ASEAN East Asia: India’s new Kohinoor

The time has come for India to forge a cross-economic understanding with other major Asian nations such as Japan, South Korea and China, and to pursue its “Look East” policy with greater vigour

By Suvrokamal Dutta

As East Asian economies begin to emerge from the economic shadow of the 1997 crisis, there is a clear understanding that greater economic coordination among major Asian countries is essential to face the challenges of globalisation.

It is only since the beginning of the Third Millennium that India has given a big push to the “Look East” policy by becoming a summit-level partner of the ASEAN (2002), in forming the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC)—an economic bloc of seven South and Southeast Asian countries—and the Ganga Mekong Cooperation, and then becoming a member of the East Asia Summit (EAS) in December 2005 and the so-called “Shanghai Cooperation”. It is a distressing matter, though—and perhaps of more than niggling consequence—that the second BIMSTEC meeting, which was due to be hosted by India on February 8, has been postponed because of political instability in Bangladesh and Nepal.

Notwithstanding, if Asia is to strengthen its economic and political weight in world affairs, India has to be involved as an integral part of the Asia-wide cooperation. Closer cooperation among Japan, the Association of East Asian Nations (ASEAN), South Korea, India, and China would have far ranging implications for the world.

India has to be more proficient at strategic economic diplomacy and soft-power skills. Simultaneously, East Asia has to shed its Cold War mindset and its insularity to grasp win-win opportunities. India's growth strategy, based on strong and increasingly globally competitive and networked domestic companies, could provide a balance for highly trade and Foreign Direct Investment (FDI)-dependent East Asian economies.

After the successful 4th India-ASEAN dialogue meeting at Kuala Lumpur in December 2005, the prime minister attended the 5th India-ASEAN Summit and the 2nd East Asia Summit at Cebu in the Philippines on January 14, 2007.

One hopes that the meetings will mean some significant developments for India.

With the country already being a member of the East Asia Dialogue Forum, things look much brighter. Following the successful visit of Chinese president Hu Jintao to India and Prime Minister Manmohan Singh's successful trip to Japan recently, things look much better now for India in relation to ASEAN and East Asia. Both China and Japan are important members of the East Asia Dialogue Forum and are dialogue partners of the ASEAN. India can play its role very well in these two fora by joining hands with Japan and China.

The “Look East” policy is being pursued aggressively and has started yielding results on the economic, political and strategic fronts. The policy initially started with courting just the ASEAN, but has now expanded to include other nations such as China, Japan and Korea through the East Asia Summit.

India's Look East policy started in 1992 and had its seeds in the end of the Cold War. In post-liberalisation India, it is more than just a foreign policy alternative: it is an alternative developmental model, too. To quote Manmohan Singh, “It was also a strategic shift in India's vision of the world and India's place in the evolving global economy.”

India's interaction with the ASEAN in the Cold War era can be described as a tale of missed opportunities. The country turned down an offer of association with the ASEAN in the 1960s, when full membership was offered even before the grouping was formalised. Former prime minister Atal Behari Vajpayee had said in his address to the Institute of Diplomatic and Foreign Relations at Kuala Lumpur in May 2001, “India and ASEAN are on the same side of the socioeconomic divide in the debate on globalisation. Opening up our national economies to global markets cannot become a mantra at the cost of equitable development and social justice.”

The first India-ASEAN Business Summit was held in New Delhi in October 2002. ASEAN-India annual trade jumped 40.8 per cent last year over that in 2003, from US$ 12.5 billion (€ 10.6 billion) to US$ 17.6 billion (€ 14.96 billion). While that marked its biggest-ever annual rise, it is still tiny compared with the ASEAN's US$ 136 billion (€ 115.61 billion) in annual trade with the US. There is massive scope to further expand it.

The prime minister has strongly advocated a Free Trade Area (FTA) with the ASEAN, an idea that was initiated by Vajpayee. An FTA with the ASEAN would give India an opportunity to look beyond trade to areas such as science and technology, information technology, biotechnology, space technology, tourism, and human resource development. India has offered to eliminate tariffs for five ASEAN members—Singapore, Malaysia, Indonesia, Thailand, and Brunei—by 2011. The brand new ASEAN members—Cambodia, Laos, Myanmar, and Vietnam—will get time till 2016 to set up FTAs with India.

India's annual trade with China is expected to double from the present US$ 20 billion to US$ 40 billion by 2010. Indo-Japanese bilateral trade in 2003-04 stood at US$ 4 billion, having grown by 18 per cent from what it was in 2002-03. So far as FDI is concerned, approvals of Japanese FDI in India during 1991-2004 have been in the order of US $3.2 billion, accounting for around 4.8 per cent of total Indian approvals for all FDI.

With the chances of the Free Trade Agreement coming up hopefully by the middle of this year between India and the ASEAN, there is every likelihood that the ASEAN might go in for very big economic and business expansions here in India. If the Free Trade Agreement comes up, the chances of opening up an ASEAN secretariat cannot be ruled out here in India. The Indian government should make sincere efforts in this direction.

Another significant development which has come out of the recent East Asia summit is the go-ahead given by the Government of India for the creation of a partnership block between India-Japan-Australia and the US for economic and strategic dialogue in relation to the Asia-Pacific. This is a major development that can have great significance in the coming future.

Thus, for India, East Asia and the ASEAN are a gold mine waiting to be tapped. The only requirement that is required from the Indian side, in general, and the Indian government, in particular, is to pursue the case with utmost attention and urgency and to rid itself of its precedent complacency.

(The writer is a foreign affairs and economic expert, and chairperson, Global Council for Peace)