Originally Published 2018-01-29 06:30:09 Published on Jan 29, 2018
When it comes to Asean, the challenge for India is to scale up trade and investment. While ease of doing business is improving and projections by the IMF are all positive, there is long way to go to tackle corruption, energise the bureaucracy and cut through bureaucratic red tape that deters business and trade
ASEAN leaders at Republic Day show India’s strategic pivot for a new Asia

Prime Minister Narendra Modi’s decision to invite all 10 leaders of Asean countries as guests for the Republic Day celebrations is undoubtedly a bold one, on a par with his decision to invite all Saarc leaders to his swearing-in ceremony in 2014. The sight of 10 Asean leaders sitting on the dais, reviewing the Republic Day Parade, will be a public demonstration of India’s strategic outreach to Asean, which has always promoted its centrality in the economic and putative security architectures of Asia, as the continent moves up the economic and security ladder in the global international order.

Modi’s neighbourhood policy is partially crippled, and that’s not for want of trying. There are several factors that have led to such a situation: China’s role; the vice-like grip of the army on political power in Pakistan; state-sponsored terrorism and political turmoil in Nepal; and the Maldives is cocking a snook at India by playing the China card. The only exceptions are Bangladesh and Bhutan, but for how long are debatable. Turning our backs on Saarc cannot remain a long-term policy.

In this scenario, India’s strategic outreach towards the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) and Asean is a logical policy outcome that fits into the Act East Policy. The change of name was to jettison the stasis that had infected the Look East Policy. Outreach to BIMSTEC leaders at the 2016 Brics summit in Goa and now at the Republic Day are both a linear progression towards a more robust policy in the Indo-Pacific region. While socio-cultural connectivity has historic roots, substantive progress in trade, investment and security cooperation has been tardy. The $100 billion target in trade is still far away from the current level that has stagnated at around $70 billion. Two-way investments hover around $90 billion.

As China’s hegemonic behaviour in the South China Sea and deep penetration of its navy into the Indian Ocean Region raise global concerns, Asean too seems more sensitive to security issues. China has set up military-logistics bases in Gwadar and Djibouti and is also working overtime to secure a foothold in the Bay of Bengal via Myanmar at the Kyaukpyu port.

India’s outreach to Asean is to develop another pivot in its quest to counterbalance China. The Quad — Australia, India, Japan and the United States — is developing into a pivot in the Indo-Pacific. This quest will not be easy. Asean has its own rules of engagement among its members and its cohesiveness is also sometimes undermined by issues like Myanmar’s treatment of the Rohingyas and how to deal with China’s assertiveness. It would be wise to keep the Quad and Asean tracks separate.

While Asean countries may be worried about China’s muscular behaviour, they seem quite happy with the trade and economic relationship with China. Chinese economic heft and the lure of Chinese investments in infrastructure, under the Belt and Road Initiative have led to a surge in Chinese investments. Two-way investments between China and Asean have crossed $185 billion. The China-Asean FTA is the largest such regional trading bloc with 90% of goods at zero tariff. A more ambitious version of the FTA has been signed which will cover investments, technology cooperation and trade, including emphasis on e-commerce. Asean-China trade aims to reach $1 trillion by 2020.

For India, the challenge is to scale up trade and investment. While ease of doing business is improving making FDI more attractive, and projections by the IMF are all positive, there is long way to go to tackle corruption, energise the bureaucracy and cut through the maze of regulations that continue to deter business and trade. India also seeks cooperation in the negotiations to conclude the Regional Comprehensive Economic Partnership (RCEP), the mega FTA that has been under negotiation for many years. The rigidity of Asean countries in balancing trade in goods and services has held up the RCEP.

So far, Asean has been a laggard in creating security structures, though India has worked with these countries on a range of issues. China has played its cards well in allaying fears about its hegemonic behaviour by changing tactics, thus giving some comfort to countries like the Philippines. The two have agreed to discuss joint exploration for oil and gas in the disputed blocks of the South China Sea. Building security structures will take time.

Finally, without a concerted effort on delivery and timely implementation of connectivity projects, India’s reputation as a reliable partner will continue to suffer. The government ‘s delivery mechanism on international projects is deficient, with various arms of the government yet to forge cohesiveness. Administrative and regulatory reforms must go hand in hand with our strategic global and regional outreach.

This commentary originally appeared in Hindustan Times.

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Pinak Ranjan Chakravarty

Pinak Ranjan Chakravarty

Pinak Chakravarty was a Visiting Fellow with ORF's Regional Studies Initiative where he oversees the West Asia Initiative Bangladesh and selected ASEAN-related issues. He joined ...

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