India-ASEAN Relations and Recent Summit

ASEAN-India Commemorative Summit was held in New Delhi to celebrate the 25th anniversary of the establishment of sectoral dialogue between two sides under the theme of “Shared Values, Common Destiny”. It issued joint statement titled Delhi Declaration after the plenary session. The session also assumes importance as for the first time there was explicit mention of close cooperation to handle “cross-border movement of terrorists”.

About ASEAN

It stands for Association of Southeast Asian Nations formed in 1967 by five countries namely Indonesia, Malaysia, the Philippines,  Singapore and Thailand under ASEAN or Bangkok declaration. Today the membership has extended to include a total of 10 members-along with 5 above members- Cambodia, Brunei, Laos, Myanmar and Vietnam are other five. It was formed with the objective of accelerating the development and progress of the region by promoting cooperation among the member nations. The members have achieved strong regional integration through initiatives like ASEAN Free Trade Agreement (AFTA), the ASEAN Framework Agreement on Services (AFAS) and the ASEAN Investment Area (AIA) etc.

Evolution of India ASEAN relations

India and ASEAN nations share common colonial, historical and cultural linkages. India even supported some nations like Indonesia in their struggle for independence. During Nehru’s era in India, various initiatives were taken to build closer ties with the countries of Southeast Asia. But the efforts did not materialized into developing full fledges economic, political or strategic partnership between India and ASEAN. This was partly due to China’s dominance in south East Asian region, recognition of Kampuchea regime in Vietnam contrary to ASEAN interests, inclination of India towards Soviet Union etc.

However, the launch of India’s ‘Look East Policy’ in 1992 was a turning point in India-ASEAN relations. By then ASEAN countries too realized the importance of India as the fastest growing economy in Asia and an emerging regional power. The realization of growing complementaries led to the establishment of sectoral dialogue partnership between two sides in 1992. This was elevated to a full-fledged dialogue partnership in 1996, and eventually in 2002 India started annual summits with ASEAN. Endeavors were made to establish robust economic relations by signing FTA in goods with ASEAN in 2009 and in services in 2014.

Currently, the growing synergies between two sides can be gauged from the fact that there are about 30 platforms for engagement, including an annual leaders’ summit and ministerial dialogues. The engagement has evolved not only at economic but also at political, strategic, security and defence level ties.

Complementariness between India and ASEAN

Following are the arenas where two sided share common interests:

Trade relations

Today ASEAN is India’s 4th largest trading partner, and India is the 7th largest trading partner of the bloc. Both sides enjoy trade complementarities in various domains such as agriculture, minerals fuels, oils and bituminous etc. which have continued to grow in the past years. Among all Southeast Asian countries; Singapore, Malaysia and Thailand emerged as major exporters to India. Further, services trade grew twice that of merchandise trade.

Foreign Direct Investment

India received nearly US$ 13.8 billion as foreign direct investment (FDI) from ASEAN economies in 2015-16.Among all major economies of ASEAN, Singapore invests the most in India which has gain further impetus with signing of India-Singapore Comprehensive Economic Cooperation Agreement.

Strategic reasons

China’s rise in the last few decades in an offensive manner with incursions in South China sea leading to disputes with almost every ASEAN nation has made these nations to look towards India as a balancing force. India’s historical track record and a stature as a soft power with willingness to accede to the Treaty of Amity and Cooperation in Southeast Asia and its endorsement of the Southeast Asia Nuclear Weapons Free Zone (SEANWFZ) has gone a long way in assuring the region of India’s intent as a friendly nation deprived of any hegemonic designs. Moreover, protection of vital sea lanes of communication like Taiwan, Malacca and Sunda straits etc are essential for all the nations including India to ensure that its sea-bound trade continues uninterrupted.

Thus, apart from economic benefits, geopolitical compulsions have also made India’s engagement with ASEAN very important.

Terrorism

ASEAN countries have, in the past few years, been victims of terrorist attacks; Indonesia and Thailand in particular. Other non-traditional challenges such as human trafficking, cybercrime and piracy are rife in India as well as neighboring ASEAN regions. Thus the complete elimination of such issues demands regional cooperation.

People-to-people connectivity

India has a long history of people-to-people connectivity with Southeast Asian countries, particularly with Singapore, Malaysia and Indonesia, which are home to large populations of the Indian diaspora. Indians comprise nine percent of Singapore’s population and seven percent of Malaysia’s. India and the member countries of ASEAN jointly organize regular exchange programmes for students, farming communities, diplomats, and business and media personnel, among others.

Areas of Concern

However, things are not all rosy in the equation. There a quite a few loose ends that needs to be tied. They are as discussed below:

Imbalance in trade and investment

Although the trade between both regions have increased substantially however it is skewed against India. This is primarily attributed to Free trade agreement (FTA) with ASEAN resulting into flooding of cheap imported products into India. Whereas India’s exports are not rising on the same pace. Apart from unfavorable balance of trade, India’s domestic producers are also suffering. For example- Cheaper palm oil from ASEAN is hurting local producers in Kerala. On the investment front too, India is at back foot. In 2015, India accounted for only 1.3 percent of total net inflows into ASEAN and was largely in the financial, insurance and real estate segment. Also the investment by India FDI into ASEAN nations accounts for 22% of its total outbound FDI; far less in comparison to the US, the EU and Japan.

China’s increasing presence

Despite problems between China and ASEAN members on the issue of South China Sea, china is trying to increase it presence in the area through its one belt one road initiative which is opposed by India. Under OBOR, China is ramping up its infrastructure investments in rail and road connectivity. For example-investments have been made to connect Laos, Thailand with southern china through high speed rail links. Among ASEAN; Malaysia, Thailand, Laos and Indonesia have already joined OBOR.

Physical connectivity

Better transport connectivity is critical to India-ASEAN relations. But on this front too both sides lag behind. There are no railway links, poor road connectivity and, inadequate maritime and port facilities. Delay in completing infrastructure projects— India-Myanmar-Thailand trilateral highway, the Kaladan Multimodal Transit and Transport Project, and the Moreh-Mandalay Bus Services -due to various political and financial constraints, has impeded the progress of economic cooperation. Moreover, the India’s north east connectivity has also been hampered. Given that Myanmar shares such a long border with NE states and can act as a bridge between India and South East Asian markets so there is a need to speed up the stalled projects.

Tourism Industry

It is another area that has not lived up to its potential. Although the number of outbound tourists from India to ASEAN countries has increased, India only accounts for 3 percent of tourist arrivals to the ASEAN region. The number of tourists from ASEAN countries to India is nothing to brag about either.

Comment

With increasing assertiveness of china and its soft power diplomacy through OBOR in the South East Asian Region it has become imperative for India to engage effectively in the region. Besides making efforts for favourable economic relations, the two sides should also explore the unexplored domains in the relationship especially energy security. ASEAN countries, particularly Myanmar, Vietnam and Malaysia can potentially contribute to India’s energy security. Also oil and natural gas deposits in the South China Sea region should be explored through regional cooperation. Similarly, India with huge demographic dividend can provide a human resource base to ASEAN who is going to experience a burden of lower share of working age population and a higher median age of workers. Thus, there is a long way to go for both sides and enhance regional cooperation.