Eastern wind

Twenty years after India launched its Look East policy, and 10 years after it began a high-level engagement with the Association of Southeast Asian Nations (ASEAN), the relationship has travelled far. Having stayed outside the regional grouping for long, the elevation of New Delhi’s ties with the ASEAN to a strategic partnership is a remarkable achievement. India is only the fourth country after China, Japan and South Korea to enter a strategic partnership with the ASEAN. The bottomline, however, has always been, and will continue to be, economic and trade cooperation. Almost three years ago, India implemented its first Free Trade Agreement (FTA) in goods with the ASEAN. The ASEAN-India Commemorative Summit this week in Delhi saw the finalisation of negotiations for the FTA on services and investment, which, once ratified and implemented, will facilitate closer economic integration of India and the bloc.

With a combined market of nearly 1.8 billion people and a combined GDP of $3.8 trillion, the ASEAN-India Free Trade Area (FTA) and the ambitious Regional Comprehensive Economic Partnership (RCEP) — which would also include China, Japan, Korea, Australia and New Zealand — will redefine the global economic architecture. As it happens, the bilateral trade volume between India and the ASEAN surpassed the $70 bn target for 2012 with $80 bn in 2011. The new target of $100 bn by 2015 looks eminently achievable. The services and investments FTA will not only propel Asia into a robust manufacturing, services and investment club, it will also benefit India’s services sector immensely, which accounts for almost 60 per cent of the GDP. This FTA will also protect investments to prevent a GMR-Male situation. Having said that, however, India’s challenges have just got bigger, as the increase in tariff-free lines, for example, will demand more comprehensive reforms from India.

The strategic partnership bolsters the political and security engagement, with particular focus on maritime security, freedom of navigation and the safety of the sea lanes of communication, as well as international terrorism. The ASEAN has long wanted India to play a larger role in the region. The question is whether Delhi has the appetite to move beyond its diplomatic support for the ASEAN and passive participation in bilateral defence agreements. This is not about containing or balancing the rise of China, but about India’s own transition to a larger role. Once projects like the India-Myanmar-Thailand Trilateral Highway or the Mekong-India Economic Corridor are completed, Southeast Asia and South Asia will be better able to fully embrace the geopolitical and geo-economic significance the new century has thrust upon East Asia.