What is currently referred to as India’s Act East Policy was launched in the early 90s as the Look East Policy alongside the New Economic Policy of Liberalization, Privatization and Globalization (LPG). The origins of the Look East Policy — which seeks to strengthen ties between India and East and South-East Asia — are often traced to a lecture made — during a visit to Singapore in September 1994 — by then PM late PV Narasimha Rao. ASEAN countries along with Japan had begun to show great interest in India after the introduction of economic reforms.
Over the past three decades, ties between ASEAN and India have become truly multifaceted. India became a dialogue partner of ASEAN in 1996 and thena Summit Level Partner. This was further elevated into a strategic-level partnership in 2012. India and ASEAN celebrated the completion of 30 years of relationship in 2022 and the year was designated as ASEAN – India friendship year.
It would be pertinent to point out here that India’s state governments are playing an increasingly important role in the country’s economic ties with ASEAN.
While India’s initial focus in the ASEAN region was Singapore, in recent years ties with other ASEAN nations have also strengthened significantly. The ASEAN- India Biztech conference in Kuala Lumpur, the Trade Expo in Bangkok and the ICT expo in Jakarta are a strong reiteration of the growth of economic ties between India and ASEAN. In 2024, Indian Prime Minister, Narendra Modi visited Brunei. This was the first bilateral visit by an Indian Prime Minister to Brunei Darussalam.
Trade
India signed 3 major trade agreements from 2009 to 2011 with its South East Asian partners. In 2009, the ASEAN India Free Trade Agreement (AIFTA) was signed followed by comprehensive Economic Partnership Agreements (CEPA) with South Korea and Japan. The framework agreement between India and ASEAN was signed in 2003 in Bali Indonesia. India and ASEAN signed a free trade agreement in Thailand in 2009 which came into effect in 2010. Further India entered into an agreement for services trade in 2014. The strengthening of trade ties between India and ASEAN can be estimated from the fact that trade has moved from below $3 billion (2.9 billion) to 121 billion.
From Look East to Act East
The Look East Policy was rechristened as Act East Policy in 2014 and is being followed with much vigour, catapulting the infrastructure of North-East of India, which will be the gateway for trade from India to ASEAN countries. Myanmar, one of the ASEAN countries, shares a border with four Indian states. India–Myanmar–Thailand Trilateral Highway (IMT Highway) is a 1,360 km long route. It is a 4-lane highway under construction under India’s Act East policy. India is keen on extending the trilateral highway to Cambodia, Laos and Vietnam to enhance its trade with ASEAN.
State-wise breakdown of economic ties with ASEAN and the trend of mini FTAs
While the Act East Policy seeks to boost infrastructure in northeastern states of India, it is important to bear in mind that these are not major exporting states. While given their geographical location, the participation of North-Eastern states as important economic stakeholders needs to be encouraged, it is important to bear in mind the fact that as per Government of India (GOI) data, the top five exporting states of India in 2023-24 were Gujarat, Maharashtra, Tamil Nadu, Karnataka and Uttar Pradesh.
Assam is the largest of the Northeastern states and ranks 24th among the exporting states and union territories of India. Interestingly, Telangana, the largest software exporter from India, signed an MOU with ASEAN member Thailand in 2022, which Indian media described as a ‘mini-FTA’. While it is obvious that Indian states are not empowered under the federal structure to sign any free trade agreement with a neighbouring country, the term ‘mini FTA’ exhibits the enthusiasm of Indian states for participating in economic cooperation beyond the border.
At the bilateral level, both countries already had an Early Harvest Scheme since 2004, which allowed the removal of tariffs on 82 items like fruits and vegetables, jewellery and automotive products. Still, both sides realized a need for deeper trade integration at the state level. Finally, the MOU was signed in 2022. While Thailand has been signing similar trade agreements at the state level with countries like China, Japan and South Korea, this was the first time with an Indian state. The MOU particularly helped the SME sector in Telangana to take the opportunity to explore the Thailand market; on the other hand, Thailand got an additional advantage in the market of 40 million people in Telangana. Thailand is particularly interested in the furniture market in Telangana. Agro-based food processing and wood-based industry are the focus areas in this MOU. This MOU is also expected to boost the potential of SMEs and start-ups from Telangana. There are strong existing business relations between Telangana and Thailand. According to estimates, there are 15 flights operating between Thailand and Hyderabad, the capital of Telangana with 97 weekly flights. Similarly, there are immense opportunities for other southern states to explore their trade and investment relationships with ASEAN countries.
In 2023-24, some of India’s top-most exports to ASEAN countries were natural or cultured pearls, precious stones, jewellery, motor vehicles and electrical machinery. The Southern state of Tamil Nadu is a major exporter to ASEAN in products like automobile components, electrical machinery and readymade garments. Telangana is a leading exporter of pearls in the entire world. Karnataka and Tamil Nadu both are major exporters of electrical machinery. Another south Indian state, Kerala is one of the major exporters of agricultural products to ASEAN. Indian Jackfruit, the national fruit of Kerala, is popular in countries like Singapore. India also exports marine products to ASEAN countries through Cochin port. It is reported that in 2025, Telangana Government signed an agreement to export 100,000 tons of rice to the Philippines. This materialized after a visit by quality control officials from the Philippines to the Nalgonda district of Telangana. The officials checked the quality requirements for exports to the Philippines.
In terms of trade ties between ASEAN and Indian states a few other points need to be borne in mind. First, ASEAN nations – especially Malaysia and Singapore – are home to a significant diaspora from Southern Indian states. Apart from this, the FDI of ASEAN nations, especially Singapore is focused on Southern Indian states though there seems to be an attempt by ASEAN nations to diversify their linkages. The Singapore President, Tharman Shanmugaratnam during his India visit, in January 2025, undertook a trip to Odisha to explore economic opportunities in the Eastern Indian state. Similarly, Assam has been proactively trying to attract ASEAN investors. Delegations from Assam visited Singapore and Thailand in connection with the Advantage Assam 2.0 Summit to be held in February 2025 in Assam.
South Indian states and their geographical advantage
While India’s Act East Policy is creating infrastructure for exports via roadways to ASEAN countries, the Bay of Bengal Sea route remains the primary gateway of Indian goods into ASEAN countries at present. Three MOUs were signed between Thailand’s Ranong Post and Indian ports in Visakhapatnam, Chennai and Kolkata in 2019. Southern India ports in Chennai, Visakhapatnam, Cochin, Trivandrum, Kakinada, and Mangalore connect India to ASEAN countries for foreign trade. ASEAN is an attractive destination for Indian exporters. South Indian states are established exporters of goods and services. Taking a cue from Telangana, other Indian states can also seek to enhance the trade relationship with ASEAN countries. In addition to the North-East, export-oriented states from other regions of India may continue to encash the advantage of the existing FTA with ASEAN and make India’s Act East policy a success.
Conclusion
In conclusion, it is important for state governments to tap trade opportunities with ASEAN countries. It is also significant that ASEAN countries are now reaching out to different states, and it is no longer a few states but several that seek to tap the economic opportunities of the ASEAN region.
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