The Asean-India Car Rally was flagged off in Singapore last month, launching an exciting nine-country, 8,000-km voyage to end in Guwahati after 22 days. The 31 Mahindra XUV 500s and their teams from members of the Association of South East Asian Nations (Asean) and India symbolise the deepening friendship between the two sides as India and Asean mark two decades of dialogue. It also demonstrates the strategic role of India?s North East as a bridge to the vibrant economies of Asean.
The car rally is organised by the India’s ministry of external affairs and the Confederation of Indian Industry, along with the cooperation of all Asean members. India?s long land border with the Asean member- nation Myanmar, and maritime borders with several other Asean countries, imparts a geo-strategic heft to the bilateral relationship. Through the car rally, and the many business and cultural activities taking place alongside, historical connections are being reinvigorated and new opportunities are opening up, particularly in terms of economic engagement through the land route via India?s North East Region (NER).
As the global economy tilts towards Asia and economic interaction among Asean and India deepens, opportunities for real progress abound, especially for NER development. The ?seven sisters? with a population of 48 million have a combined GDP of over $81 billion, and have been growing rapidly in recent years. Simultaneously, Myanmar, with which NER shares 1,600 km of borders, too, is undergoing a historical transformation. Prime Minister Manmohan Singh?s visit to Myanmar in May 2012 set a new pace for economic cooperation. Under India?s Look East policy, India-Asean economic engagement gained momentum with the implementation of the India-Asean trade in goods agreement and many other initiatives. The progression of the FTA to include services and investments would further add to economic dynamics between the two sides.
Over the last decade, India?s exports to Asean have multiplied from $3.5 billion to $37 billion, while its imports have soared from $4.4 billion to $43 billion, a ten-fold expansion of aggregate trade. Significantly, bilateral investments have gone up too. It is estimated that Asean nations have invested $19 billion in India between April 2000 to July 2012, while fund flows in the opposite direction have totalled $6 billion. The sectors of interest cover a wide spectrum, from natural resources to infrastructure, and manufacturing to services and knowledge domains.
Both sides have been proactively instituting additional frameworks for economic engagement. However, India accounts for only a small share of Asean?s trade. With a continued slowdown in advanced economies, the two sides, which together have a population of 1.8 billion and a GDP of $2.75 trillion, can gain in the development race through greater trade and investment linkages. We believe that by exploring new synergies, the two sides will be able to increase bilateral trade to $150 billion in the next 3-5 years.
Infrastructure connectivity will play a big part in this. India is working to actualise the Trilateral Highway from Moreh in India through Myanmar to Mae Sot in Thailand, to be completed by 2016. It is also implementing the Kaladan multi-modal transport project to upgrade the Sittwe port and connect Paletwa in the Chin state of Myanmar to Mizoram, which will be ready by 2015. Border trade infrastructure, including the Rhi-Tiddim road and customs points, will further enhance connectivity. In addition, India is also working on regional integration through platforms such as BIMSTEC and Mekong Ganga Cooperation. Indian businesses can be actively involved in these projects.
Resources cooperation, especially in energy resources, can be a growth avenue. India already imports important commodities such as edible oils and crude oil from the region, and has invested in exploration blocs, plantations and mines across several Asean nations. Given Asean’s resource endowment and India?s needs, joint development could be beneficial for both sides. NER and Myanmar have common oil basins that can be exploited together. Cooperation in resource mapping, sharing mineral information, and more dialogue could open more cooperation avenues.
Also, the two sides are working together for knowledge cooperation. India is providing training and scholarships to Asean citizens. Indian business can assist in the promotion of information and communication technology, capacity building, software development, e-commerce and cyber-security. Life sciences and biotechnology are also possible areas of engagement. Services trade liberalisation could promote such cooperation to make both sides future-ready for the knowledge era.
Many issues also need to be tackled to enhance trade and investment, such as the elimination of non-tariff barriers, border and customs controls, mutual recognition and harmonisation of standards, etc. At home, inverted duty structures and anomalies need to be sorted out so that Indian industry can take on the opportunities. But in the final analysis, as the Asean-India Car Rally so eloquently emphasises, the bridging of hearts and minds is the key to strengthening bilateral cooperation.
The author is director general, CII