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Indias ASEAN Approach: Acting East | The Diplomat

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India's Prime Minister Narendra Modi (C) holds the hands

of Malaysia's Prime Minister Najib Razak (R) and Vietnams
Prime Minister Nguyen Tan Dung at the 2015 ASEAN
Summit in Kuala Lumpur.
Image Credit: REUTERS/Jorge Silva

Indias ASEAN Approach: Acting East

How Indias approach to ASEAN has evolved, and where it stands now.
By Sampa Kundu
April 08, 2016

The Association of Southeast Asian Nations (ASEAN) has a population (600 million) larger than North America or
the European Union; its total merchandise exports stand at $1.2 trillion. Stephen Groff, vice president of the Asian
Development Bank (ADB), noted in a 2014 speech in Berlin that if ASEAN were one economy, with a combined
gross domestic product of $2.3 trillion, it would have ranked as the seventh largest economy in the world by 2013.
He added that it would become the fourth largest economy by 2050 if the existing level of growth continues.
Fittingly, ASEAN is considered to be a growing hub for consumer demand and occupies a significant position in
global trade flows.
Presently, ASEAN is taking the process of economic integration into serious consideration, though with some
limitations and constraints. No other regional trading bloc in Asia is talking about a single currency at this
moment, which sets ASEAN apart. Plus, ASEAN already has six trade agreements with its neighbors, which
includes China, South Korea, Japan, Australia, New Zealand, and India.
India is one of the strategic partners of ASEAN. With a total population of 1.8 billion and a combined GDP of $3.8
trillion, ASEAN and India together form an important economic space in the world. Besides an economic
partnership, India expects to benefit geopolitically as well from its rejuvenated affinity with ASEAN and other
regional countries. In order for India to gain a substantial position in East Asia, New Delhi has moved to an Act
East Policy (AEP) now, an update to the 25-year-old Look East Policy (LEP). As ASEAN remains central to Indias
AEP, Indias achievements from this strategy are worth watching. It is crucial to observe whether the Modi
government will be able to overcome the challenges and give the Act East Policy a much-needed push.
The beginning of Indias Look East Policy could be marked in early 1990s. After the end of the Cold War, the force
of regionalism began to divide the world into small trade blocs. Under these circumstances, the booming
economies of ASEAN offered an economically liberalizing India an avenue that could serve its interests in many
ways. Through ASEAN, India wanted to reap the benefits of economic integration and well as discuss security
issues like cross-border movements from Myanmar. Chinas expanding influence in Southeast Asia, especially in
Myanmar, was another concern for India. All these led to the formulation of the LEP.
LEP has already gone through two phases since 1991. Phase I lasted between 1991 and 2002, when the primary
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thrust was toward renewed political and economic relations with ASEAN countries. India became a sectoral
dialogue partner of ASEAN in 1992 and full dialogue partner in 1996; that same year, it also joined the ASEAN
Regional Forum (ARF).
During Phase II (2003 to 2012), the scope of the LEP was broadened to include China, Japan, South Korea,
Australia, and New Zealand. Indias then-External Affairs Minister Yashwant Sinha mentioned in a 2003 speech
that the new phase of LEP would focus on extensive economic and security issues, including joint efforts to protect
the Sea Lanes of Communications and launch coordinated counter-terrorism activities. In 2012, India and ASEAN
commemorated 20 years of their dialogue partnership; they became strategic partners and a vision document was
released.
In between, in July 2011, the then-U.S. Secretary of State Hillary Clinton visited India and advocated for India to
play a stronger role in the Asia-Pacific. She coined the term act East instead of just looking East. LEP 3.0 got a
momentum in the same direction under the Modi government as EAM Sushma Swaraj confirmed in 2014 that New
Delhi is now willing to Act East. Under the AEP, India not only expected to bolster its economic engagements
with the region; it yearned to emerge as a potential security balancer as well.
Economics
On the economic front, the rising two-way trade between India and ASEAN is noteworthy. It grew from $13 billion
to $74 billion between 2003-04 and 2013-14. (See Table 1). However trade data between India and ASEAN shows a
negative balance against India. The government had to face criticism for signing its Free Trade Agreement with
ASEAN on the grounds that, though imports from ASEAN to India have been mounting, Indias exports to the
region are not experiencing the same trajectory.
ASEAN, as a collective, occupies the fourth largest position in Indias total external trade, while India was only
ASEANs 10th largest trading partner as of June 2015. As of 2015-2016, Indias exports to ASEAN stood at 9.79
percent of its total exports, and its imports from the region were approximately 10.51 percent of its total imports.
So far as investment is concerned, as of 2014, Indias outward investment to Singapore, Indonesia, Malaysia,
Philippines, Thailand, and Vietnam stood at a record $128 billion, which is even higher than Indian investment in
China, some $119.56 billion. At the same time, approximately 12.5 percent of Indias total inflows of foreign
investment come from ASEAN.
Table1:IndiasTradewithEastAsia,AustraliaandNewZealand(All values in USD million)
Country

Export
Import
Total Trade
2010-11
2014-2015
2010-11
2014-2015
2010-11
Brunei
23.07
41.99
234.17
840.88
257.23
Cambodia
66.94
142.53
8.01
17.96
74.95
Indonesia
5,700.78
4,043.32
9,918.63
15,004.64
15,619.41
Malaysia
3,871.17
5,816.55
6,523.58
11,117.74
10,394.75
Myanmar
320.62
773.24
1017.67
1,231.54
1,338.29
Lao PDR
13.11
67.31
0.22
85.28
13.33
Singapore
9,825.44
9,809.36
7,139.31
7,124.47
16,964.75
Thailand
2,274.21
3,464.83
4,272.09
5,865.88
6,546.31
Vietnam
2,651.44
6,257.88
1,064.90
3,003.35
3,716.34
Philippines
881.10
1,395.58
429.39
423.04
1,310.49
ASEAN
25,627.89
31,812.58
30,607.96
44,714.77
56,235.85
China
14,168.86
11,934.25
43,479.76
60,413.17
57,648.62
Japan
5,091.24
5,385.57
8,632.03
10,131.36
13,723.27
South Korea
3,727.29
4,602.95
10,475.29
13,529.11
14,202.58
Australia
1,713.02
2,782.13
10,789.00
10,247.24
12,502.01
New Zealand
190.59
322.10
625.21
591.40
815.80
Source:ExportImportDataBank,DepartmentofCommerce,GovernmentofIndia

2014-2015
882.87
160.49
19,047.96
16,934.29
2,004.78
152.58
16,933.83
9,330.71
9,261.23
1,818.62
76,527.35
72,347.42
15,516.93
18,132.06
13,029.38
913.49

Politics
Geopolitically, India has attempted to demonstrate its ability to play a dynamic role in the region. India sent a
strong signal to China by mentioning the importance of maintaining freedom of navigation in the South China Sea
in the joint statement released by President Barack Obama and Prime Minister Narendra Modi during the latters
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2014 U.S. visit. The idea of U.S.-India joint patrols in South China Sea has also been floated, after Defense Minister
Manohar Parikkars visit to the U.S. Pacific Command in Hawaii in late 2015 (this has, however not been
confirmed from the Indian side). Freedom of navigation in the South China Sea is essential for India in order to
ensure that its sea-bound trade continues uninterrupted.
Through these gestures and the Indian Navys proven capabilities in handling natural disasters such as the 2004
Indian Ocean tsunami, India has embarked on a path of greater involvement in the affairs of Southeast and East
Asia. In this regard, it is to be noted that Indias interests in the region converge with the interests of countries like
Japan, Philippines, Vietnam, Taiwan and, to some extent, Brunei and Indonesia. The very fact that all these
countries share territorial disputes with China (or, in Indonesias case, uncertainty over an exclusive economic
zone) stimulates them to forge closer relationships. Further, it has also become imperative for India to cultivate
relationships in the Indo-Pacific region because of the economic and strategic benefits that China is likely to gain
with even a partial materialization of its One Belt One Road (OBOR) initiative.
On December 31, 2015, ASEAN officially declared the establishment of ASEAN Community. There are certain
reservations about Indias prospective benefits from the ASEAN Community building process, just as the
advantages of the India-ASEAN FTA are still unclear from Indias perspective. The ASEAN Community itself is
marred with problems like intra-ASEAN divides based on the South China Sea disputes; the lack of an ASEAN
identity; developmental gaps that prevailing within ASEAN; and many more.
For India, another challenge is that the government has not been able to decide the extent of exposure it wants to
provide to its remote northeast through connectivity projects designed to create linkages between South Asia (vis-vis northeast India) and East Asia. Furthermore, the delays in completing the India-Myanmar-Thailand trilateral
highway, the Kaladan Multimodal Transit and Transport Project, and the Moreh-Mandalay Bus Services have
created negative perceptions in the region about Indias political will. India needs to be more watchful, as a balance
between domestic concerns and its larger national interests is a prerequisite for India enabling itself for a greater
extra-regional role.
Dr.SampaKunduisaresearcherattheInstituteforDefenceStudiesandAnalyses,NewDelhi.

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