Time for ‘Act East’ Policy

Spotlight

“Now it is time to not just look but act. Under the Narendra Modi government, we will have an Act East Policy,” External Affairs Minister Sushma Swaraj said during her recent visit to Vietnam. Dr M Mayilvaganan elaborates.

India’s engagement with ASEAN is flourishing to new heights today, owing to the changing geopolitics in the region, India’s maritime interest and its quest for securing access to natural resources and freedom of navigation in the Indian Ocean. India’s current vibrant Look East Policy (LEP) seeks to reinforce its ties with states in the Asia-Pacific, much beyond the intention of LEP that was initiated in 1991 by former Prime Minister Narasimha Rao. After the end of the Cold War and the launch of economic reforms, New Delhi essentially aimed to reintegrate India, economically and culturally, with South East Asia (SEA). This led to a major strategic shift in India’s foreign policy objectives, as traditionally till then New Delhi looked westwards in spite of its long-established historical and cultural ties with the region. Gradually, increased trade and commerce between India and ASEAN, which later expanded to Japan, South Korea and Australia, contributed significantly to the expansion of defence and security ties. As a result, relations between India and the region have acquired new strategic and security characteristics in recent years.

The breadth and intensity of India’s engagement with South East Asia and East Asia today is considerably unparalleled by any of its other regional relationships. Several institutionalised annual summits, ministerial consultations and intensive engagement across governments and programmes between private sectors, academia, and media are cases in point. However, there are some pertinent questions with regard to India’s rising relations with the region such as: How does India perceive itself in the regional scene? What are India’s main strategic concerns? Is it ready to assume the role of security provider in the region?

Revamped LEP

The recent pronouncement of a five-year action plan by the Modi government for enhancing connectivity and cooperation in diverse areas and acceleration of a free trade pact on services and investment that starts from 2016 have given fresh impetus to India’s LEP. This envisaged action plan puts the spotlight on India’s blossoming ties with the larger Asia-Pacific region – Eastern Indian Ocean and West Pacific – home to the world’s rapidly growing economies. Notably, India-ASEAN ties have now entered a new rapid phase, as stated by External Affairs Minister Sushma Swaraj, “now it is time to not just look but act…we will have an Act East Policy.”1 This revamped LEP anchors on mutual ambition of India and ASEAN at regional and multilateral levels. Besides, the minister’s recent visits to Myanmar, Singapore and Vietnam aside from Prime Minister Narendra Modi’s visit to Japan have demonstrated New Delhi’s blueprint for a strategic partnership with the region, and its commitment to accelerate better communication links and enhanced trade and investment.

Enhanced Connectivity

Improving connectivity in all its dimensions – physical, institutional and people-to-people – with SEA and East Asia has been the decisive feature of India’s LEP, and its deepening engagement with the region. India has time and again underscored the importance of strong connectivity between India and ASEAN. Lately, the government under Modi is seamlessly promoting a multimodal approach that integrates land, sea and air connectivity for better people-to-people interface and advancing trade and investment. For instance, emphasising the need for stronger connectivity within ASEAN, External Affairs Minister Sushma Swaraj expressed the importance of the ‘C’ of Connectivity to the five Ts that New Delhi is currently pursuing – Tradition, Talent, Tourism, Trade and Technology,2 signifying institution-to-institution and people-to-people linkages.

Physical Connectivity

New Delhi has shown interest in fast-tracking number of connectivity projects that will accelerate regional integration. It has vigorously backed the Master Plan on ASEAN plus Connectivity (MPAC) and negotiations of an ASEAN-India Transit Transport Agreement. Significantly, India has also supported the extension of Tamu-Kalewa-Kalemyo sector of the India-Myanmar-Thailand Trilateral Highway project further to Laos, Cambodia and Vietnam, as it could boost further linkage with ports in ASEAN countries. The completion of this project in 2016 is expected to create a new dynamic in India’s multi-faceted relations with the region. The Kaladan Multi-modal Transit Transport Project, Paletwa-Lomasu road construction project and 100 km stretch from Lomasu to Lawngtlai in Mizoram are few other ambitious projects that would improve connectivity between the countries in the region. Also, the India-ASEAN Car Rally that covered 8,000 kms in 22 days in nine countries symbolised the importance of connectivity. Similarly, the Indian Naval Ship INS Sudarshini’s six-month expedition with 13 ports of call in nine ASEAN countries highlighted the economic potential of sea-based connectivity. The entry of Malindo Air and Air Asia from Malaysia and Tiger Airways from Singapore into India’s aviation market with regular and direct flights between tier two Indian cities such as Trichy, Kochi and Kuala Lumpur and Singapore has furthered air connectivity.

North East India and LEP

The renewed LEP strives to transform India’s northeast from its presently landlocked and peripheral status into a new natural gateway to Southeast Asia by unlocking the economic energies and enterprise of India’s north-eastern states. India has taken various measures including identifying at least eight stretches of Imphal-Jiribam, Imphal-Kohima, Maram-Dimapur, Ukhrul-Tadubi and Aizawl-Tuipang of the National Highways 53, 39, 54, 44, 40 and 60 where agencies like Japan International Cooperation Agency (JICA) can potentially invest in the region. Without greater interactions between north-eastern states with SEA, particularly Myanmar, New Delhi will find it difficult to achieve its strategic interests identified by LEP.

People-to-People Linkages

People-to-people linkages are another crucial aspect of LEP. Over the years, several efforts have been made by India to promote flow of people between ASEAN and India. Through various schemes such as the Indian Technical and Economic Cooperation Programme (ITEC) and the Technical Cooperation Scheme (TCS) of Colombo Plan, New Delhi promotes movement of people, particularly students and professionals. Apart from this, the Delhi Dialogue, which was established in 2009, helps New Delhi bring together a diverse range of people such as policy makers, corporate leaders and academia in an effort to amplify its partnership with ASEAN. Yet, it is important for New Delhi to streamline the visa regime to make its presence felt. The external affairs minister while addressing the Third Roundtable on ASEAN-India Network of Think Tanks in Hanoi, Vietnam emphasised the need of long-term visas for businessmen and professionals and their families in boosting further connectivity and easier movement of goods and people.

Tourism

Besides physical connectivity, promotion of inter and intra-regional tourism is another critical characteristic of LEP to improve links. In order to strengthen tourism cooperation, India and ASEAN signed a Memorandum of Understanding (MoU) in January 2012 and engaged in a dialogue to link tourist places, particularly Buddhist sites in India and ASEAN as a way to increase connectivity. Also, New Delhi is looking to further liberalise the visa regime for ASEAN countries to improve people-to-people connectivity and expand mutually beneficial economic opportunities.

Economic Dimension

With the initiation of the LEP, India has made significant progress in fostering comprehensive ties with ASEAN, and its member states in particular. Economically, the LEP offered a remarkable boost to its economic ties with the ASEAN member states by impressive trade growth since 2002. The signing of a Free Trade Agreement in goods in 2009 aided in meeting India’s trade target of $70 billion and has crossed $80 billion in 2012. It is further expected to cross $100 billion by 2015 with the anticipated conclusion of India-ASEAN Free Trade Agreement on Services and Investment. For instance, the bilateral trade between India and Vietnam stands at $8 billion, of which Indian export to Vietnam is about $5.4 billion.

Geographical proximity, a combined market of over 1.8 billion people and a GDP (gross domestic product) of $3.8 trillion have enabled India-ASEAN bilateral trade to make impressive gains. According to ASEAN Director General Le Luong Minh, there is a huge potential for countries to extract mutual benefit in trade, investment and economic cooperation. The Standard Chartered report3 forecasts that Indian exports into ASEAN would rise dramatically over the next 10 years to $280 billion a year, up from $33.13 billion in the 2013-14 financial year with potential Indian exports in six areas such as petroleum products, organic chemicals, vehicles (including auto parts), pharmaceuticals, gems and jewellery, and apparel and clothing accessories.

The 2009 FTA was a game-changer of sorts, as ASEAN investments into India have multiplied, and ASEAN countries also have emerged as major destinations for Indian companies. New Delhi’s Comprehensive Economic Cooperation Agreement (CECA) with Singapore in 2005, with Malaysia in 2010 and with Indonesia in 2011, have also significantly contributed towards deeper economic engagement. Further, the setting up of an Indian mission to the ASEAN in Jakarta, and the decision to set up an ASEAN-India Centre for Trade and Investment has contributed significantly in fostering ties. From materials to machinery, from farm products to energy resources, and from electronics to information technology, Indian and ASEAN companies are forming new partnerships. Moreover, the agreement on trade in services is expected to pave the way for an India-ASEAN Comprehensive Economic Partnership Agreement (CEPA) and India’s admission into the Regional Comprehensive Economic Partnership (RCEP). Besides, India is looking forward to a more dynamic relationship with strategically-important ASEAN members, particularly focussing on cooperation in defence, agriculture, pharmaceuticals, textiles and areas like science and technology, in addition to taking partnerships beyond trade in goods and investments to the service sector in which it has strength. The LEP and New Delhi’s impetus in the last few years have dramatically reshaped economic linkages between India and ASEAN.

Strategic Dimension

India’s strategic partnership with ASEAN and countries like Japan assumes importance in the context of the rise of a strong and aggressive China with military and technological advancement. A deeply interlinked future and prosperity means that a stable and secure Asia-Pacific region is crucial for New Delhi’s progress and prosperity in the region. Today, there is a mutually beneficial synergy in the partnership. For example, India-Vietnam ties have risen to a new level. The visit of Sushma Swaraj to Vietnam further cemented ties between Hanoi and New Delhi besides strengthening India’s position in the South China Sea. The relevance of ASEAN and countries like Japan and Australia are clearly recognised as the core of India’s LEP by the Indian government. For instance, while visiting Japan, Prime Minister Modi said that the ‘choice of Japan as my first destination for a bilateral visit outside India’s immediate neighbourhood is recognition of Japan’s importance in India’s foreign policy and economic development, and her place at the heart of India’s Look East Policy.’

Another factor that has played an important role in enhancing LEP is India’s quest for external natural resources – particularly oil and gas exploration in the South China Sea – and its desire for safe seaway in the Indian Ocean region. Today, India has reoriented its LEP in a way to position itself as a strategically eminent power in the region. New Delhi has consistently supported freedom of navigation on high seas as guaranteed by the UNCLOS, which is endorsed by ASEAN nations and East Asia.4 Besides, this partnership is sustained by the convergence of values and interests of both entities. Interestingly, most ASEAN states are apprehensive of China’s rising power and want India to balance it in the region.

The heightened synergy between India and ASEAN and East Asian countries can be taken forward only if India is determined to Act East and ensure the rapid integration of northeast India.

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Author

Dr M Mayilvaganan

Dr M Mayilvaganan is Assistant Professor of International Strategic and Security Studies at the National Institute of Advanced Studies, Bangalore.

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    References

    1 “Time for ‘Act East Policy’ and not just ‘Look East’: Swaraj,”Business Standard, August 24, 2014at http://www.business-standard.com/article/pti-stories/time-for-act-east-policy-and-not-just-look-east-swaraj-114082400624_1.html

    2. ManashPratimBhuyan, “Govt to draft 5-year plan of action to deepen ties with ASEAN,” Business Today, August 9, 2014 at http://businesstoday.intoday.in/story/india-external-affairs-minister-sushma-swaraj-asean/1/209020.html

    3 See Luke Hunt, “Indian Trade Seen Booming With ASEAN,”The Diplomat, August 26, 2014 at http://thediplomat.com/2014/08/indian-trade-seen-booming-with-asean/

    4 For example, Prime MinistersShinzo Abe and Manmohan Singh had reiterated the commitment of Japan and India to the freedom of navigation. Refer, Joint Statement on the occasion of Official Visit of the Prime Minister of Japan to India (January 25-27, 2014), January 25, 2014 at http://www.mea.gov.in/in-focus-article.htm?22772/Joint+Statement+on+the+occasion+of+Official+Visit+of+the+Prime+Minister+of+Japan+to+India+January+2527+2014

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