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Looking east at last

India’s engagement with Southeast Asia has increased remarkably during the last few years.

India’s engagement with Southeast Asia has increased remarkably during the last few years. The growing presence of India in regional matters is evident from the regularity of the formal summits between India and ASEAN. Other than these summits,India and ASEAN are part of the East Asia Summit,which has emerged as one of the most significant and strategic regional groupings.

Economics has been the main driver of India’s engagement with Southeast Asia and other parts of East Asia. There have been several formal economic arrangements between India and Southeast Asian countries. India’s first trade pact in the region was with Thailand. The most comprehensive and fruitful economic deal,however,has been with Singapore. The CECA with Singapore is five years old and covers both goods and services. In terms of its scope,this is one of the most ambitious and exhaustive trade deals that India has entered into till date. Similar deals have been negotiated with Malaysia and Japan; both are close to being signed. The overarching formal arrangement,and the mother of all deals,has been India’s free trade agreement with ASEAN as a whole. Covering almost 2 billion people,with a combined GDP of $2.8 trillion and trade of $46 billion,the India-ASEAN FTA is one of the largest trade agreements in Asia,second only to the China-ASEAN Free Trade Area.

“Looking east” has been a rather late,if welcome,realisation in India’ strategic priorities. India missed the opportunity of being a part of Asia’s remarkable growth story,which began in the 1960s,on account of foreign policy considerations flowing from Cold War priorities. The latter motivated India to maintain a “cordial” distance from the region. The missed decades could have allowed India to become a part of Asia’s production networks. Intra-Asian trade,particularly in machinery and components,has been a significant part of Asian production systems. India’s cheap,basically-skilled labour was ideal for embedding into the assembly and processing segments of Asian production networks. The latter fanned out from Japan,Korea and Taiwan to different parts of Southeast Asia and gradually embraced China within its sweep. All of Southeast and Northeast Asia connected with each other through substantive flows of goods,capital,and labour; India and South Asia hardly featured in the story.

Though the popular notion is that India began cosying up to its eastern neighbourhood from the 1990s,it is actually from the early years of the current century that the engagement began taking on a meaningful shape. The first India-ASEAN summit took place in Phnom Penh in 2002. Since then,the summit has been a regular feature. (The current is the eighth.) The landmark summit was the second,in Bali in 2003,when the framework agreement on economic cooperation was signed. The current FTA is an outcome of this agreement. In the meantime,India’s strategic engagement with the region has progressed,with India becoming both a full dialogue partner and featuring in the ASEAN Regional Forum.

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While India is showing definite signs of engaging closely with its east,it still lacks the force that is needed to push it deeper into the regional production network. Much of the production space in the region has been filled up by China’s phenomenal economic rise. The level and volume of China’s formal economic engagement with ASEAN and Southeast Asian countries is much more than that of India’s. India realises that the Asian region is the main hub of future global economic activity,as also the importance of its finding a deeper foothold in the region. But this realisation is not backed by as much action as required. India’s trade and economic negotiations with ASEAN and Southeast Asian countries are not progressing swiftly enough. Following Bali in 2003,it took six years for India and ASEAN to freeze one part of their framework agreement. Negotiations are currently taking place in services and investment. But if past negotiations are any indication,then the current ones are unlikely to end in a hurry.

In order to obtain the maximum economic benefits from its “Look East” strategy,India must ensure speedy formalisation of economic agreements. In this respect,it needs to look closely at the quality of its trade negotiations. It should also approach deliberations with East Asia in a more positive manner. Indian diplomacy and engagement has always been more comfortable dealing with the West. The East is a different cup of tea. Unless India understands the East,it will not be successful in dealing with it.

The author is a visiting Senior Research Fellow at

the Institute of South Asian Studies at the National

University of Singapore

First published on: 30-10-2010 at 12:44:24 am
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