that the basic challenge in Southeast Asia is between India and China. That challenge runs along the spine of Asia.”19 Michael Brecher wrote about Indian and Chinese role in Southeast Asia, “As the two most populous and potentially most powerful states in Asia, they are inevitable rivals for influence in the vast belt of ‘uncommitted’ countries of South-east Asia.”20 Nehru was aware of the challenge emanating from the newly founded People’s Republic of China (PRC). The new Chinese leadership in Beijing had articulated their intention to promote communist movement in Southeast as well as South Asia. Chinese communist leader Liu Shao Chi identified non-communist countries of South and Southeast Asia, India, Burma, the Philippines and Indonesia as ‘semi-colonies’ which were to be ‘freed from the stranglehold of western imperialism’.21 When asked whether post revolution China would turn eyes to Southeast Asia, Nehru evaded direct answer saying that the Chinese were busy with their own problems now and therefore would not do it but he did refer to long perspective of history saying, “it is difficult to say what might happen in future – what a powerful nation may do to develop expansionist tendencies.” New China was certainly a challenge to India’s, or more precisely, Nehru’s leadership aspiration in Southeast Asia. Nehru considered India as the ‘natural leader of Southeast Asia,’22 and was apprehensive regarding the impact of communist triumph in China. He wrote on 6th December 1948, “The victory and consolidation of Chinese Communists is going to have a far reaching results all over South East Asia and ultimately in the world.”23

Since the foundation of Communist China in 1949, India’s external policy has been China oriented, especially in respect of spread of communism in Southeast Asia.24However, Nehru never wanted any direct confrontation with the giant Asian neighbour until the 1962 tragedy occurred. Nehru’s prime objective in Southeast Asia vis-à-vis China was to minimise the impact of the Asian giant especially in the context of communist influence in the region. Nehru’s strategy in Southeast Asia was to enthrone non-communist regimes wherever feasible like Indonesia, Malaya and Burma. Like today’s India, Nehru’s India was also cautious not to push the then Burma to the lap of China given her strategic location bordering China and hostile East Pakistan (today’s Bangladesh), contiguous to insurgency-hit northeast. Thus Nehru wanted an India-friendly regime in Burma which he found in U Nu. Nehru expressed his suspicion about China to Burmese premier U Nu in the following words, “Obviously we cannot be dead sure what China may do in the future.25

Nehru’s main challenge was in Indochina, the only crisis in Southeast Asia that Jawaharlal Nehru did not see being resolved during his lifetime. The Indochina affair put his policy towards communist growth in Southeast Asia and communist China to a litmus test. With camp politics casting shadow over Indochina, Nehru exercised his Panchsheel policy. Nehru extracted Chinese assurance of peaceful co-existence in the joint communiqué during the visit of Chinese premier Chou En-lai to India in 1954 to be applied in resolution of Indochina conflict. This was to commit China to non-interference in Southeast Asia while China found it helpful firstly to resist American presence in her southern borders while resisting India from joining any future regional defence organization.26This strategy was also to assure kingdoms like Cambodia and Laos planning to opt for either camp amidst Vietnam War. Nehru wanted Indochina to stay away from Cold War politics which might increase American presence activating the Chinese. However, Nehru’s Panchsheel strategy failed eventually while the growing rapport between North Vietnam and China forced India to veer away from neutrality and incline towards pro-US South Vietnam in the International Control Commission founded to resolve the crisis. This was the result of the growing deterioration of the India-China relations since 1959 over border issue. While between 1954 and 1959 India voted for Hanoi in 72 per cent of her decisions, since 1959 India ruled against North Vietnam.27

The war of 1962 had a deep and permanent impact on India’s Southeast Asia policy. Post 1962 Southeast Asia policy under Nehru was overtly anti-China in character with Nehru declaring, “There is no non-alignment vis-à-vis China. There is no Panchsheel vis-à-vis China.”28 India now attempted to dissuade Southeast Asia against China. While visiting Thailand in March 1963, Indian Minister of State for External Affairs, Mrs. Lakshmi Menon, said, “The Chinese problem is a common problem. One day it may be your problem in Southeast Asia…”29This is interesting since prior to the war, India cautiously avoided Thailand (and the Philippines) as pro-US countries of Southeast Asia contradicting Nehru’s non-alignment policy. After the war, Nehru ‘discovered’ Thailand in his fresh Southeast Asia policy. Nehru by then realized the futility of his Panchsheel strategy. Not only this, the war itself was an eye-opener for Nehru to see countries like Thailand and Philippines, along with Malaya, siding with India against Chinese aggression while Burma and Indonesia, the countries he invested the most in, opting for neutral policy.

Conclusion

Southeast Asia has traditionally held strategic importance for India. Commenting on strategic importance of Southeast Asia to India, Major Anthony Strachey of the Indian Army compared the region with Nepal and Tibet in 1947 saying like in case of the Himalayan buffers to India, adverse powers in charge of Burma, French Indochina, Siam or East Indies would be detrimental to India.30 The last world war proved this when Japan marched at the gate of British India in the northeast while it occupied Andaman & Nicobar Islands after seizing Southeast Asia. Today’s India is similarly concerned about the growing might of China whose only maritime link to India is via South China Sea. Tranquil Southeast Asia was always beneficial for India both economically as well as strategically. The rice supply from Burma and Indonesia was a big help to India’s food crisis in the early years of independence. For that, stable and friendly regimes were required there for which Nehru worked hard. This was also needed to handle the Indian migrants there. In a way Nehru was in a nation-building mission in Southeast Asia. And there was a latent desire of Nehru to gain India (or him?) the world-wide prestige as he himself admitted in January 1949 in the context of conference on Indonesian independence, “We had recently the conference on Indonesia which has been a great success and which has enhanced the prestige of India all over the world.”.31 Southeast Asian leaders, fighting against communism, also acknowledged Nehru as their guide as was evident from the visit of Burmese and Indonesian leaders to India. Even the outside world acknowledged Nehru as the ‘influential non-communist voice of Asia’.32 Nehru was the bridge between the contending powers interested in post-war Southeast Asia. He never wanted any single power domination in the region and advocated for its tranquility which he found was threatened by South East Asia Treaty Organisation (SEATO) and Indochina crisis. His strategy in Southeast Asia, was to resist communist victory while engaging China in local affairs. The Bandung Conference of 1955 served the purpose well but initiated the downgrading of Nehru’s influence in Southeast Asia as well.

India had a strategy vis-à-vis Southeast Asia under Prime Minister Nehru which continued even after that. Nehru’s India tried to resist Southeast Asia from pursuing camp politics and follow a non-aligned policy based on Panchsheel strategy which was close to the later ASEAN Treaty of Amity and Cooperation or the Zone of Peace Freedom and Neutrality (ZOPFAN), 1971 which expressed ASEAN’s desire to keep power tussle outside the region. Presumably, Nehru wanted Southeast Asia to balance between contending powers like China and USA. Today, India acknowledges the centrality of ASEAN in the Asia-Pacific security architecture harmonizing ‘larger interests of the world beyond it’, according to Indian minister Gen. VK Singh.33 The omni-enmeshment strategy of the group embracing all the regional and extra-regional powers, including India, within its expanded fold like ASEAN Regional Forum, East Asia Summit and ASEAN Defence Ministers’ Meeting Plus has put it at the centre of the East Asian geopolitics today. During Nehru’s time Southeast Asia was unable to handle its affairs and India under Nehru was in action to set the house in order. Today, when India-ASEAN relations officially turn twenty-five, we see India more as a partner in the ASEAN led missions in East Asia. Besides, Nehru’s Look/Act East strategy was more diplomatic and non-military in character while today India expands her strategic collaboration through joint exercises and port visits. The only consistency in India’s Southeast Asia policy has been the China factor. The China factor remains equally relevant today as it was during Nehru period. India today is partnering with ASEAN to engage China to contain her, as did Nehru. Later ASEAN policy towards China in post-Cold War years reflected this wisdom.

References:

1  Manish Anand, ‘Act East: India’s ASEAN Journey’, Public Diplomacy, Ministry of External Affairs, Government of India, November 10, 2014, http://www.mea.gov.in/in-focus article.htm?24216Act+East+Indias+ ASEAN+Journey (accessed on 12.12.2017)

2  Ministry of External Affairs, Government of India,‘Celebrating 25 Years of ASEAN-India DialoguePartnership’, January 28, 2017, para3,http://mea.gov.in/press releases.htm?dtl/27970Celebrating_25_years_of_ the_ASEANIndia_Dialogue_Partnership (accessed on 12.12.2017)

3  Ibid

4  Ministry of External Affairs, Government of India,‘15th ASEAN-India Summit and 12th East Asia Summit in Manila, the Philippines (November 4, 2017), para6, http://www.mea.gov.in/press-releases.htm?dtl/29102/15th_ASEANIndia_Summit_and_12th_East_Asia_Summit_in_Manila_Philippines_November_14_2017 (accessed on 12.12.2017)

5  Cited in Subhadeep Bhattacharya, Understanding South China Sea Geopolitics, New Delhi, Pentagon Press, 2017, p.214

6  Jawaharlal Nehru, Indian Foreign Policy: Selected Speeches, September 1946-April 1961, New Delhi, The Publication Division, Ministry of Information and Broadcasting, Govt. of India, 1961, p.22

7   Jawaharlal Nehru, Letters to Chief Ministers 1947-64, Vol. 1.(1947-49), New Delhi, Jawaharlal Nehru Memorial Fund,  1985,p.143

8 Cited in Subhadeep Bhattacharya, Looking East Since 1947: India’s Southeast Asia Policy, New Delhi, KW Publishers Pvt. Ltd., 2016, p.7

9 V.P. Dutt, India’s Foreign Policy, New Delhi, Vani Educational Books, 1985, p.254

10Jawaharlal Nehru, Letters to Chief Ministers, 1947-1964, Vol 1, op cit, p.222

11S. Gopal, Selected Works of Jawaharlal Nehru, Second Series, Volume Seven, New Delhi, Jawaharlal Nehru Memorial Fund, 1988, p.616

12 Werner Levi, Free India in Asia, Minneapolis, University of Minnesota Press, 1952,pp.101, 102

13  Nehru’s  cable to V.K. Krishna Menon, July 24, 1948, S. Gopal (ed), Selected Works of Jawaharlal Nehru, Second Series, Volume Seven, New Delhi, Jawaharlal Nehru Memorial Fund, 1988, p.651

14  Jawaharlal Nehru, Letters to Chief Ministers, 1947-1964, Vol 1, op cit, p.235

15 Ibid

16 The Statesman,‘With China on mind, India woos ASEAN nations’, 14.12.2017, p.3

17 S.D. Muni,‘India’s Look East Policy: Strategic Dimension’, ISAS Working Paper, No.121, 1 February, 2011, https://www.files.ethz.ch/isn/126612/ISAS_Working_Paper_121-_Email-_India’s_’look-east’_policy_the_strategic_dimension_01022011145800.pdf  (accessed on 19.08.2017), p.23

18 Balveer Singh, ‘Southeast Asia’s Rising Engagement of India’, Southeast Asia-India Defence Relations in Changing Regional Security Landscape, IDSA, Monograph Series No.4, 2011, p.16

19 Cited in Subhadeep Bhattacharya (2016), op cit, p.6

20 Michael Brecher, Nehru: A Political Biography, New Delhi, Oxford University Press, 2011, p.589

21 D.R. Sardesai,‘India and Southeast Asia’, B.R. Nanda (ed), Indian Foreign Policy: The Nehru Years, Delhi, Vikas Publishing House Pvt Ltd, 1976, p.85

22 Jawaharlal Nehru, Guidelines for the session of the United Nations General Assembly, September 12, 1948, Selected Speeches of Jawaharlal Nehru, Second Series, Volume Seven, 1948,  op cit, p.611

23 Jawaharlal Nehru, Letters to Chief Ministers, Volume 1 (1947-1949), New Delhi, Jawaharlal Nehru Memorial Fund, 1985, p.232

24 D.R. Sardesai, India’s Foreign Policy towards Cambodia, Laos, Cambodia and Vietnam from 1947-1964, Barkley, California University Press, 1968, p.33

25 Sarvepalli Gopal, Jawaharlal Nehru: A Biography, Volume Two-1947-1956, New Delhi, Oxford University Press, p.190

26 Subhadeep Bhattacharya (2016), op cit, p.20

27 Ibid, pp.21, 22

28 Cited in Asis Kumar Majumdar, Southeast Asia in India’s Foreign Policy: Study of India’s Relations with Southeast Asian Countries from 1962-1982, Calcutta, Noya Prokash, 1982, p.70

29 Cited in ibid, p.72

30 Ton That Thien, op cit, p.67

31 Jawaharlal Nehru, Letters to Chief Ministers, 1947-1964, Vol. 1 (1947-1949) op cit,  p.270, emphasis added

32 The New York Times, 29th August 1950, cited in Karunakar Gupta, Indian Foreign Policy : In Defence of National Interest, Calcutta, The World Press Private Ltd., 1956, p.5

33 The Statesman,‘Asean central to region’s security architecture: India’, 07.08.2017, p.1

 

(Subhadeep Bhattacharya is a Researcher at Netaji Institute for Asian Studies (NIAS), Kolkata.)

(This article is carried in the print edition of January-February 2018 issue of India Foundation Journal.)

Introduction

Regional Comprehensive Economic Cooperation Partnership (RCEP) is an initiative of economic cooperation among 10-member ASEAN countries and six Free Trade Agreement (FTA) partners of ASEAN. A broader Asian regional free trade area was contemplated and East Asia Vision Group (EAVG) recommended the establishment of an East Asian Free Trade Area (EAFTA) to the leaders of ASEAN+3 while Japan proposed Comprehensive Economic Partnership for East Asia (CEPEA) based on East Asia Summit framework. In November 2011, ASEAN proposed its own model for an ASEAN centric regional FTA – the RCEP. RECP was conceived as a competitor for TPP agreement. However, TPP agreement faces deadlock and put under backburner and RCEP is receiving more global attention.

The countries participating in the RCEP also signed a number of bilateral FTAs with other member countries. Since there are a number of cross-country FTAs signed between members, the outcome of RECP may not be substantial. But RCEP is expected to improve efficient functioning of the production networks of the region. Also, the coverage of the RCEP should be substantial compared to FTA+1 for sustainable benefit from the agreement.

RCEP negotiations cover trade in goods, trade in services, investment, economic and technical cooperation, intellectual property, competition, dispute settlement, e-commerce, and other issues.

RCEP negotiations will follow eight principles: (1) consistency with the WTO; (2) significant improvements over the existing ASEAN+1 FTAs; (3) facilitation of trade and investment; (4) flexibility (e.g., special and differential treatment) to the least developed asean Member States (AMSs); (5) continuation of existing FTAs; (6) open accession clause; (7) technical assistance and capacity building to the developing and least-developed countries; and (8) parallel negotiation. RCEP negotiations were launched in November 2012, and 18 rounds of negotiation have been held, along with six ministerial meetings and three inter-sessional meetings. But there is limited progress as members have disagreements on the tariff reduction on goods, liberalisation of services and investment framework.

Economic and Trade Profile of ASEAN+6 Countries

Table-1 provides the economic and trade profile of ASEAN countries and its six FTA partners. In terms of land area China, Australia and India are the large economies where China, India and Indonesia are the most populous countries in the group. In terms of GDP size, China is by far the largest economy with 11 trillion US $ in 2015 followed by India which is a 2.9 trillion economy. Australia got the highest per capita income followed by New Zealand and Japan. India and China are the fastest growing economies among bigger countries. FDI inflows into China is way high with 133 billion US$ followed by India at 44 billion US$ in 2015. Trade GDP ratio is highest in Singapore as trade is almost three times the GDP of Singapore.

 

 

Table 1 : Economic and Trade Profile of ASEAN+6 Countries, 2016

Indicators	Brunei	Cambodia	Indonesia	Laos	Malaysia	Myanmar	Philippines	Singapore	Thailand	Vietnam	Australia	China	India	Japan	Korea	New Zealand
Land Area(m)km2	5270	176520	1811570	230800	328550	653080	298170	707	510890	310070	7682300	9326410	2973193	364485	96920	264537
Population (million)	0.423	15.578	257.564	6.802	30.331	53.897	100.699	5.604	67.959	93.448	24.309	1382.323	1326.802	126.324	50.504	4.565
GDP Millions Current US$	12930	18050	861934	12585	296284	62601	292449	292734	395168	193241	1270596	11382057	2274998	4919661	1392963	180583
GDP Per Capita, Current $	30,553	1159	3346	1850	9768	1161	2904	52239	5815	2068	52268	8234	1715	38945	27581	39556
Real GDP Growth yony %	-0.55	7.04	4.79	7.56	4.97	7.29	5.90	2.01	2.83	6.68	2.40	6.70	7.30	1.0	2.70	3.20
Current A/C Balance (%GDP)	13.26	-9.38 ( e )	-2.02	-18.08	7.78 ( e)	-7.30	2.82	20.12	8.08	0.47	–	2.96 (2015)	-1.06 (2015)	3.09 (2015)	7.68 (2015)	-2.92 (2015)
Exchange Rate ($)	1.375	4067.75	13389.4	8147.91	12.17 ( e)	1162.615	45.503	1.375	34.248	21697.60	1.345	6.644	67.195	108.793	1160.270	1.437
FDI inflows(M$)	173.24	1700.97	15508.16	1219.82	11121.50	2824.0	5234.03 (j)	65262.40 (j)	10844.64	11800.0	48190.25	133700.0	44485	11388.41	10826.60	2291.63
FDI outflows (M$)	507.94	47.46	6249.62	1.13	9899.50	–	5601.94 (j)	35485.04 (j)	7776.24	1100.0	6011.70	183100.0	5120.27	145242.43	27274.20	-43.86
Personal Remittances (%GDP)	–	2.20	1.10	0.74	–	5.11	10.05	–	1.33	–	–	–	3.10 (2015)	0.09 (2015)	0.48 (2015)	–
Trade Balance (%GDP)	8.28(e)	-7.77 (e )	0.83 (e )	-5.86 ( e)	7.78 (e )	-2.10	-5.85	27.32	11.38 ( e)	1.59 (e )	-0.75	2.19	-3.49	0.82	7.38	0.55
Trade Balance (% imports)	24.60(e)	-10.12 ( e)	4.38 (e )	-17.48 (e )	12.17 ( e)	-9.50	-19.63	17.96	19.50 ( e)	1.82 ( e)	-3.73	12.81	-15.57	5.25	20.50	2.09
Trade (% of GDP)	84.90	126.95	37.39		128.08	42.79	64.90	318.42	126.59	176.77	39.95	37.06	39.81	35.59	83.71	55.01

Source: UNCTAD & World Bank

 

Trade by ASEAN+6 Countries       

Singapore is the dominant country in the ASEAN region with regard to international trade. Singapore is having an export of 346 billion US$ and imports worth 296 billion US$ with a trade surplus of 46 billion US$. Thailand, Malaysia, Vietnam and Indonesia are the other important ASEAN countries having larger trade share in the region. With regard to services also Singapore plays a dominant role.

Table 2 :Merchandise trade and services by ASEAN and its FTA Partners, 2015 (Million US $)

	Merchandise			Services
Countries	Exports	Imports	Balance	Exports	Imports	Balance
Brunei	6,353	3,229	3,124	577 ( e )	2,225 ( e )	– 1,648 ( e )
Cambodia	8,542	12,615	-4,073	3,943 ( e)	1,907 ( e)	2.36 ( e)
Indonesia	150,366	142,695	7,672	21,891 ( e )	30,384 ( e)	-8,493 ( e)
Laos	2,769	5,233	-2,464	810  (e)	566 (e )	244 ( e)
Malaysia	199,158	176,011	23,147	34,844 ( e)	40,044 ( e)	-5,200 ( e)
Myanmar	11,429	16,885	-5,456	4,212 (2014)	2,602 (2014)	1,609 (2014)
Philippines	58,827	70,153	-11,326	28,167	23,924	4,244
Singapore	346,638	296,745	49,893	139,611	143,469	-3,858
Thailand	214,352	202,654	11,698	60,543 ( e)	50,779 ( e)	9,864 ( e)
Vietnam	162,107	166,103	-3,996	11,200  (e )	15,501 (e )	-4,300 ( e)
Australia	190,271	196,150 (e )	-5,879	53941	56532	-2,590
China	2098,161	1587,431	510,730	208,488	453,014	-244,526
India	264,020	359,065	-95,045	161,845 (e )	133,710 (e )	28,135 (e )
Japan	644,933	606,927	38,006	173,821	184,710	28,135
Korea	495,426	406,192	89,234	92,828	110,436	-17,608
New Zealand	33,699	36,067	-2,368	14,886 (e )	11,967 (e )	2,919 (e )

Source: Extracted from WITS, World Bank

With regard to FTA partners of ASEAN, China enjoys a dominant position with a trade surplus of 510 billion US$. Japan, Korea and India are the other prominent countries with large trade performance. China’s trade performance is very large and other countries shares are much smaller in relative terms.

Top 5 Trade Partners of  India ASEAN+6 Countries

Table 3 gives the top five exports and import partners of ASEAN countries and its six FTA partners. With regard to Brunei, the top export and import partners are primarily from the Asian region with Japan as the major export destination and whereas Malaysia is the largest import partner.  For almost all countries, China is the largest import partner. For Indonesia, Myanmar, Singapore, Australia, Korea and New Zealand, China is the largest export and import partner. The table shows that for most of the ASEAN plus countries a large proportion of trade is happening among themselves.

Table 3 :Top 5 Trade Partners of ASEAN Plus economies for the year 2016.

Brunei (2015)	Top 5 Export Partners	Japan	Rep. of Korea	India	Thailand	Other Asia
	Top 5 Import Partners	Malaysia	Singapore	China	US	Korea
Cambodia	Top 5 Export Partners	US	UK	Germany	Japan	Canada
	Top 5 Import Partners	China	Thailand	Vietnam	Other Asia	Singapore
Indonesia (2016)	Top 5 Export Partners	China	US	Japan	Singapore	India
	Top 5 Import Partners	China	Singapore	Japan	Thailand	US
Laos	Top 5 Export Partners	Thailand	China	Vietnam	India	Japan
	Top 5 Import Partners
Malaysia	Top 5 Export Partners	Singapore	China	US	Japan	Thailand
	Top 5 Import Partners	China	Singapore	Japan	US	Thailand
Myanmar	Top 5 Export Partners	China	Thailand	India	Singapore	Japan
	Top 5 Import Partners	China	Singapore	Thailand	Japan	India
Philippines	Top 5 Export Partners	Japan	US	Hong Kong	China	Singapore
	Top 5 Import Partners	China	Japan	US	Thailand	Korea
Singapore	Top 5 Export Partners	China	Hong Kong	Malaysia	Indonesia	US
	Top 5 Import Partners	China	Malaysia	US	Other Asia	Japan
Thailand (2015)	Top 5 Export Partners	US	China	Japan	Hong Kong	Malaysia
	Top 5 Import Partners	China	Japan	US	Malaysia	UAE
Vietnam (2015)	Top 5 Export Partners	US	China	Japan	Korea	Hong Kong
	Top 5 Import Partners	China	Korea	Japan	Other Asia	Thailand
Australia	Top 5 Export Partners	China	Japan	Korea	US	India
	Top 5 Import Partners	China	US	Japan	Thailand	Germany
China	Top 5 Export Partners	US	Hong Kong	Japan	Korea	Germany
	Top 5 Import Partners	Korea	Japan	Other Asia	US	Unspecified
India	Top 5 Export Partners	US	UAE	Hong Kong	China	UK
	Top 5 Import Partners	China	US	UAE	Saudi	Switzerland
Japan	Top 5 Export Partners	US	China	Korea	Other Asia	Hong Kong
	Top 5 Import Partners	China	US	Australia	Korea	Other Asia
Korea	Top 5 Export Partners	China	US	Hong Kong	Vietnam	Japan
	Top 5 Import Partners	China	Japan	US	Germany	Other Asia
New Zealand	Top 5 Export Partners	China	Australia	US	Japan	Korea
	Top 5 Import Partners	China	Australia	US	Japan	Germany

Source: Extracted from WITS, World Bank

 

ASEAN PLUS Export Share

The table shows the intra-regional export share of ASEAN six countries. China, Japan and Korea are the largest trade partners of Australia. China is having larger export share with Japan. China, Japan, India and Singapore are the important export destinations of Indonesia. India does not enjoy large export share with the ASEAN plus region. For Japan, China if the large export market followed by Korea. More than one-fourth of Korea’s export is going to China only. For Malaysia, China and Singapore are the important trade partners followed by Japan. For New Zealand, Australia and China are important while Singapore is having larger export share with China and Malaysia. China and Japan are the important export destinations for Thailand whereas China, Japan and Korea are important for Vietnam.

Table 4 :Export Share of ASEAN Plus Countries for the year 2015

	Exporting Nations
	AUS	BRU	CHN	INDO	IND	JPN	CAM	KOR	LAO	MYAN	MAL	NZ	SIN	THA	VIET
AUS	0.00	3.49	1.77	2.46	1.23	2.06	1.03	2.06	0.11	0.05	3.60	15.98	3.32	4.56	1.79
BRN	0.02	0.00	0.06	0.06	0.01	0.02	0.02	0.05	0.00	0.01	0.34	0.01	0.22	0.05	0.02
CHN	32.49	1.52	0.00	10.01	3.62	17.49	4.75	26.03	34.82	39.61	13.02	18.32	13.76	11.05	10.23
IDN	1.99	1.62	1.51	0.00	1.09	1.85	0.17	1.49	0.01	1.24	3.73	1.72	8.18	3.65	1.76
IND	4.23	9.06	2.56	7.80	0.00	1.30	0.12	2.28	1.11	8.31	4.06	1.35	3.06	2.47	1.52
JPN	15.88	36.35	5.97	11.98	1.71	0.00	6.69	4.86	1.66	3.99	9.46	6.29	4.39	9.37	8.70
KHM	0.02	0.00	0.17	0.29	0.05	0.05	0.00	0.12	0.58	0.00	0.12	0.02	0.28	2.31	1.48
KOR	7.08	15.63	4.46	5.10	1.37	7.04	1.61	0.00	0.21	2.40	3.23	3.32	4.18	1.91	5.50
LAO	0.01	0.00	0.05	0.01	0.02	0.02	0.06	0.03	0.00	0.00	0.01	0.00	0.02	1.98	0.32
MMR	0.06	0.00	0.42	0.41	0.33	0.17	0.02	0.13	0.01	0.00	0.39	0.06	0.71	1.95	0.23
MYS	1.82	4.62	1.93	5.07	1.85	1.92	1.57	1.47	0.20	1.52	0.00	1.99	10.89	4.75	2.21
NZL	3.33	5.23	0.22	0.29	0.12	0.34	0.07	0.24	0.02	0.01	0.51	0.00	0.50	0.62	0.20
PHL	0.62	0.39	1.17	2.61	0.49	1.52	0.20	1.58	0.08	0.10	1.69	1.36	1.85	2.80	1.24
SGP	2.71	3.50	2.28	8.40	2.95	3.18	0.69	2.85	0.19	5.50	13.91	1.71	0.00	4.07	2.01
THA	1.73	8.64	1.68	3.66	1.18	4.48	4.05	1.21	33.77	27.54	5.70	1.63	3.97	0.00	1.96
VNM	1.39	0.74	2.90	1.82	2.03	2.01	2.17	5.27	18.02	0.52	2.23	1.10	3.50	4.16	0.00
WLD	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00

Source: Computed based on data extracted from WITS

ASEAN PLUS IMPORT SHARE

Australia’s imports are coming mainly from China and Japan. Malaysia is the largest import partner of Brunei. China’s largest import partner from the region are Korea and Japan. India imports substantially from China. Indonesia imports large share from China, Singapore, Japan, Korea and Malaysia. One-fourth of the Japanese imports are coming from China. Imports from China are dominant in ASEAN countries and the FTA partners of ASEAN.

Table 5 :Import Share of ASEAN Plus Economies for the year 2015

	Importing Nations
	AUS	BRN	CHN	IDN	IND	JPN	KHM	KOR	LAO	MMR	MYS	NZL	SGP	THA	VNM
AUS	0.00	1.36	4.79	3.38	2.41	5.56	0.29	3.77	0.37	0.34	2.55	11.91	1.08	2.11	1.22
BRN	0.15	0.00	0.01	0.09	0.16	0.37	0.00	0.22	0.00	0.00	0.08	1.01	0.05	0.36	0.03
CHN	23.22	10.43	0.00	20.63	15.77	25.67	36.95	20.68	18.88	38.05	18.87	19.66	14.20	20.52	29.82
IDN	2.11	2.67	1.29	0.00	3.56	3.16	3.16	2.03	0.23	3.47	4.53	1.75	4.84	3.28	1.65
IND	1.80	1.13	0.87	1.92	0.00	0.78	1.07	0.97	0.38	2.80	2.21	1.15	1.94	1.31	1.60
JPN	7.42	7.41	9.30	9.30	2.47	0.00	3.98	10.51	1.91	9.08	7.82	6.57	6.27	15.61	8.55
KHM	0.06	0.00	0.04	0.01	0.01	0.15	0.00	0.05	0.01	0.00	0.09	0.03	0.05	0.32	0.57
KOR	5.47	9.06	11.36	5.91	3.35	4.29	4.33	0.00	1.28	2.44	4.52	3.70	6.14	3.52	16.64
LAO	0.00	0.00	0.10	0.00	0.04	0.02	0.19	0.01	0.00	0.00	0.00	0.01	0.00	0.73	0.35
MMR	0.02	0.01	0.35	0.11	0.26	0.14	0.03	0.12	0.00	0.00	0.10	0.01	0.04	1.78	0.03
MYS	3.71	21.13	3.47	5.98	2.45	3.44	1.76	1.97	0.32	3.13	0.00	3.35	11.14	5.95	2.52
NZL	2.87	0.15	0.43	0.45	0.14	0.38	0.04	0.28	0.04	0.10	0.44	0.00	0.24	0.30	0.23
PHL	0.28	0.26	1.23	0.48	0.13	1.42	0.09	0.74	0.02	0.12	0.95	0.26	1.53	1.18	0.54
SGP	3.49	14.00	1.80	12.64	1.89	1.26	4.74	1.82	0.21	21.65	11.98	3.47	0.00	3.60	3.64
THA	5.12	3.75	2.42	5.67	1.45	3.27	14.70	1.11	58.82	11.58	6.09	4.16	2.62	0.00	4.99
VNM	1.68	1.18	1.94	2.22	0.69	2.42	8.72	2.25	13.94	1.59	2.75	1.17	1.21	2.02	0.00
WLD	100.00	100	100	100	100	100	100	100	100	100	100	100	100	100	100

Source: Computed based on data extracted from WITS

India’s trade with ASEAN PLUS Countries

India’s exports to ASEAN increased from U.S. $ 10.41 billion in 2005-06 to US$ 25.20 billion in 2015-16 and imports over the same period quadrupled from US$ 10.81 billion in 2005-06 to US$ 39.84 billion. This reflects a compound annual growth rate (CAGR) of about 9.2 percent in exports to the ASEAN region and close to 14 percent per annum growth in imports during 2005-06 to 2015-16. Concomitantly, India’s trade deficit with the ASEAN surged from US$ 0.5 billion in 2005-06 to US$ 14.6 billion. In terms of market share, the share of imports in India’s total imports from ASEAN went up from 7.3 percent in 2005-06 to 10.5 percent in 2015-16, over the same period share of exports to ASEAN in India’s total exports fell from 10.1 percent to 9.6 percent. With regard to India’s trade with individual countries of the region, India runs in to trade deficit with major countries of Southeast Asia. With regard to ASEAN plus countries, India has a trade deficit of 88 billion US$ of which China alone accounts for 52 billion US$. India also has trade deficits with Australia (6.15Bn. US$), Indonesia (11 Bn. US$), Korea (9.48 Bn. US$),Japan (5.10 Bn. US$), Malaysia (4.67 Bn. US$). India got trade surplus with Vietnam (2.68 Bn. US$) and a marginal trade surplus with Cambodia, Philippines and Singapore.

Table 6 : India’s Trade with ASEAN Plus Economies

Partner Name	Export Value (Million $)	Import Value (Million $)	Trade Balance (Millions $)
ASEAN plus FTA partners	47710.76	135805.34	-88,094.58
Australia	3252.81	9411.87	-6,159.05
Brunei	30.39	607.78	-577.39
China	9576.58	61604.43	-52,027.85
Indonesia	2868.88	13902.02	-11,033.14
Japan	4529.72	9635.16	-5,105.44
Cambodia	145.35	42.99	102.36
Korea, Rep.	3609.63	13087.66	-9,478.02
Lao PDR	51.26	142.95	-91.69
Myanmar	859.97	1016.30	-156.33
Malaysia	4892.06	9559.92	-4,667.86
New Zealand	313.90	549.84	-235.94
Philippines	1304.35	518.19	786.16
Singapore	7805.08	7395.99	409.09
Thailand	3113.56	5650.14	-2,536.58
Vietnam	5357.21	2680.09	2,677.12
World	264,381.00	390,744.73	-126,363.73

Source: Data extracted from WITS

Impact of India ASEAN Plus FTA – Smart Simulation Analysis

The economic impact of proposed India-ASEAN plus Free Trade Agreement is analysed using World Integrated Trade Solutions (WITS) tool. WITS is a data extraction and tariff simulation software using databases maintained by UNSD COMTRADE, UNCTAD TRAINS, and WTO IDB/CTS. The SMART simulation model of the WITS allows users to estimate the partial equilibrium impact of tariff reductions for a single market at a time. WITS simulation is largely used to simulate the impact of preferential trade agreements. This simulation involves two aspects. First, a database has to be extracted to conduct simulation exercise. Secondly, simulation parameters are defined to get the impact of a tariff cut arising out of a Free Trade Agreement (FTA).

The simulation exercise for the study used bilateral trade data between India and ASEAN plus countries for the year 2015. India is cutting tariff and the beneficiary Countries are ASEAN and its five FTA partners. Tariff cut is done across the board and all products are affected by that. Since the attempt is to understand the impact of FTA, the new tariff rate is kept at zero percent. There arise five results from the simulation exercise. They are total trade effect, export effect on partners, effect on average duty, welfare effect and tariff revenue effect.

When India initiates100 percent tariff cut against ASEAN plus countries as part of the Free Trade Agreement, they gain access to theIndian market and the exports to India will increase substantially. Table-7 provideschanges in the exports of10-member ASEAN countries and five FTA partners of ASEANdue to 100 percent tariff reduction by India. The biggest trade gains are arising to countries against which the tariff cuts are effected by India. China gains most with an increase of 13.52 billion (22.49 percent), followed by Malaysia, a (4.74 billion $), Korea (3.36 billion $), Thailand (2.19 billion) and Japan (2.18 billion US$). The countries which are losing most from India ASEAN plus FTA is Indonesia (2.77 billion), US (532 million), Germany (523 million), Italy (180 million). Interestingly, Indonesia which is an FTA partner is losing out asubstantial trade to other members of the ASEAN plus group.

Table 7 :Major Gainers from India ASEAN Plus FTA – Smart Simulation

Partner Name	Product Code	Exports Before in 1000 USD	Exports After in 1000 USD	Export Change in Revenue in 1000 USD	Percentage Change in Exports
China	Total	60,120,801	73,642,347	13,521,546	22.49
Malaysia	Total	9,493,390	14,228,497	4,735,107	49.88
Korea, Rep.	Total	12,878,505	16,233,598	3,355,093	26.05
Thailand	Total	5,417,513	7,608,380	2,190,867	40.44
Japan	Total	9,367,973	11,543,881	2,175,907	23.23
Vietnam	Total	2,536,126	3,882,464	1,346,338	53.09
Singapore	Total	7,380,912	8,577,367	1,196,456	16.21
Australia	Total	9,243,673	10,284,401	1,040,728	11.26
Philippines	Total	505,562.5	620,169.3	114,606.9	22.67
New Zealand	Total	544.125.6	626,297.8	82,172.12	15.10
Brunei	Total	607,783.4	608,538.4	755.072	0.12

Source: Calculated based on WITS SMART simulations

Table 8 :Major Losers from India ASEAN Plus FTA – Smart Simulation

Partner Name	Product Code	Exports Before in 1000 USD	Exports After in 1000 USD	Export Change in Revenue in 1000 USD	Percentage Change in Exports
Indonesia	Total	13553819	10786291	-2,767,528	-20.42
United States	Total	19628746	19096118	-532,628	-2.71
Germany	Total	11332232	10808555	-523,677	-4.62
Italy	Total	3967955	3787745	-180,210	-4.54
Taiwan, China	Total	3523306	3352020	-171,286	-4.86
Switzerland	Total	21075113	20914464	-160650	-0.76
United Kingdom	Total	5311658	5155350	-156308	-2.94
United Arab Emirates	Total	20265670	20133665	-132005	-0.65
France	Total	3122004	3004414	-117591	-3.77
Saudi Arabia	Total	21348540	21253981	-94559.5	-0.44
Russian Federation	Total	4514333	4425048	-89285	-1.98

Source: Calculated based on WITS SMART simulations

 

The simulations show that India’s imports will increase by 23.58 billion if theFTA is signed with ASEAN plus countries. Because of the elimination of tariffs with ASEAN plus countries, there will be a reduction in customs duty to the tune of 19.3 billion US dollars. Because of the reduction in tariff and the consequent reduction in prices, there will be a consumer surplus to the tune of 1.92 billion US$.

Table 9 :Trade, Revenue and Welfare effect of India-BIMSTEC FTA

Market View of India-ASEAN PLUS FTA
Imports	Imports	Tariff	Tariff	Tariff
Before ($ ‘000)	Change In	Revenue ($ ‘000)	New Revenue ($ ‘000)	Change in Revenue ($ ‘000)	Consumer Surplus ($ ‘000)
377535382	23,581,967.25	40,965,439.83	21,623,485.41	-19,341,954.42	1,915,040.615
Revenue Impact of India-ASEAN PLUS FTA
Revenue Effect ($ ‘000)	Trade Total Effect ($ ‘000)	Trade Value ($ ‘000)	Old Weighted Rate (%)	New Weighted Rate (%)
-12147512.13	23,581,967.25	377,535,382	10.85	5.39
Welfare Impact from India-ASEAN PLUS FTA
Trade Total Effect ($ ‘000)	Welfare ($ ‘000)	Old Weighted Rate (%)	New Weighted Rate (%)
23,581,967.25	2,224,771.425	5.39	10.85
Trade creation from India –ASEAN PLUS FTA
Trade Total Effect ($ ‘000)	Trade Diversion Effect ($ ‘000)	Trade Creation Effect ($ ‘000)	Price Effect	Old Simple Duty Rate (%)	New Simple Duty Rate (%)
23,581,967.25	0.097	23,581,967.25	0	10.85	5.39

Source: Calculated based on WITS SMART simulations

The total trade effect of India ASEAN plus FTA is 23.58 billion US $ of which the trade creation effect is 12.58 billion US$ and the trade diversion effect is only 79 US$the total welfare effect is to the tune of 2.22 billion US$. This showed that the India ASEAN plus is a highly trade creation FTA with no trade diversion and substantial welfare improvement.

 

Conclusion

The simulation exercise showed that India’s import from ASEAN plus countries will substantially increase if the FTA comes into existence. China which enjoys a huge trade surplus with India will further improve its trade performance and increase the trade balance. India’s advantage will be primarily in the services sector and it is better to complete the comprehensive trade agreement which includes trade, services and investment. Also, protection of sensitive product categories with higher Rules of Origin (RoO) support is necessary. India’s experiences with the existing FTAs is not very encouraging. India should ensure its concerns addressed before signing the FTA. Already China is pressurising ASEAN to go ahead with the agreement without India. This kind of Chinese hegemony should be resisted and an institutional framework should be created for the success of RCEP.

References

A Blueprint for Growth ASEAN Economic Community 2015: Progress and Key Achievements http://www.asean.org/storage/images/2015/November/media-summary-ABIS/AEC%202015%20 Progress%20and%20Key%20Achievements_04.11.2015.pdf

ASEAN Integration Report 2015 http://www.asean.org/storage/images/2015/November/media-summary-ABIS/ASEAN%20 Integration%20Report%202015.pdf

ASEAN Community in Figures – Special Edition 2014: A Closer Look at Trade Performance and Dependency, and Investment http://www.asean.org/storage/images/resources/2014/Oct/ACIF%20Special%20Edition%202014_ web.pdf

ASEAN International Merchandise Trade Statistics Yearbook 2014 http://www.asean.org/storage/images/2015/March1/asean_publication/Preview%20IMTS%2012-032015%202.pdf

ASEAN Investment Report 2015 Infrastructure Investment and Connectivityhttp://www.asean.org/storage/images/2015/November/asean-investment-report/ASEAN%20 Investment%20Report%202015.pdf

David Scott, India’s ‘Extended Neighbourhood’ Concept: Power Projection for a Rising Power, India Review 8, No. 2 (2009), accessed June 11, 2017, doi: 10.1080/14736480902901038. 5. For a broad overview of India’s engagement with East and Southeast Asia, see Harsh V Pant, Indian Foreign Policy: An Overview (Manchester: Manchester University Press, 2016), pp. 137-148.

Das, Sanchita Basu The Future of Trade Diplomacy in East Asia, PERSPECTIVE, RESEARCHERS AT ISEAS – YUSOF ISHAK INSTITUTE ANALYSE CURRENT EVENTS, Singapore, 14 February 2017,

Deeparghya Mukherjee, “India-ASEAN economic linkages: Challenges and Way Forward,” Ideas for India, 10 March 2016, accessed June 21, 2017, http://www.ideasforindia.in/article.aspx? article_id=1593.

 

(Dr. B.P. Sarath Chandran is an Associate Professor at
VVM’s Shree Damodar College of Commerce & Economics, Margao, Goa.)

 

(This article is carried in the print edition of January-February 2018 issue of India Foundation Journal.)