ASEAN-India Forging New Partnership

Global Centre Stage

ASEAN welcomes India's active role in promoting regional peace and development as they set out to achieve a new plan of action (2016-2020)

ASEAN-India partnership has been remarkably strengthened after Indian Prime Minister Narendra Modi introduced “Act East Policy” in 2014, which aims to concretise and advance the country’s “Look East Policy” initiated in the early 1990s.

“A new era of economic development, industrialisation and trade has begun in India. Externally, India’s ‘Look East Policy’ has become ‘Act East Policy,’” Modi announced in ASEAN-India Summit in November 2014. The shift implies India’s stronger commitment to implementing its foreign policy towards East Asia.

ASEAN welcomes India’s active role in promoting regional peace and development as they set out to achieve a new plan of action (2016-2020). However, more concrete actions are required to bring about more fruits to the bilateral partnership. India needs a stronger leadership in building a result-oriented ASEAN-India partnership.

India’s foreign policy towards Southeast Asia is driven by the increasing regional economic interdependence and complex regional security dynamics. India wishes to reap benefits from the realisation of the ASEAN Community 2015 and consequently increase its regional presence and influence. Deepening economic integration generates a win-win situation for India and ASEAN to grow together in a wider Asian community.

India’s Role in Southeast Asia

India has a population of 1.25 billion—the second largest after China—and is young and growing with half its population under the age of 25. By 2030, India will become the world’s most populous nation. Such demographic dividend enables India to play a more significant role in the region.

With a GDP of $1.8 billion, India is a valuable economic partner for ASEAN. India has enjoyed high economic performance with an average growth rate of 7.2 percent over the past five years. According to the International Monetary Fund (IMF), India is expected to clock a GDP growth rate of 7.5 percent in 2015-2016, making it the world’s fastest-growing large economy. Southeast Asian countries will definitely benefit from India’s fast-growing economic power and potential.

India has played an important role in maintaining peace and stability in the region. Non-traditional security cooperation takes the centre-stage of India-ASEAN bilateral cooperation. Strategic cooperation, especially maritime security cooperation, has been enhanced to meet new realities and challenges in the Indo-Pacific region. India is a regional major power, contributing positively to building dynamic power equilibrium in the Indo-Pacific, as a result of stable power interplay among India, China, US and Japan under the umbrella of ASEAN’s multilateral institutions.

India’s Strategic Visions

India needs to deepen strategic ties with ASEAN in order to concretise its strategic visions of playing a greater role in the Indo-Pacific region and the world at large. India wishes to become: a regional economic engine; part of regional production network; a regional security provider and stabiliser; and a powerhouse of ideas, innovation and information technology.

The Hindu newspaper quoted Commerce and Industry Minister Nirmala Sitharaman as saying, “We are very keen to open up the northeast part of India: open up the economy, improve on its connectivity with the rest of the east and therefore look at India’s northeast as a threshold to our Act East Policy.” It is expected that bilateral trade volume between India and ASEAN will reach $100 billion by the end of 2015 and $200 billion by 2022 from the current $80 billion.

However, India must first address structural issues at home in order to realise those visions. First, India needs to reduce investment barriers and improve business environment, develop infrastructure connectivity within the country and between India and Southeast Asia, and strengthen maritime connectivity by developing modern seaports and logistics.

Second, India needs to invest more in defence and security ties with Southeast Asia by upgrading bilateral dialogues, strengthening ASEAN’s regional security institutions, promoting joint military exercises, developing human resources and building capacity in peacekeeping operations and humanitarian missions.

Third, India should set up programmes and mechanisms to promote cross-cultural dialogue and people-to-people contact with ASEAN. More attention should be given to educational and cultural exchanges, science and technology, and innovation and entrepreneurship. India should invest more in English language training and entrepreneurship development centres in Cambodia, Lao PDR, Myanmar and Vietnam.

ASEAN-India Trade Ties

India and ASEAN signed the Framework Agreement on Comprehensive Economic Cooperation in 2004, reached trade agreement in goods in 2009 and implemented it in 2010. Both sides concluded an agreement on investment and trade in services in 2012, which came into effect three years later.

According to the 2004 Framework Agreement, both sides agreed to (a) strengthen and enhance economic, trade and investment cooperation; (b) progressively liberalise and promote trade in goods and services as well as create a transparent, liberal and facilitative investment regime; (c) explore new areas and develop appropriate measures for closer economic cooperation, and (d) facilitate a more effective economic integration of the new ASEAN member states and bridge the development gap.

Bilateral trade relations between India and ASEAN have increased over the last decade. ASEAN has become India’s fourth largest trading partner. India’s main export products to ASEAN include petroleum products, oil meals, gems and jewellery, electronics, cotton yarn and wool, machinery and instruments, primary and semi-finished iron and steel, transport equipment, marine products, drugs and pharmaceuticals, and agro chemicals.

ASEAN’s main exports to India include coal, coke, briquettes, vegetable and petroleum oils, electronics, organic chemicals, non-electrical machinery, wood and wood products, non-ferrous metals, metalliferous ores and metal scrap.

For trade in services, both sides agreed to promote cooperation in telecommunications, information technology, transportation and logistics, financial services, education, real estate, business services, health and social services, and the movement of natural persons and professionals.

India is also interested in promoting scientific innovation and technology transfer and encouraged private sectors in ASEAN to capitalise on India’s “Make in India” policy by exporting raw materials, parts and components to the Indian market. Such economic policies are vital to regional production networks. India and ASEAN need to promote the flow of foreign direct investment (FDI) and link small and medium-sized enterprises (SMEs) into regional production networks.

Huge financial resources are needed to implement regional connectivity projects. Therefore, India-ASEAN-China trilateral partnership in infrastructural development is critical. The Asian Infrastructure Investment Bank (AIIB) and China’s “One Belt One Road” initiative are going to significantly contribute to the realisation of regional infrastructural connectivity.

ASEAN-India Security and Defence Cooperation

ASEAN and India have developed bilateral and multilateral mechanisms to promote security and defence cooperation. Non-traditional security issues are the core areas of cooperation. Those issues include trafficking in persons, drugs and arms; natural disaster and humanitarian assistance; international terrorism, piracy, climate change, and food-water-energy security nexus.

Moreover, India has shown a stronger interest in maritime security for two reasons. First, India tries to play a dominant role in the northeast Indian Ocean, which includes the Bay of Bengal and Andaman Sea. Second, India plans to expand its strategic maritime role in Southeast Asia, particularly in maintaining freedom of navigation.

ASEAN views India as a benign regional power. And India is supportive of ASEAN centrality. India has significant strategic space to manoeuvre in Southeast Asia as long as it has a clear strategic vision and the required energy and resources to implement the vision. The South China Sea dispute provides a strategic window of opportunity to engage in and secure regional peace and stability, given that 55 percent of India’s trade passes through the South China Sea.

India’s key strategic partners are Japan, Australia, Singapore, Vietnam and Indonesia. In May this year, India and Vietnam signed a memorandum of understanding on defence and coast guard cooperation. In June, the Indian navy made port visits to Thailand and Cambodia during a joint military exercise with Singapore, Indonesia and Australia.

ASEAN-India Dialogue Forum

ASEAN encouraged India to continue its constructive contribution to regional peace, stability and prosperity through active participation in various ASEAN-led mechanisms such as ASEAN Regional Forum, ASEAN Defence Ministers’ Meeting- Plus, expanded ASEAN Maritime Forum and East Asia Summit. In addition, India has been encouraged to continue its active contribution towards timely conclusion of the negotiations for a modern, comprehensive, high-quality and mutually beneficial Regional Comprehensive Economic Partnership (RCEP) by the end of this year.

ASEAN and India need to work closer together to strengthen regional security and economic architecture by effectively linking the aforementioned regional institutions and delivering results and making wider regional impact on people’s lives rather than only making declarations.

Future Plan of Action

At the ASEAN-India Joint Cooperation Committee Meeting in June, both sides assessed the achievements and shortcomings of the implementation of the 2010-2015 Plan of Action—which include political security, economic and socio-cultural cooperation—and stressed the need to steadfastly implement the remaining measures in the plan by the end of this year.

ASEAN and India are formulating a new Plan of Action for the next five-year period of 2016-2020, which will be adopted by the Ministers of Foreign Affairs of ASEAN and India this coming August in Kuala Lumpur. Some of the remaining measures, which have not yet been implemented in the previous plan, will be implemented in the new plan. The new plan will include more elaborate measures to advance security and defence cooperation, deepen economic integration and promote people-to-people contacts.

India and the Mekong region countries should upgrade and institutionalise the Mekong-Ganga Cooperation from economic and cultural ties, tourism and connectivity to a comprehensive strategic partnership level. Mekong-India summit is vital to advance the bilateral partnership.

Mekong-India summit should focus on three core areas: (a) connectivity which include enhancing physical infrastructure, institutional building and harmonisation, and people-to-people contacts; (b) trade and investment promotion which relates to linking trade with poverty reduction, boosting investment with a focus on attracting FDI, generating employment and opportunities for social development; and (c) sustainable development which consists of environmental protection and social and economic inclusiveness.

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