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#5296, 15 June 2017

Three Years of the Modi Government

India-ASEAN Relations: Progress and Possibilities
Rajiv Bhatia
Distinguished Fellow, Gateway House, and former Indian ambassador to Myanmar

Assessing the state of India's relations with ASEAN as the Modi government completed three years in office makes sense. But the task is not easy, for the governments are in a mode of self-congratulation. Whereas celebrations of the silver anniversary of the India-ASEAN dialogue partnership (which began in 1992 and culminated in the strategic partnership in 2012) are underway, ASEAN celebrates its own golden anniversary in 2017. Nevertheless, offering a scholarly and objective evaluation is possible, keeping in view the recent history and changing power dynamics in the region.

The Shift
In the last two years of the Look East Policy (LEP), India's approach towards ASEAN looked tired, if not stale. Nothing much of significance seemed to be happening in the relationship then. Some commentators, this author included, wrote at the time about the need for re-orienting the policy and crafting LEP 2.0 or 3.0. In this backdrop, PM Narendra Modi brought a breath of fresh air and a dash of strategic gravitas as he rose at the India-East Asia Summit at Naypyitaw on 13 November 2014 to announce that the LEP had been turned into the Act East Policy (AEP).

Cynics quickly dismissed the shift as merely a change of labels. But perceptive observers noted that the change was consequential. The Modi government sought to extend the canvas of its focus from  ASEAN to the whole of East Asia; defence cooperation, maritime security and strategic coordination were added to the previous agenda (largely) of political, economic and cultural cooperation; and the new policy promised increased attention to developing India's Northeast and its linkages with ASEAN countries. Greater emphasis on implementation of promises and strategic boldness on India's part at a time when China’s assertiveness was on the rise were also implicit in the AEP.

As a strong leader with a clear popular mandate, PM Modi made a positive impression at the past three India-ASEAN Summits and East Asia Summits by spearheading the expansion and diversification of India's economic growth and demonstrating his keenness to enhance trade and investment ties with Southeast Asia. The articulation of India's policy and programmes was precise, pointed and powerful. India came through as a country that knew its mind and articulated its stand, without hesitation, on key issues such as the South and East China Seas and regional security architecture.

New Delhi moved to implement its policy at three different levels. At the bilateral level, India's top three leaders – the president, vice president and prime minister – paid visits to nine out of 10 ASEAN member-states. Return visits by VIPs from all ASEAN countries took place. Viewed together, they contributed to the strengthening of mutual cooperation. At the sub-regional level, serious initiatives were launched to rejuvenate BIMSTEC: the Leaders’ Retreat, followed by their Outreach Summit with BRICS leaders on 16 October 2017, and the first-ever meeting of BIMSTEC national security advisers in Delhi in March 2017. The Mekong Ganga Cooperation (MGC) too received pointed attention.

At the ASEAN level, India pushed for new economic cooperation initiatives and also increased financial resources to intensify cooperation in science and technology, energy, environment and other sectors. The extra-ASEAN dimension was strengthened by developing a joint vision for the security-development matrix in the Indo-Pacific region, particularly with the US, Japan and Australia.

Despite strenuous efforts, the figures of trade and investment flows between India and ASEAN did not bring much comfort. Trade, valued at US$ 76.53 in 2014-15, declined to US$ 65.04 in 2015-16. Investment from India to ASEAN and ASEAN to India stood at US$ 38.67 billion (for 2007-15) and US$ 49.40 billion (for 2000-16), respectively. While the global slowdown is undoubtedly an explanation, these figures are far from vibrant and indicate systemic challenges that need to be addressed.

Endeavours to conclude negotiations for a balanced Regional Comprehensive Economic Partnership (RCEP) seemed to have been bogged down. Earlier, RCEP was supposed to be ready by end-2016. Negotiations are now set to spill into 2018. The region and India badly need a new economic partnership arrangement that vastly strengthens trade, technology and investment linkages in a mutually beneficial manner. On connectivity, progress has been made in the fields of space and digital technology. However, physical connectivity continues to lag behind. India's flagship infrastructure projects – Kaladan and the Trilateral Highway – are unlikely to be completed before 2020.

Above all, the strategic environment in East Asia has taken an adverse turn from New Delhi’s perspective. This happened during the transition from Obama to Trump. China rejected an unfavourable verdict on the South China Sea delivered by the tribunal of the Permanent Court of Arbitration, and succeeded in overriding critical reactions. It weakened ASEAN's 'centrality' and increased anxiety levels in the region. Leveraging political change in the Philippines, it succeeded in developing a framework for the Code of Conduct in the South China Sea, with valuable help from Manila (Philippines is the current chair of  ASEAN). Further, US-China relations are passing through a happy phase. China-Japan relations too are looking up. On the other hand, India-China ties are frayed. India-US relations are also marked by new tensions; how this equation will shape up will become clearer in the coming months. 

Challenges Ahead
Bilateral political relations with most ASEAN countries are in good shape today, but more investment of effort is required to deepen cooperation with Myanmar, Indonesia and the Philippines. Enhanced energy is undoubtedly required not just by the governments but by India Inc and ASEAN Inc to secure the agreed target of trade touching US$ 100 billion. The long-pending connectivity projects deserve the strongest national effort. The proposed extension of the Trilateral Highway to Vietnam, Laos and Cambodia will gain credibility only when the highway is ready. A time-bound plan to conclude RCEP negotiations expeditiously should be a priority. New programmes announced by the Modi government - US$ 1 billion-fund for digital connectivity with ASEAN countries and US$ 100 million-fund for small-scale projects in CLMV countries - must produce concrete results.

As regards the changing geopolitical situation, deep contemplation is needed to re-calibrate India's policy priorities and partnerships. A carefully re-designed strategy alone will protect India's national interest, enhance its multi-dimensional relationship with ASEAN, and ensure peace and prosperity in East Asia. 

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