THE CONTEXT: The 21st India-ASEAN Summit took place in Laos, marking a milestone in the relationship between India and the Association of Southeast Asian Nations (ASEAN). This summit coincided with the 10th anniversary of India’s Act East Policy, which has been instrumental in reinvigorating India’s relationship with ASEAN nations.
10-POINT PLAN TO STRENGTHEN INDIA-ASEAN PARTNERSHIP
- Celebrating 2025 as the ASEAN-India Year of Tourism
- Doubling scholarships at Nalanda University for ASEAN students
- Providing new grants for ASEAN students at Indian Agricultural Universities
- Organizing various people-centric activities to celebrate the decade of Act East Policy
- Conducting an ASEAN-India Women Scientists Conclave
- Allocating $5 million for enhancing disaster resilience
- Initiating a new Health Ministers’ track for building Health Resilience
- Establishing a regular ASEAN-India Cyber Policy Dialogue mechanism
- Organizing a workshop on Green Hydrogen
- Inviting ASEAN leaders to join the ‘Plant a Tree for Mother’ campaign
STRATEGIC IMPORTANCE OF INDIA-ASEAN RELATIONS:
- Economic Cooperation and Trade Potential: Economic cooperation between India and ASEAN has grown significantly, with bilateral trade reaching over USD 130 billion in recent years. The ASEAN-India Trade in Goods Agreement (AITIGA) has been instrumental in this growth, although it has also highlighted trade imbalances that India aims to address through ongoing negotiations. The review of AITIGA seeks to make the agreement more mutually beneficial by addressing tariff imbalances and enhancing market access for Indian goods.
- Cultural Linkages and People-to-People Contacts: Initiatives such as celebrating 2025 as the ASEAN-India Year of Tourism and doubling scholarships at Nalanda University aim to strengthen these ties. Educational exchanges significantly promote cultural understanding, with India’s prestigious institutions offering opportunities for ASEAN students. These exchanges enhance academic excellence and contribute to regional harmony by fostering cross-cultural interactions.
- Technological and Connectivity Cooperation: The ASEAN-India Joint Statement on Advancing Digital Transformation outlines strategies for enhancing digital public infrastructure, financial technology, and cybersecurity. India’s support for the ASEAN Digital Masterplan 2025 highlights its role in regional capacity-building initiatives.
INDIA’S ACT EAST POLICY: A DECADE IN REVIEW
- Evolution from Look East to Act East Policy: The Act East Policy marks a strategic shift from the earlier Look East Policy, emphasizing proactive engagement with Southeast Asia. Launched in 2014, it reflects India’s intent to deepen economic, strategic, and cultural ties with ASEAN nations. This policy shift aligns with India’s broader regional integration and connectivity vision, mainly through infrastructure projects like the India-Myanmar-Thailand Trilateral Highway.
- Achievements and Milestones: Bilateral trade has nearly doubled since its inception, highlighting the economic success of this policy. Diplomatic engagements have also increased, with high-level visits reinforcing strategic partnerships across various sectors. The policy has positioned India as a key player in the Indo-Pacific region, fostering regional stability and economic growth through initiatives like SAGAR (Security and Growth for All in the Region).
CHALLENGES FOR INDIA:
- Trade Imbalance: Since implementing the Free Trade Agreement (FTA) in 2010, India’s trade deficit with ASEAN has more than doubled. For instance, in the fiscal year 2022-2023, India’s exports to ASEAN countries were valued at USD 44.04 billion, while imports from ASEAN reached USD 87.58 billion. This imbalance is particularly pronounced in sectors like electronics and machinery.
- Infrastructure Connectivity: While there has been progress in digital and cultural connectivity, physical infrastructure links remain underdeveloped. Critical projects like the India-Myanmar-Thailand Trilateral Highway and the Kaladan Multi-Modal Transit Transport Project have faced significant delays, hindering trade flows and people-to-people connections.
- Geopolitical Challenges: Navigating China’s growing influence in Southeast Asia poses a complex challenge for India-ASEAN relations. ASEAN member states often find themselves between Chinese economic inducements and security concerns. India’s efforts to counter China, such as through the Quad Alliance, have received mixed responses from ASEAN countries wary of taking sides.
- Tariff and Non-Tariff Barriers: The ASEAN-India Free Trade Agreement (AIFTA) has led to asymmetric tariff reductions, disadvantaging India. While India has reduced tariffs on about 74% of its tariff lines for ASEAN countries, ASEAN has reciprocated for only about 56% of its tariff lines. This imbalance is particularly evident in sectors like agriculture and textiles.
- Strategic Influence: India’s strategic influence in Southeast Asia appears to be diminishing. According to a survey report, India ranks low among major powers in terms of economic, political, and security influence in the region. This perception is exacerbated by India’s inward-focused priorities and protectionist policies, which may detract from its ability to assume a leadership role globally.
- Economic Partnership: The absence of a robust economic partnership has long inhibited close India-ASEAN cooperation. India’s exit from the Regional Comprehensive Economic Partnership (RCEP) exemplifies its resistance to further opening its economy. Enhancing India’s economic position in Southeast Asia will require further economic reforms to boost goods exports and complement its service advantage.
THE WAY FORWARD:
- Modernizing Trade Agreements: Revamping agreements like AITGA by incorporating changes in the Rules of Origin (ROO) framework can help reduce the trade deficit, increase market access for Indian goods, and block unfair trading practices.
- Leveraging Mini-lateral Partnerships: Developing bilateral partnerships with like-minded ASEAN partners can complement broader regional strategies. This approach allows for targeted cooperation even as ASEAN struggles with internal cohesion challenges.
- Aligning on Climate Change and Sustainability: Proposing an “ASEAN-India Green Partnership” focusing on climate change mitigation and renewable energy can foster collaboration on sustainable development goals. This partnership could include technology transfer in areas like solar energy.
- Strengthening Strategic and Defense Cooperation: Deepening strategic engagement with ASEAN in maritime security is crucial. Increased capacity-building assistance in maritime domain awareness, anti-piracy operations, and humanitarian aid can enhance strategic trust.
- Enhancing Manufacturing Competitiveness: Extending the Production Linked Incentive (PLI) scheme to cover more industries relevant to ASEAN trade can help boost India’s manufacturing competitiveness. Joint manufacturing initiatives with ASEAN countries, such as a potential India-Vietnam electronics manufacturing hub, could leverage India’s software capabilities with Vietnam’s hardware expertise.
THE CONCLUSION:
Strengthening India-ASEAN relations requires addressing trade imbalances and enhancing connectivity through strategic economic reforms and infrastructure development. By fostering collaborative partnerships and leveraging shared interests, India can strengthen its influence and secure a more balanced and prosperous regional engagement.
UPSC PAST YEAR QUESTIONS:
Q.1 Critically examine the aims and objectives of SCO. What importance does it hold for India? 2021
Q.2 Do you think BIMSTEC is a parallel organization like the SAARC? What are the similarities and dissimilarities between the two? How are Indian foreign policy objectives realized by forming this new organization? 2022
MAINS PRACTICE QUESTION:
Q.1 Discuss the challenges India is facing in strengthening its partnership with ASEAN. How can India address these challenges to enhance its strategic influence and economic ties with Southeast Asia?
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