- ASEAN It stands for Association of Southeast Asian Nations formed in 1967 by five countries namely Indonesia, Malaysia, the Philippines, Singapore and Thailand under ASEAN or Bangkok declaration.
- Today the membership has extended to include a total of 10 members-along with 5 above members- Cambodia, Brunei, Laos, Myanmar and Vietnam are the other 5 members.
- It was formed with the objective of accelerating the development and progress of the region by promoting cooperation among the member nations.
- The members have achieved strong regional integration through initiatives like ASEAN Free Trade Agreement (AFTA), the ASEAN Framework Agreement on Services (AFAS) and the ASEAN Investment Area (AIA) etc.
Evolution of India ASEAN relations
- India and ASEAN nations share common colonial, historical and cultural linkages.
- India even supported some nations like Indonesia in their struggle for independence. During Nehru’s era in India, various initiatives were taken to build closer ties with the countries of Southeast Asia. But the efforts did not materialized into developing full fledges economic, political or strategic partnership between India and ASEAN.
- This was partly due to China’s dominance in south East Asian region, recognition of Kampuchea regime in Vietnam contrary to ASEAN interests, inclination of India towards Soviet Union etc.
Complementariness between India and ASEAN
Following are the arenas where two sided share common interests:
Today ASEAN is India’s 4th largest trading partner, and India is the 7th largest trading partner of the bloc. Both sides enjoy trade complementarities in various domains such as agriculture, minerals fuels, and oils etc. which have continued to grow in the past years. Among all Southeast Asian countries; Singapore, Malaysia and Thailand emerged as major exporters to India. Further, services trade grew twice that of merchandise trade.
Foreign Direct Investment
India received nearly US$ 13.8 billion as foreign direct investment (FDI) from ASEAN economies in 2015-16.
Among all major economies of ASEAN, Singapore invests the most in India which has gain further impetus with signing of India-Singapore Comprehensive Economic Cooperation Agreement.
ASEAN countries have, in the past few years, been victims of terrorist attacks; Indonesia and Thailand in particular. Other non-traditional challenges such as human trafficking, cybercrime and piracy are rife in India as well as neighbouring ASEAN regions. Thus the complete elimination of such issues demands regional cooperation.
India has a long history of people-to-people connectivity with Southeast Asian countries, particularly with Singapore, Malaysia and Indonesia, which are home to large populations of the Indian diaspora. Indians comprise 9% of Singapore’s population and 7% of Malaysia’s. India and the member countries of ASEAN jointly organize regular exchange programmes for students, farming communities, diplomats, and business and media personnel, among others.
Areas of Concern
However, things are not all rosy in the equation. There a quite a few loose ends that needs to be tied. They are as discussed below:
Imbalance in trade and investment
- Although the trade between both regions have increased substantially however it is skewed against India.
- This is primarily attributed to Free trade agreement (FTA) with ASEAN resulting into flooding of cheap imported products into India.
- Whereas India’s exports are not rising on the same pace. Apart from unfavourable balance of trade, India’s domestic producers are also suffering.
- For example- Cheaper palm oil from ASEAN is hurting local producers in Kerala.
- On the investment front too, India is at back foot. In 2015, India accounted for only 1.3 percent of total net inflows into ASEAN and was largely in the financial, insurance and real estate segment. Also the investment by India FDI into ASEAN nations accounts for 22% of its total outbound FDI; far less in comparison to the US, the EU and Japan.
China’s increasing presence
- Despite problems between China and ASEAN members on the issue of South China Sea, china is trying to increase its presence in the area through its one belt one road initiative which is opposed by India.
- Under OBOR, China is ramping up its infrastructure investments in rail and road connectivity.
- For example-investments have been made to connect Laos, Thailand with southern china through high speed rail links. Among ASEAN; Malaysia, Thailand, Laos and Indonesia have already joined OBOR.
- Better transport connectivity is critical to India-ASEAN relations. But on this front too both sides lag behind.
- There are no railway links, poor road connectivity and, inadequate maritime and port facilities.
- Delay in completing infrastructure projects— India-Myanmar-Thailand trilateral highway, the Kaladan Multimodal Transit and Transport Project, and the Moreh-Mandalay Bus Services – due to various political and financial constraints, has impeded the progress of economic cooperation.
It is another area that has not lived up to its potential. Although the number of outbound tourists from India to ASEAN countries has increased, India only accounts for 3 percent of tourist arrivals to the ASEAN region. The number of tourists from ASEAN countries to India is nothing to brag about either.