Prime Minister Narendra Modi’s visit to Southeast Asia came in the backdrop of the region facing significant challenges. Economic momentum has slowed in the region with the near-term economic outlook sober. Slowdown in China has affected most economies in the region. Matters have not improved with Japan going into a recession. Apart from economics, the region is struggling to come to terms with growing political tension over South China Sea.
Notwithstanding territorial tensions, Southeast Asia is searching opportunities for recharging economic growth. There are two specific aspects of focus in this respect. The first is generation of growth impulses from within. The most important step in this regard has been the finalisation of the ASEAN Economic Community (AEC) framework for creating an integrated market in Southeast Asia for goods, services, capital and labour. But the regulatory integration would not deliver intended outcomes unless trade and investment increases with the rest of the world. For Southeast Asia, it is important to deepen economic engagement with countries on stable growth trajectories that can be mutually robust vehicles of growth.
India, clearly, can be the solution that Southeast Asia is searching. For the subcontinent, on the other hand, Southeast Asia can be a major partner in ‘Make in India’ and a major source of capital, finance and tourism.
The Prime Minister’s visit was being looked at as the occasion that would spell out details of India’s future engagement with Southeast Asia. The key expectation was on the economic component of the engagement. India-ASEAN bilateral trade has swelled since the beginning of the century to reach $75 billion. Apart from the bilateral FTA, trade has increased through India’s individual economic agreements with Singapore, Malaysia and Thailand. More importantly, India and ASEAN have worked out a trade in services and investment agreement that should result in significant improvement in cross-border service and capital flows. And finally, ASEAN is eagerly awaiting conclusion of the RCEP (Regional Comprehensive Economic Partnership) being negotiated by ASEAN, India, China, Korea, Japan, Australia and New Zealand.
Regional expectations from India and the visit of the Prime Minister were also high on clearer articulation of the ‘Act East’ strategy. Alluded to by the Prime Minister in the India-ASEAN meeting in November 2014, the strategy was perceived as India and the Modi government’s ‘new’ vision for the region. Apart from deeper geostrategic partnership, the region awaited more positive economic overtures from India as part of its Act East vision. The appetite was further wetted by the Modi government’s desire to become a member of the APEC—as documented in the joint statement issued during the US President’s visit to India in January 2015—and the much celebrated emphasis on ‘Make in India’.
Most of these expectations, however, remain largely unfulfilled, particularly on the economic side. Of course, there were commitments during the Prime Minister’s visit on early conclusion of the RCEP negotiations. There were also assurances of multiplying trade volumes with Singapore and Malaysia along with shared commitments on increasing investments. But deeper specifics of a proactive forward-looking vision were missing. Absence of such specifics continues to strengthen regional impressions that notwithstanding the enunciation of Act East, India’s efforts to deepen economic engagement with ASEAN are missing the push that the region has been looking for.
At a time when the region is looking forward to the RCEP, and where India continues to be considered a difficult negotiator, it would have been great if, in addition to assuring quick completion, India would have sent out a message on the gains it envisages from the RCEP, particularly with respect to ‘Make in India’. The message would have made a difference to India’s impression as a negotiating partner. Similarly, at a time when China and ASEAN are aiming to upgrade their FTA, India’s expression of interest in a similar exercise would have helped.
Meaningful engagement with Southeast Asia cannot happen without deeper engagement on trade. Unfortunately, in this respect, the perception gap between India and Southeast Asia continues to remain significant. The difficulty of negotiating with India continues to remain a sore point with the region. The negative sentiment would continue to prevail in the absence of proactive steps from India on the trade front.
There is also disappointment over the lack of clarity on the specific contents of the Act East policy. While there is speculation over the policy being a larger edition of the ‘Look East’ policy with its scope expanding to East Asia and the Asia-Pacific, the region is curious to learn its exact strategic focus, like whether it will mean India taking active interest in regional matters including the South China Sea. The upgraded and action-oriented aspect of the Act East policy needs to be spelt out so as to not keep the region on tenterhooks. India’s aspiration of being a more active regional player requires announcements to be followed by articulation.
The author is senior research fellow at the Institute of South Asian Studies in the National University of Singapore. He can be reached at isasap@nus.edu.sg and on twitter: @amitendu1. Views are personal