25 YEARS OF INDIA – ASEAN ECONOMIC COOPERATION

In 2017, ASEAN and India celebrated their silver jubilee. ASEAN and India have evolved
enormously since early 1992 when India joined the regional organization and launched its
“Look East Policy”. The policy was later named as “Act East Policy” showcasing the
importance of the ASEAN countries to the new Modi government. The change came when
the Indian policymaker witnessed the economic potential and strategic significance the
region possessed. Therefore the Act Eat Policy was the apt push of the Indian government
to strengthen the existing relation.
Historical Evolution
Soon after India’s independence in 1947, India supported the policy of Non- Aligned
Movement, an organization of the states that did not seek to formally align themselves with
either the United States or the Soviet Union during the cold war, but sought to remain
independent or neutral. Yet India in 1970’s was seen tilted towards the Soviet Union, the
period also saw the slow drift of ASEAN countries.
Nonetheless, 1990’s saw the growing friendship between ASEAN and India with
bilateral ties in the economic arena. Later in 1992, India became the sectoral dialogue
partner of ASEAN. In 1995 India was invited to become its full dialogue partner in the fifth
ASEAN summit in Bangkok. India also became the member of the ASEAN Regional Forum
(ARF) in 1996 and since 2002 has been engaged in holding summit-level meetings on an
annual basis. India also joined the East Asian Summit (EAS) in 2005.

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ASEAN is currently India’s fourth largest trading partner, accounting for 10.2
percent of India’stotaltrade. India, on the other hand, is ASEAN’s seventh largest trading
partner.
Building India-ASEAN Relation
Thailand at present is the second largest economy and the fourth largest trading partner to
India in the ASEAN region. The commercial linkage between India and Thailand
consolidating relationships are visible from their policy perspective, India’s ‘Act East’ and
Thailand’s ‘Act West”. Trade between both the nations in 2016 accounted up to USD 7.72
billion, with of USD 5.15 billion in Thai exports to India and USD 2.57 billion in Indian
exports to Thailand.
The fast-growing Indian economy remains an attractive option for the ASEAN
countries and vice-avers, especially in the sectors of tourism, infrastructure, and retail
industries. Since January 201o (signed in August 2009) the Thai business has benefited
tremendously from the tax reduction under the ASEAN-India FTA in goods. The recent visit
of the Indian External Affair Minister (EAM), Smt. Sushma Swaraj showcases the great
importance Thailand holds with respect to further enhancing India’s engagement with

ASEAN countries. Thailand will assume the role of coordinator country for India-
ASEAN relations in the middle of 2018. Indonesia at present is the largest trading partner

of India in the ASEAN region. The Bilateral trade has increased from USD 4.3 billion in
2005- 20016 to USD 15.9 billion in 2015- 16. CEOs met President Joko Widodo on 13
December 2016. The bilateral trade witnessed a downfall leading to a trade imbalance.
The visit of President Joko Widodo to India in December 2016, with a 25-
member high-powered business delegation is suggestive of the enhancing economic
relations, especially in the sectors of pharmaceuticals and information & technology.
Similar gestures were seen when a group of twenty CEOs met President Jokowi in
December 2016 to encourage Indian investments in Indonesia. India’s investment in
Indonesia amounts to USD 343.2 million between 2010 and 2016, while Indonesian
investments in India was about USD 20.50 million between 2010 and 2016 (September).
At present both the countries seek to increase direct trade, creating a win- winsituation.
Therecentvisit by Indian EAM has boosted the negotiations on exclusive economic zones
and intensified cooperation to promote trade facilitation and to explore other trade
potentials through greater market access.
Malaysia and India established its diplomatic relation in 1957, then known as the

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Federation of Malaya. On 1st July 2010, India and Malaysia signed comprehensive
Economic Cooperation Agreement (CECA), which came to force in from 1 July 2011. Later
in September 2014 India also signed the Free Trade Agreement (FTA) in services and
investments with the 10-member ASEAN. Malaysia is India’s largest trading partner in
ASEAN and India is the largest trading partner for Malaysia from among the countries of
the South, excluding China. Bilateral trade between both in 2015 amounted USD 12.02
billion, subsequently USD 13.84 billion in 2014 and USD 13.38 billion in 2013. Apart from
trade infrastructural investment in an area of cooperation, as India seeks Smart cities which
match with the Malaysian capacities.
The Philippines and India established its diplomatic relations in 1949, soon after
both attainted independence. The trade agreement between the two was signed in 1979.
Until late 1990’s the bilateral trade was slow, but saw a positive growth after India- ASEAN

ties were strengthened. In August 2009 agreement on trade in goods between India-
ASEAN helped in the increase of bilateral trade. At present, the bilateral trade amounts to

USD 1.98 billion, where the exports are approximately USD 1.48 billion and import USD
494 million from India. The potential of both the countries seems to be hidden, but with the
growing economic and shared values, it seems to be an achievable task.
India was among the first countries to set up diplomatic ties after the
independence of Singapore in 1965. Both countries have common political and economic
interests, with a significant presence in each other economies since 1990’s. In 2015 the
CECA with Singapore was the first such agreement to be signed by India with any country.
It integrates agreements on trade in goods and services, investment protection, and
economic cooperation in fields like education, intellectual property, and science &
technology. It also provides Mutual Recognition Agreements (MRAs) that eliminates
duplicative testing and certification of products in sectors where there are mandatory
technical requirements. Singapore is India’s 10th largest trade partner globally and 2nd
largest in ASEAN accounting for 25.9 percent of India’s overall trade with ASEAN (2013-
14). India was Singapore’s 12th largest trade partner globally (2014). Bilateral trade
expanded after the conclusion of CECA from USD 6.65 billion in 2004-05 to USD 25.2
billion in 2011- 12 but declined to USD 19.27 billion in 2013-14.
Common denominator
The equation in the world domain has changed since the inception of regional
organizations. The growing Chinese presence in the region has compelled India to have
stronger ties with all 10 ASEAN countries. As far as the ASEAN countries are considered, it

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seeks India as a balancing agent against China. The relation between both India and ASEAN
will define the geopolitics of the Indo-Pacific region. In conclusion, the forthcoming
ASEAN-India Commemorative Summit which marks 25 years since the establishment of
Dialogue Partnership between Indian and ASEAN will enhance the economic ties between
both. The 69th Republic Day of India will also witness 10 distinctive guests instead of the
customary one, indicating the seriousness of Indian policymakers to enhance the ties.

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*Anjelina Patrick is a Research Associate at the National Maritime Foundation (NMF),
New Delhi. The views expressed here are her own, and do not reflect the official policy or
position of the NMF. She can be reached at anjelina.patrick92@gmail.com

 

 

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