Recently, India had dropped out of the RCEP deal since the outstanding issues like India’s major trade deficit with countries in RCEP, lack of assurances on market access and the other nations’ insistence on keeping 2014 as the base year for tariff reduction was not addressed. These above-mentioned issues can lead to negative effects on the Indian farmers, MSMEs and dairy sector. This incident reflects India’s limitations when it comes to the diplomatic ties with the ASEAN nations despite the recent efforts taken through the Act East Policy. Addressing the existing issues with the ASEAN nations is vital for India’s national interest.
What is ASEAN?
- Association of Southeast Asian Nations is a regional intergovernmental organisation consisting of ten Southeast Asian countries – Indonesia, Singapore, Philippines, Malaysia, Brunei, Thailand, Cambodia, Laos, Myanmar and Vietnam.
- This organisation facilitates economic, political, security, military, educational and socio-cultural integration among its members and other nations in Asia.
- Its secretariat is located in Jakarta, Indonesia.
How did India-ASEAN relations begin?
- India’s focus to strengthen the multi-faceted relationship with ASEAN is an outcome of the significant changes in the world’s political and economic situation since the early 1990s and India’s change in the economic policy towards globalisation.
- The then Look East Policy has changed into a dynamic and action-oriented “Act East Policy” in 2014 during the 12th ASEAN-India Summit and 9th East Asia Summit.
- Apart from ASEAN, India has taken other policy initiatives with some of the members of this regional organisation like BIMSTEC, Mekong Ganga Cooperation, etc.
- Currently, India is also an active participant of several forums like the Asia-Europe Meeting (ASEM), East Asia Summit (EAS), ASEAN Regional Forum (ARF), ASEAN Defence Ministers’ Meeting + (ADMM+) and Expanded ASEAN Maritime Forum (EAMF).
- India’s close ties with the ASEAN are vital for India’s foreign policy and it is the foundation of the Act East Policy.
- Currently, there are 30 dialogue mechanisms between India and ASEAN, involving various sectors.
What are the areas of cooperation?
Plans of Action:
- In order to enhance their ties, the ASEAN-India Partnership for Peace, Progress and Shared Prosperity, which sets out the roadmap for long-term ASEAN-India engagement, was signed during the 3rd ASEAN-India summit in 2004.
- A Plan of Action (POA) for the period of 2004 to 2010 was developed to implement the partnership.
- The 3rd POA (2016-2020) was adopted by the ASEAN-India Foreign Ministers Meeting held in August 2015.
- Priority areas were identified from 2016 to 2018 and implemented. This contributed to the successful implementation of the 2016-2020 POA.
Political Security Cooperation
- It is the key and emerging pillar of the ASEAN-India relationship.
- This is to deal with the growing traditional and non-traditional challenges.
- It involves the coordination, cooperation and sharing of experience to deal with terrorism and radicalisation.
- India keeps ASEAN at the centre of its Indo-Pacific security vision.
- ASEAN Regional Forum (ARF) is the main forum for security dialogue and India has been attending these annual meetings since 1996.
- The ASEAN Defence Ministers’ Meeting (ADMM) is the highest consultative and cooperative mechanism in ASEAN. The ADMM+ brings together the 10 ASEAN nations and Australia, China, India, Japan, New Zealand, Republic of Korea, Russia and the US on a biannual basis.
- Between 1995 and 2016, trade between India and ASEAN grew at a compound average growth (CAGR) of about 11.9%.
- Of the total trade of nearly $64.3 billion in 2016, Indian imports from the ASEAN nations accounted for a dominant share of 59% with exports to the ASEAN nations accounting for the remaining share.
- India’s imports from ASEAN nations saw a robust growth of 12.3% during the same period while India’s exports to ASEAN recorded a CAGR of 11.4%.
- This shows that the balance of trade has been in favour of the ASEAN member countries between 1995 and 2016.
- A few ASEAN nations like Singapore, Malaysia, and Thailand have emerged as major export destinations for India.
- Since there are trade complementarities between India and Southeast Asian countries in areas such as agriculture, machinery, and minerals, among others, trade relations have continued to expand, except a few periods of East Asian Crisis such as 1997-98 and global financial crisis of 2008-09.
- Investment flows are also substantial in both ways, with ASEAN accounting for approximately 18.28% of the investment flows into India since 2000. The FDI flows from ASEAN to India between 2000 and 2018 were about $68.91 billion while FDI outflows from India to ASEAN between 2007 and 2015 are about $38.67 billion.
- The ASEAN-India Free Trade Area has been completed with the entering into force of the ASEAN-India Agreements on Trade and Service and Investments on July 1st
- ASEAN and India have been also working on enhancing private sector engagement. ASEAN-India Business Council (AIBC) was set up in March 2003 as a forum to bring key private players from India and ASEAN countries on a single platform for business networking and idea-sharing.
- Various programmes have been organised to enhance people-to-people contacts.
- India, for instance, has invited the ASEAN students each year for Students Exchange Programme, Special Training Courses for ASEAN Diplomats, Exchange of Parliamentarians, Participation of ASEAN students in the National Children’s Science Congress, ASEAN-India Network of think tanks, ASEAN-India Eminent Persons Lectures etc.
- The 3rd edition of the ASEAN-India Workshop on Blue Economy was jointly hosted by India and Thailand in Bangkok this year.
- Connectivity is a priority area for both India and ASEAN.
- In 2013, India became the third dialogue partner of ASEAN to initiate an ASEAN Connectivity Coordination Committee-India Meeting.
- India has made considerable progress in implementation of the India-Myanmar-Thailand Trilateral Highway and the Kaladan Multimodal Project.
- However, issues related to increasing the maritime and air connectivity between India and ASEAN nations and transforming corridor of connectivity into economic corridor are still under discussion.
- A possible extension of the India-Myanmar-Thailand Trilateral Highway to Cambodia, Laos and Vietnam is also under consideration.
- Also, the India-Myanmar-Thailand Motor Vehicle Agreement (IMT MVA) is being negotiated. This will be significant for ensuring the seamless movement of passenger, personal and cargo vehicles along the roads linking India, Myanmar and Thailand.
India provides financial assistance to the ASEAN nations from the following:
- ASEAN-India Cooperation Fund: India contributes $50 million to the ASEAN-India Fund to support the implementation of the ASEAN-India Plans of Action, which envisages cooperation in a range of sectors as well as capacity building in the political, economic and socio-cultural spheres for enhancing the ASEAN-India Cooperation. An additional grant of $50 million was proposed by India during the 14th ASEAN India Summit in 2016.
- ASEAN-India Science and Technology Development Fund (AISTDF): India contributed $1 million to promote joint research and development projects in the field of science and technology. The fund has been enhanced to $5 million from 2016-17.
- ASEAN-India Green Fund: Set up by India with an initial contribution of $5 million, it supports collaboration activities related to environment and climate change. Some of the areas identified for collaboration under the fund are climate change, energy efficiency, clean technologies, renewable energy, biodiversity conservation and environmental education.
- Various collaborative projects have been undertaken in the fields of agriculture, science and technology, space, environment and climate change, human resource development, capacity building, renewable energy, tourism, people-to-people contacts, connectivity etc. The key projects include:
- space project envisaging establishment of a Tracking, Data Reception/Data Processing Station in Ho Chi Minh City in Vietnam, up-gradation of Telemetry Tracking and Command Station in Biak, Indonesia, establishment of Centres of Excellence in Software Development and Training in CLMV countries (Cambodia, Laos, Myanmar and Vietnam), e-Network for provision of telemedicine and Tele-education in CLMV countries, Quick Impact Projects in CLMV etc.
- Apart from the above projects, India also supports many ASEAN nations, especially CLMV countries, under the Initiatives for ASEAN Integration in the areas of education, disaster management, groundwater management etc.
- India and ASEAN are cooperating in projects like Exchange of Farmers, ASEAN-India Fellowships for Higher Agriculture Education in India and ASEAN, Exchange of Agriculture Scientists, Empowerment of Women through Cooperatives, Training Course of Organic Certification for Fruits and Vegetables etc.
- These were further strengthened in 2018 with the ratification of the Medium Term Plan of Action for ASEAN-India Cooperation in Agriculture and Forestry for 2016-2020.
Why does India need ASEAN?
- India needs a close diplomatic relationship with ASEAN nations both for economic and security reasons.
- Connectivity with the ASEAN nations can allow India to improve its presence in the region. These connectivity projects keep Northeast India at the centre, ensuring the economic growth of the northeastern states.
- Improved trade ties with the ASEAN nations would mean a counter to China’s presence in the region and economic growth and development for India.
- ASEAN occupies a centralised position in the rules-based security architecture in the Indo-Pacific, which is vital for India since most of its trade is dependent on maritime security.
- Collaboration with the ASEAN nations is necessary to counter insurgency in the Northeast, combat terrorism, tax evasions etc.
16th India-ASEAN Summit:
- Along with the 16th India-ASEAN summit, other summits also took place in Thailand this year. These include 35th ASEAN Summit, 14tth East Asia Summit and 3rd meeting of RCEP.
- During this summit, the discussions were held on India-ASEAN strategic partnership, cooperation in the areas of maritime security, blue economy, trade and investment, connectivity, science, technology and innovation.
- The nations also discussed ways to promote people-to-people connectivity, cultural exchange, humanitarian aid and tourism.
- India called for mutual coordination between India’s vision of the Indo-Pacific and the ASEAN Outlook for maintaining strategic balance in the Indo-Pacific.
- At the 3rd RCEP Summit, a trade deal is yet to be finalised since India’s concerns on trade and investments have not been addressed.
- India highlighted the importance of Myanmar in India’s Act East Policy and Neighbourhood First Policy.
- It called for a stable border that can be ensured by improving physical connectivity to Myanmar and Southeast Asia.
- India also reiterated that it would continue supporting the capacity enhancement programme to Myanmar’s police, military and civil servants, as well as its students and citizens.
- Both countries have agreed to cooperate on the shared vision of maritime cooperation in the Indo-Pacific.
- The threat posed by terrorism and extremism was also discussed and the countries have agreed to work together to tackle it.
- They are also working together to improve ties in the areas of defence, security, connectivity, trade and investment and people-to-people exchanges.
- India emphasised the need for greater access to Indonesia’s market for its commodities like pharmaceuticals, automotive and agricultural products.
- India shares a Comprehensive Strategic Partnership with Indonesia and 2019 is the 70th anniversary of the establishment of formal diplomatic ties.
- Both countries have agreed to further explore opportunities for cooperation in the areas of trade, culture and defence sector.
- The focus was also given to improve connectivity, including physical and digital connectivity.
- India’s Act East Policy is complemented with Thailand’s Look West Policy, leading to the improvement of the bilateral ties.
What are the challenges?
- In the rapidly evolving geopolitical scenario marked by China’s assertive military, political and economic rise, the Act East Policy has imparted greater dynamism to India’s ties with ASEAN.
- The issue of ownership, control, use and exploitation of oil, gas, and mineral and fisheries resources in the South China Sea has emerged as a major dispute between China and several ASEAN nations like Vietnam, Philippines, Brunei and Malaysia.
- This issue has divided ASEAN and there is no unanimity amongst them.
- The South China Sea is of economic importance for India as more than 40% of trade is dependent on this region. Fossil fuel resources in this region are also being harnessed by India on a collaboration basis.
- Maritime security is essential in this region for the protection of India’s national interest.
- However, India’s effort in this regard is meagre when compared to China’s dominance in the region.
- Therefore, India must forge a greater alliance with these nations for the promotion of rules-based maritime security.
- India has an unfavourable balance of trade with the ASEAN nations.
- India has pulled out of the RCEP deal, as it would deepen its trade deficit with China and the ASEAN nations.
- Improving economic competitiveness at the domestic level and ease of doing business and promoting investment inflows can address this problem.
- The domestic economic growth can be guaranteed by providing assistance to the MSMEs and improving domestic market connectivity.
- India should address the issue of land and labour laws so that there is an ease in doing business within the country.
- Improving infrastructure and promoting technological growth can also solve this problem exponentially.
- Many bilateral deals with these nations are yet to be finalised, leading to the halting of various aspects of diplomatic ties.
- Increasing the flexible bilateral interaction based on the principle of quid pro quo can assure the win-win situation for both India and ASEAN.
- India has committed to many connectivity projects like India-Myanmar-Thailand trilateral highway.
- However, they have not been completed at the rate on par with China.
- China, on the other hand, through its BRI, is able to gain the trust of these countries.
- India, to promote its presence in this region, must prioritize the completion of these projects.
- It not only helps India to counter China but also ensures the economic development of the Northeast.
- Improving connectivity would mean improved business and tourism ties with the ASEAN nations.
- Strong maritime connectivity between India and ASEAN nations can allow for the realisation of the full potential of India-ASEAN trade.
- Enhancing maritime connectivity would provide cheaper logistics and motivate increased trade of goods and services between the nations.
India’s pulling out of the RCEP deal shows the limitations of the ties with the ASEAN nations. Maintaining cordial ties, both bilaterally and multilaterally with these nations is essential for both India’s economic and security interests.
Not realising India-ASEAN relations’ full potential is jeopardising India’s national interests. Comment. (250 words).