India's Act East Policy so far and beyond - Minding the Gaps
Recently, the relation between Singapore and India got a little bit tense due to New Delhi Chief Minister's recent remarks about a Singapore variant of Covid reaction.
Although the External Affairs ministry was quick to disown the critical comments, many Indian policymakers and foreign policy analysts presented a wider and larger challenge to India’s standing in Southeast Asia as a whole.
Three developments over the past five years are testing Indian diplomacy in the region. First, the rising profile of China combined with growing China-India tensions; second, disappointment in the region with India’s economic under-performance; and, third, rising concern in the region with India’s approach towards its minorities, especially Muslims and Christians.
These developments warrant a review of domestic politics and how it impacts the Act East policy of India.
Evolution of Act East Policy
- Ever since 1992 when Prime Minister PV Narasimha Rao enunciated a “Look East Policy” reaching out to Southeast Asia, India has engaged the region on all fronts — diplomatic and security, economic and people-to-people.
- Prime Ministers Atal Bihari Vajpayee and Manmohan Singh built on Narasimha Rao’s foundation and constructed a robust relationship with the Association of Southeast Asian Nations (ASEAN), so much so that in 2007 Singapore’s founder-mentor, Lee Kuan Yew, a longstanding India sceptic, went to the extent of naming China and India as the two engines of Asian economic growth.
- Continuing this approach, present Prime Minister Narendra Modi graduated Look East into an Act East policy.
Importance of India’s Act East Policy
- Growth in economic relations with ASEAN countries: India and the ASEAN have signed two trade agreements in goods and services, creating one of the biggest trade areas with a market of 1.8 billion people and a combined GDP of about US$3 trillion.
- Increase in private investments in Indian infrastructure: A good deal of ASEAN private investment has also flowed into India in many sectors including construction of ports, highways, and food processing, shipping, and auto components.
- Development of India’s Northeastern region (NER): India’s Act East Policy is closely connected with its long-term vision of developing its Northeastern region (NER) which is considered as a gateway to Southeast Asia.
- The connectivity projects in the NER will foster greater integration not only within the NER, but also externally with neighbouring countries.
- Fulfilment of Strategic and geo-political interests: India has now forged strategic partnerships with Indonesia, Vietnam, Malaysia, Japan, South Korea and Australia.
- In addition, it has also established close links with countries of the BIMSTEC group of countries and the IOR.
- Promotion of regional cooperation and integration: The present Act East lays great emphasis on the connectivity programmes that link India’s Northeast region with ASEAN countries.
- India’s Act East policy has a strong synergy with Japan’s Free and Open Indo-Pacific and South Korea’s New Southern Policy.
- All three recognise the centrality of the ASEAN region and their economic and strategic interests converge in the Indo-Pacific and provide a great opportunity for mutual cooperation.
What is going wrong with India’s Act East Policy?
- India’s decision to move away from regional trade grouping: India’s economic slowdown and inward orientation, expressed through the decision to stay out of the Regional Comprehensive Economic Partnership (RCEP) agreement, disappointed regional business.
- While ASEAN and Indian governments tried to maintain good relations, Southeast Asia’s powerful business groups, mostly ethnic Chinese, began losing interest in India.
- Socio-political turmoil in Indian region: The growing concern about Hindu majoritarianism in India has impacted civil society attitudes in countries like Indonesia, Malaysia, Thailand and Singapore.
- The growing assertion of a Hindu personality by India’s present ruling dispensation has weakened India’s soft power, globally and in this region.
- Slowly becoming Act Indo-Pacific policy: India believes in an Indo-Pacific that is free, open and inclusive, and one that is founded upon a cooperative and collaborative rules-based order.
- India has placed the ‘Indo-Pacific’ at the heart of its engagement with the countries of South, Southeast and East Asia.
- Delay in funding of projects: The Ministry of External Affairs (MEA) depends on the Ministry of Finance (MoF) for funding, whereas the MoF depends on the Prime Minister’s Office (PMO) for political and statutory directions.
- The bureaucratic process often acts as hurdles, delaying the projects or funding.
- Regional developments testing Indian diplomacy: The rising profile of China combined with growing China-India tensions and the disappointment in the region with India’s economic under-performance.
- There is rising concern in the region with India’s approach towards its minorities, especially Muslims and Christians.
- China’s accelerated rise since the trans-Atlantic financial crisis: The growing assertiveness of the Xi Jinping regime initially generated a strong pro-India sentiment in the region with many ASEAN countries wanting India to balance China’s enhanced power.
- Weakened trade contacts of India with the region: The developments have weakened the business-to-business (B2B) and people-to-people (P2P) connect between India and ASEAN despite the best efforts of hard-pressed diplomats.
Measures to be adopted to address India’s Act East Policy
- Completion of tasks promised in the Delhi Declaration 2018: The three sets of tasks are worth mentioning:
- First, complete and scale up the digital connectivity projects in Cambodia, Lao PDR, Myanmar and Vietnam;
- Second, complete the Trilateral Highway (TH), resume the replacement of 69 bridges along the TH and negotiate the Trilateral Motor Vehicle Agreement (MVA); and
- Third, continue with the high impact projects such as fellowships for integrated Ph.D. programmes to ASEAN scholars and set up a network of universities to encourage greater inter-university exchanges between ASEAN and India
- Empowerment of Northeastern states in Act East Policy: The Act East through the North East can flourish if the central and state governments work towards improving the connectivity in the region, particularly at the border areas.
- Increased focus on BIMSTEC: It is the natural connector of South and Southeast Asia.
- The countries must enhance the negotiation process to conclude BIMSTEC MVA, BIMSTEC coastal shipping agreement, and BIMSTEC TFA.
- SMEs drive the business within and across borders: It is important to give special focus on SMEs which can build effective business networks across borders.
- The projects such as the ASEAN–India SMEs Forum, special fund, etc., would fillip to trade and investment as well as integrating our producers and manufacturers in regional value chains.
- Development cooperation projects: It should be put in fast-track by avoiding cumbersome documentation and bureaucratic procedures.
- The EXIM Bank of India should open branches in all South, Southeast and East Asian countries and Pacific and also strengthens the resources of their existing outfits.
- Cooperation and synergy among multiple stakeholders: The greater coordination between Prime Minister’s Office, Ministry of Finance, and Ministry of External Affairs is essential in implementing the Act East projects.
- Increase in development of tourism industry: Tourism is the most immediate ‘money-making’ opportunity, which has the potential to improve the connectivity between India and Southeast Asia.
- Tourism is the most immediate ‘money-making’ opportunity, which has the potential to improve the connectivity between India and Southeast Asia.
- The air connectivity between Northeast India and Southeast Asia is immediately needed to unlock opportunities.
- Expansion of scope of Act East Policy: India must add Bangladesh and Sri Lanka in our AEP.
- A prosperous Bangladesh offers opportunities for India’s Eastern and Northeastern states.
- Strengthen border infrastructure, logistics and last-mile connectivity: The construction of ICP projects should be completed and equip the ICPs with high-speed Internet, food testing laboratories, warehousing including cold chains, security, banking facilities, skilled human resources, etc.
Road ahead
- Indian diplomacy must take a fresh look at its Act East policy and the constraints being imposed on it by unsatisfactory economic performance and sectarian and communal politics at home.
- The faster cross-border economic engagements, particularly in the North East, will wipe out the insurgency, which is the main constraint for expansion of trade and investment.
- The states must encourage the start-ups which are exporting processed food, organic fruits and vegetables, flowers, high-end fashion products through borders.
- The time is ripe for India to establish a strong economic partnership with Southeast and East Asia and other Indo-Pacific countries.
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