India's Act East Policy: What needs to be done?
Need for greater physical connectivity and economic integration
09 August 2016
By: Tridivesh Singh Maini

Following the recent ruling of the Hague Tribunal on the South China Sea Dispute, which declared that China’s claims to almost the entire to be invalid, India’s own interests in the area has come into focus.

New Delhi’s response to the judgment was extremely measured and nuanced, and has received plaudits despite the ever-strengthening China-Pakistan axis and Beijing becoming excessively belligerent on the issue.

India has long had its own agenda concerning the South China Sea. From the Malabar Naval Exercises with Japan and the US, to its multinational Oil and Natural Gas Corporation (ONGC) being given an extension to continue its exploration of Block 128, much to the chagrin of China. Joint Statements in the aftermath of the meetings between Prime Minister Narendra Modi and US President Barack Obama in September 2014 and January 2015 also explicitly mentioned the South China Sea and the need for a fair resolution.

Act East: How does it differ from Look East?

While there is no doubt, that the key difference between the Act East Policy of the current India government and the erstwhile Look East Policy is the addition of a pronounced strategic component, not restricting India’s outreach merely to the Association of Southeast Asian Nations (ASEAN), but also engaging more with the broader Asia-Pacific region. 

The foundations were laid when previous Prime Minister Dr Manmohan Singh spoke of the need for greater engagement between India and the Asia-Pacific, using the term “Indo-Pacific” on more than one occasion. And it’s worth noting that it was not just the US, but also Australia who urged India to become a greater stakeholder in the broader Asia-Pacific. India has also shed its traditional reticence towards bolstering a strategic partnership with the US and Japan, something which was unimaginable a few years ago.

Can Act East be successful without India being connected with ASEAN?

The key question is can India have significant strategic clout without it without having greater economic leverage through trade and connectivity and being part of regional organizations. There is no doubt that trade between India and ASEAN has risen to an estimated at $70 billion, and ASEAN is India’s fourth largest trading partner. One of the catalysts for this rise in trade has been the India-ASEAN FTA signed in 2009.

Yet this is way below the trade between ASEAN and China. While Beijing’s trade with Vietnam for 2015 was $66 billion, India's trade for the same period was a little over $5 billion.

It is not just trade where India lags, but also in terms of connectivity. Connectivity with Southeast Asia is extremely poor, with it struggling to complete projects like the trilateral highway connecting India-Myanmar-Thailand (1,400 kilometers), and the Kaladan Multi-nodal project which connects the Sittwe port in Myanmar with India’s North Eastern state of Mizoram, which was first conceived in April 2003.

Of late steps have been taken to expedite these projects and a three-nation motor vehicle agreement is also likely to be signed soon. There is also a plan to link the Dawei Port in Myanmar to Chennai, India. While India is struggling to build connectivity with Myanmar, China is way ahead, with one clear example the Myanmar-China Gas pipeline connecting the city of Kunming in Yunnan with Kyaupkyu in Rakhine state.

The other problem is that India is not well integrated with the key economic organizations of the region. While it is true that connectivity projects are still being examined through groupings such as The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC), and India has been engaging closely with ASEAN through the East Asia Summit which consists of 16 Asia-Pacific countries, New Delhi also needs to think of integrating with other groupings like the Asia-Pacific Economic Cooperation (APEC) forum.

Daniel Twining, Director and Senior Fellow, Asia Program, Washington, DC of the German Marshall Fund of the United States has rightly made the point about India not being well integrated in Asia’s economic architecture. (http://waysandmeans.house.gov/hearing-on-u-s-india-trade-relations-opportunities-and-challenges/)

“Although India is part of Asia’s security architecture, it is not a part of Asia’s economic architecture,” he said. “This disjuncture makes little sense for a country that sits in the middle of Asia, is an important partner to countries like American and Japan. One of the key reasons for the ambitious Indo-Pacific Economic Corridor being mooted by the US is not just the lack of connectivity.”

Being part of trade organizations will not be easy, and for this India needs to reach out to domestic constituencies. But for a successful Act East Policy and for the success of projects like the Indo-Pacific Economic Corridor proposed by the US, which seeks to connect India with Southeast Asia through Myanmar, India cannot afford to keep itself out of APEC for long.

The US has been urging India to join APEC as it would be able to play a more meaningful role in the Asia-Pacific Region. In April 2016, Indian Finance Minister Arun Jaitley, at a lecture at the Asia Society in New York, spoke in favor of India being part of APEC.

 “You can’t claim to be one of the fastest growing economies in the world and not think of trade as a win-win option,” (http://www.thehindu.com/news/international/us-welcomes-indias-interest-in-joining-apec/article8535711.ece).

In conclusion, it is time for India to move beyond the existing rhetoric, and ensure that the Act East Policy is not just restricted to the China factor, and is not reactionary. Instead, it needs to be pro-active. To increase its clout and leverage in Southeast and East Asia, India needs to seriously examine stronger physical connectivity and robust trade relations.

A lot of the issues will be domestic. For instance being part of trade blocs is likely to encounter opposition and stakeholders need to be brought on board. Similarly, it is not just connectivity with neighbors but connectivity within India, especially in the north east of the country, which needs to be improved for a meaningful Act East Policy. It is also important that the partnership with Japan is not just restricted to bilateral cooperation, but with both sides finding common ground in the context of the Partnership for Quality Infrastructure.

During Japan Prime Minister Shinzo Abe’s December 2015 visit, this issue was high on the agenda, and from this a good beginning can be made to India’s connectivity plans with Myanmar as Japan is already involved in infrastructural projects in the north east of the country.

Tridivesh Singh Maini is a New Delhi based Policy Analyst associated with The Jindal School of International Affairs, Sonipat. 

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