Recently, the Tata Group inaugurated a new office in Myanmar, and is likely to expand operations in Southeast Asian countries. Tata companies already present in Myanmar are Tata International (which trades in agricultural commodities such as pulses, beans and fertilizer); Tata Consultancy Services (which provides IT solutions to companies); Tata Motors; and Tata Power, which is actively exploring opportunities in the renewable energy sector.

Tata should be lauded for the fact that it has been very strategic in not restricting its business operations to natural resources, and by seeking to enter areas like information technology and agricultural it has sent a clear message that, unlike Chinese companies, Indian companies are not merely interested in grabbing natural resources and are keen to create opportunities for locals and help in capacity building.

Can Indian investors take the lead?

Myanmar, with whom India’s ties have been strengthening over past decade, and is India’s land bridge to Southeast Asia, is trying to encourage foreign investment, and with the removal of sanctions it is likely to emerge as an important investment destination. Given their geographical proximity, strong political links and the growing angst against Chinese businesses, Indian investors can take the lead in Myanmar.

Myanmar is keen to reduce its dependence on China, and is actively seeking alternatives. Indian investment falls way behind that of China’s, at $224 million for 2015-2016, compared to over $3 billion for Beijing. Unlike Chinese investors, there is not much resentment against Indian investors either in Southeast Asia or Africa since they generate local employment

A number of important infrastructural projects, such as the India-Myanmar-Thailand trilateral highway and the Kaladan multimodal project, are bound to improve connectivity with both countries. There are also plans to further strengthen air connectivity.

How CMLV countries are becoming more important for India 

It is not just Myanmar, India’s economic ties with the Association of Southeast Asian Nations (Asean) in general and Cambodia, Myanmar, Laos and Vietnam (CMLV) in particular have witnessed a sharp rise. Bilateral trade between India and the CMLV countries was $0.46 billion in 2000, rising to $11.85 billion in 2014. Over 15 percent of India’s total trade with Asean is with CMLV.

India is also encouraging companies to invest in CMLV. An Rs 500 crore Project Development Fund has been approved by the Indian government to encourage investment there. 

It would be pertinent to mention here that private sector companies like Tata are according high priority to CMLV, recognizing their high potential. In addition to Myanmar, Tata has been expanding its operations in Vietnam. The fact that these countries are engines of growth, have favorable demographics and are signing free trade agreements with different regions, are encouraging the private sector to tap industries.

This is a significant change from when Singapore was considered to be India’s gateway to Southeast Asia, due to the strong political and economic ties and the positive role of the Indian diaspora.

While India’s presence in the CMLV countries may be increasing, a number of steps need to be taken to make this policy more effective. Nirmala Sitharaman, India’s Minister of State for the Ministry of Commerce and Industry, remarked at the 3rd India CLMV Business Conclave at Chennai conclave: “The trade links and ties between India and the CLMV countries can be much better and the two governing principles, connectivity and economic integration with regional value chains, are crucial.”

The first step needed is stronger air connectivity, expediting infrastructural projects between India and Myanmar. People to people contact between India-Vietnam and India-Myanmar also needs to be enhanced to generate goodwill for India.

Secondly, while Indian Prime Minister Narendra Modi has on more than one occasion spoken about the benefits for the north east of India, beyond the region being a connector there has to be a clear vision for benefitting the north east itself. Before encouraging private players to invest in CMLV countries, the government should urge more private entities to invest in India’s north east.

Finally, the Indian government should not shy away from taking up issues which Indian investors face in other countries. The government has not been aggressive enough in pushing the interests of Indian companies whenever they have had problems.

In conclusion, Indian business has strong potential in CMLV countries, but the government and private sector need to work closely. While the government should back Indian businesses, the latter needs to exhibit more of a risk appetite and not shy away from investing in transitioning societies.

Tridivesh Singh Maini is a New Delhi based Policy Analyst associated with Jindal School of International Affairs, OP Jindal Global University (Sonipat). His areas of interest include India’s Act East Policy.