look east policy

NDIA�S LOOK-EAST POLICY: More aggressive, Better Dividends

by C. S. Kuppuswamy

�I reiterate India�s commitment to work with ASEAN and other East Asian countries to make the 21st century truly an Asian century�

- Prime Minister Manmohan Singh

Introduction

With the participation of India in the recently concluded East Asian Summit and from the level of interaction evidenced at the 4th India-ASEAN Summit, both held at Kuala Lumpur from 12-14 December 2005, it is seen that the Look-East policy is being pursued aggressively and has started yielding results on the economic, political and strategic fields. The policy which was primarily directed towards improving relations with ASEAN will now be enlarged to cover other nations of the region such as China, Japan and Korea where the interaction was more bilateral till date.

Look-East Policy

The policy launched in 1992 had its genesis in the end of the cold war, following the collapse of the Soviet Union. In the aftermath of India�s liberalization, it was more than just a foreign policy alternative as it provided a development alternative as well, in synchronization with the globalization and the resurgence of Asia as an economic powerhouse. To quote Prime Minister Manmohan Singh �it was also a strategic shift in India�s vision of the world and India�s place in the evolving global economy�.

Though the policy was given an initial thrust with the then Prime Minister Narasimha Rao visiting China, Japan, South Korea, Vietnam and Singapore and India becoming a sectoral dialogue partner with ASEAN in 1992, the policy was pursued in fits and starts till recently. It is only since the beginning of this century, India has given a big push to this policy by becoming a summit level partner of ASEAN (2002) and getting involved in some regional initiatives such as the BIMSTEC and the Ganga Mekong Cooperation and now becoming a member of the East Asia Summit (EAS) in December, 2005.

India � ASEAN

India�s interaction with ASEAN in the cold war era can be described as a tale of missed opportunities. India declined to get associated with ASEAN in the 1960s when full membership was offered even before the grouping was formed.

It is only with the formulation of the Look-East policy in the last decade (1992), India had made amends by giving this region due importance in the foreign policy planning. India became a sectoral dialogue partner with ASEAN in 1992, a full dialogue partner in 1995, a member of the ASEAN Regional Forum (ARF) in 1996, and a summit level partner (on par with China, Japan and Korea) in 2002.

The first India-ASEAN Business Summit was held at New Delhi in October 2002. The then Prime Minister A.B. Vajpayee addressed this meet and since then this business summit has become an annual feature prior to the India-ASEAN Summits, as a forum for networking and exchange of business experiences between policy makers and business leaders from ASEAN and India.

Four India-ASEAN Summits, first in 2002 at Phnom Penh (Cambodia), second in 2003 at Bali (Indonesia), third in 2004 at Vientiane (Laos) and the fourth in 2005 at Kuala Lumpur (Malaysia), have taken place till date.

The following agreements have been entered into with ASEAN:

*

Framework Agreement on Comprehensive Economic Cooperation (for establishing a FTA in a time frame of 10 years) was concluded in Bali in 2003.
*

An ASEAN-India Joint Declaration for Cooperation to Combat International Terrorism has been adopted.
*

India has acceded to the Treaty of Amity and Cooperation (TAC) in 2003, on which ASEAN was formed initially (in 1967).
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Agreement on �India-ASEAN Partnership for Peace, Progress and Shared Prosperity� was signed at the 3rd ASEAN-India Summit in Nov 2004.
* Setting up of Entrepreneurship Development Centres in ASEAN member states � Cambodia, Myanmar, Laos and Vietnam. (The one in Laos is already functional)

The following proposals were announced by the Prime Minister at the 4th ASEAN-India Summit:

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Setting up centres for English Language Training (ELT) in Cambodia, Laos, Myanmar and Vietnam.
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Setting up a tele-medicine and tele-education network for Cambodia, Myanmar, Laos and Vietnam.
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Organising special training courses for diplomats from ASEAN countries.
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Organising an India-ASEAN Technology Summit in 2006.
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Organising education fairs and road shows in ASEAN countries.
* Conducting an India-ASEAN IT Ministerial and Industry Forum in 2006.

The ASEAN region has an abundance of natural resources and significant technological skills. These provide a natural base for the growth of synergies and integration between ASEAN and India in both trade and investment. The present level of bilateral trade with ASEAN of nearly US $ 18 billion is reportedly increasing by about 25 % per year. India hopes to reach the level of US $ 30 billion by 2007. India is also improving its relations with other elements like offers of lines of credit, better connectivity through air (open skies policy), rail and road links.

Regional Initiatives

BIMSTEC. The littoral states of Bay of Bengal (Bangladesh, India, Myanmar, Sri Lanka and Thailand) came together to form this economic association in June 1997. Myanmar has joined this grouping in December1997 and Bhutan and Nepal in 2004. This grouping aims at promoting economic cooperation between members in key areas like, Trade, Investment, Fisheries, Agriculture, Transportation and Human Resources Development. The first BIMSTEC Summit held in July 2004, renamed the grouping as �Bay of Bengal Initiative for Multi Sectoral Technical Cooperation� with the same acronym.

BIMSTEC has identified six sectors of focused cooperation. For each a lead country has been designated: Trade and Investment (Bangladesh); Technology (Sri Lanka); Transport and Communication (India); Energy (Myanmar); Tourism (India) and Fisheries (Thailand). A Framework Agreement, with the aim of establishing a FTA has been signed in February 2004 and a time frame has been worked for implementation in various phases. India has taken a leading role in this grouping and will also hold the next Summit in 2006.

Mekong Ganga Cooperation (MGC) Project. The foreign ministers of the six nations (India, Myanmar, Thailand, Laos, Cambodia and Vietnam) decided at the ASEAN Ministerial Meeting at Bangkok in July 2000 to launch this cooperative venture. It may be noted that barring India, the rest are member states of ASEAN. This project is aimed at development of overland trade, tourism, communications and transport linkages. The Trans-Asian highway (an old proposal of ESCAP) may become a reality through this grouping. The MGC ministerial level meetings will be held every year.

CSCAP. The Council for Security Cooperation in the Asia Pacific (CSCAP) established in 1993, is a non-governmental (Track II) process for dialogue on security issues in Asia Pacific. India became an associate member in 1994 and a full member in 2000. CSCAP is consolidating its links to the first track ARF. This is a useful mechanism (though unofficial) to discuss political and security issues and make such recommendations and facilitate information exchange with interested actors.

Bilateral Relations

Thailand. The first Framework Agreement for a bilateral FTA (with an ASEAN nation) was signed with Thailand in October 2003. Under this agreement, the commencement of FTA in Services and Investments will be in 2006 and in Goods from 2010. Some Memorandums of Understanding were also signed in October 2003, on tourism, agriculture and cooperation in bio-technology. A Joint Working Group is also in place for information and intelligence sharing on terrorism.

Malaysia. India is Malaysia�s largest trading partner among countries in the south, excluding China and the ASEAN, with the bilateral trade valued at US $ 4.29 billion in 2004. Indian public sector undertakings such as BHEL and IRCON have undertaken and successfully completed a number of projects in Malaysia. There are 57 Indian joint ventures in Malaysia in the fields of palm oil refining, power, railways, civil construction, training and information technology.

During the visit of Prime Minister Manmohan Singh in December 2004, India and Malaysia agreed to initiate a Comprehensive Economic Cooperation Agreement (CECA). 12 agreement/MOUs were also signed covering wide ranging cooperation in satellite technology, biotechnology, information technology, infrastructure and education.

Indonesia. During the visit of the Indonesian President, Susilo Bambang Yudhoyono, to India in November 2005, Indonesia and India agreed to establish a �strategic partnership� based on shared values and commitment to democracy and aimed at broad based development of relations in the political, security, economic, commercial, cultural and science and technology fields. Three MOUs were signed- one on marine and fisheries cooperation, one on establishment of Joint Study Group for CECA and one on training cooperation for training of diplomats.

India has many joint ventures in Indonesia since the 1970s. The bilateral trade currently at around US $ 4 billion will be tripled to US $ 15 billion in the next five years. Indonesia was insistent on the inclusion of India into East Asia Summit and had supported India at the other forums like WTO and OIC.

Myanmar. Myanmar is the only ASEAN country with which India shares both land and maritime boundaries. Hence Myanmar has to be accorded a special position in its foreign policy, especially in view of India�s strategic and security concerns. Consequent to visit ofSenior General Than Shwe, Chairman SPDC,to India in 2004, the bilateral relations are at an all time high.

India has extended a number of general and project-specific credit lines to Myanmar in the last few years. A number of agreements and MOUs, including the Tripartite Maritime Agreement between India, Myanmar and Thailand, the Border Trade Agreement and an agreement on Cooperation between Civilian Border Authorities, have been signed. Indian companies are involved in oil and gas exploration in Myanmar. A feasibility study has been undertaken for a rail link between India and Myanmar.

India had upgraded the 160 km long Tamu-Kalewa-Kalemyo highway in 2001 and will be maintaining it for the next six years. There is an ongoing project for construction of a trilateral highway from Moreh in India to Mae Sot in Thailand to Bagan in Myanmar, the progress of which is being reviewed regularly by the foreign ministers of the three nations. True to Myanamar�s assurances, it has been launching operations against the Indian rebel groups such as NSCN (K) camping in its soil.

Singapore. AComprehensive Economic Cooperation Agreement (CECA) between India and Singapore was signed on 29 June 2005 during the visit of Singapore Prime Minister to India. This agreement which came into effect on 01 August 2005, includes a bilateral investment promotion treaty, a double taxation avoidance agreement and an air services agreement in addition to an FTA. It may be recalled that it was Singapore that paved the way of India�s association with ARF. Lee had also supported India�s bid for a permanent seat in the UN Security Council. Singapore along with Indonesia had also supported India�s entry in to the East Asian Summit.

Cambodia, Laos and Vietnam

These three economically under developed countries of this region, in comparison to the rest of ASEAN, have enough scope and opportunity for India to extend its influence and reap the benefits.

Since 1981, when India recognized the Hang Samrin regime, India had cordial relations with Cambodia. India has entered into a number of bilateral treaties and agreements for cooperation in the fields of trade, science & technology, agriculture, tourism, air services and visa exemption. India has some major projects in the areas of education, entrepreneurship development and information technology. India has helped Cambodia in a big way through the ITEC programme.

India and Laos have signed a number of agreements and MOUs in the fields of culture, cooperation in defence, cooperation in science & technology, agricultural cooperation, drugs and illicit trafficking, and exemption of visas for diplomats and officials. India has also set up and Entrepreneurial Development Centre in Laos and will be setting up an Information Technology Centre shortly.

India has a number of bilateral treaties and agreements with Vietnam in the areas of Consular relations, Avoidance of Double Taxation, Narcotics, Science & Technology and Culture. Since 1976, India has extended 14 lines of credit amounting to Rupees 3,610 million to Vietnam. Another credit line of US $ 27 million to Vietnam was signed in August 2004 between Exim Bank of India and Ministry of Finance, Vietnam. India is also helping Vietnam in setting up an Advanced Resource Centre in IT in Hanoi and HRD in the field of IT in six educational institutions in Vietnam.

India has also proposed in the 4th India-ASEAN Summit at Kuala Lumpur in 2005 to set up Centres for English Language Training, tele-medicine and tele-education centres in these three states.

Visits

Visits to and from the South East Asian nations at the level of the heads of state, at the level of the ministers, at the level of the service chiefs and at the level of the bureaucrats and business leaders have also helped in giving a major thrust to the Look-East policy. Some of the visits in the last three years which were significant are given below:

2003

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Prime Minister AB Vajpayee visited Bali (Indonesia) in October 2003 to attend the ASEAN Summit and had also bilateral meetings with the Korean President and the Prime Minister of Vietnam.
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Prime Minister AB Vajpayee made an official visit to Thailand on 9-10 October 2003, when a Framework Agreement for a bilateral FTA was signed.
* Vice-President of India, Bhairon Singh Shekhawat visited Myanmar from 2-5 November 2003.

2004

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Prime Minister ManmohanSingh visited Bangkok (Thailand) in July 2004 to address the first BIMST-EC Summit meeting.
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Senior General Than Shwe, Chairman State Peace and Development Council of Myanmar, visited India in October 2004.
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Prime Minister Manmohan Singh visited Vientiane (Laos) to attend the 3rd India-ASEAN Summit and to flag off the India-ASEAN car rally.
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Prime Minister Datuk Seri Abdullah Ahmad Badawi of Malaysia visited India in December 2004.

2005

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Prime Minister Manmohan Singh visited Indonesia in April 2005 to attend the AFRO-ASIAN Summit.
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Thai Premier Thaksin Shinwatra was in New Delhi from June 03-04, 2005 to expedite the setting up of the FTA (agreed in October 2003).
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Prime Minister Lee Hsien Loong of Singapore was on a state visit to India from June 29 to July 01, 2005 along with a small delegation of his ministers.
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Indonesian President Susilo Bambang Yudhoyono visited India from 22 to 24 November 2005.
* Prime Minister Manmohan Singh was in Kuala Lumpur (Malaysia) from 12 to 14 December 2005 to attend India-ASEAN Summit as well as the inaugural East Asia Summit

India International Trade Fair (IITF)

South East Asia was the focus in the IITF this year (2005), which happened to be the silver jubilee of this fair. Companies from Indonesia, Malaysia, Vietnam and Thailand took part in the fair. After more than two decades of emphasizing trade with Europe and U.S., this fair reached out the South East Asian businesses.

The China Factor

China is virtually dominating this region. By the ASEAN-China Accord entered into in November 2004 (during the 10th ASEAN Summit in Vientiane), the world�s biggest free trade area has been created removing all tariffs for 2 billion people. The tariff cuts that began in 2005 will be completed by 2010 drawing the ASEAN�s combined economies of US $ 1 trillion closer to China�s US $ 1.4 trillion. (For more details refer to Paper Number 1184 dated 10-12-2004 of this author titled �ASEAN ECONOMY: Dominated by China�).

James Kelly, Assistant Secretary of State, in a testimony to the U.S. Congress said �China�s bilateral agreements mean little in economic terms, but they serve notice of how China is using its newly won economic power to expand its presence and political influence among its southern neighbors�.

In the Cold war era, South East Asian nations perceived China as dangerous because of its military expansionist scheme in Asia. While now the �peaceful rise� of China is being considered as more of an opportunity despite the challenges. To dispel the fears of this region Chinese Premier Wen Jiabao, said in a speech during the last ASEAN Summit that �China will continue to seek peace and development through cooperation and will strive to achieve development that will bring about peace, openness, cooperation and harmony as well as benefit to itself and other countries�.

Despite the pronouncements of the Chinese Premier some analysts are of the opinion that Beijing preferred a smaller Asian grouping (without U.S., India, Australia and New Zealand) that can move quickly on the economic front and which China can influence more significantly. Perhaps it is this increasing influence of China and its benign motives that had prompted countries like Singapore and Indonesia to co-opt India, Australia and New Zealand into the EAS.

Hence India must be aware that it has not been invited to EAS because of its rising economic potential alone but more as a balancing force to offset the China factor. Prime Minister Manmohan Singh, did mention that in a global environment, India is not afraid of competition. He added that India and China are not rivals and they can complement rather than compete in the EAS. India and China have engaged more purposefully than ever before bilaterally at the Shanghai Cooperation Organisation, at the UN and as part of the India-China-Russia axis.

Indian Foreign Secretary, Mr. Shyam Saran had remarked in this connection that �There will be increased capabilities that China will bring to bear in this region and even beyond. India also is going to be a major player in Asia �.I think India and the U.S. can contribute to much better balance in the Asian region�. It is debatable as to whether India should be worried about bringing this balance with the help of the U.S. or assert itself in the region on its own with whatever capabilities it may have or challenges to be met.

Conclusion

The Look-East policy has been given a significant thrust since the beginning of this century and the results achieved are evident as seen from the foregoing.

India has entered into a number of pacts, agreements and FTAs but its record for implementation of such accords has been poor as can be seen from the follow up of the Indo-Thai FTA and CECA with Singapore. The reasons may be � the Indian industry�s doubts about its competitive efficiency or it does not want competition at home or it is scared of cheaper exports to India from these countries.

There are some domestic political compulsions which impinge on the desired reforms or changes and the Indian Prime Minister had to admit at the ASEAN Business Advisory Council about the struggle the liberalization process is undergoing in the �minds of our people�. India has come under harsh criticism from Singapore, Thailand and Malaysia for the 1414 �negative items list� in the proposed FTA with ASEAN. This has put India in an embarrassing situation.

The meteoric rise of China�s economic potential and the resultant influence on this region should not deter India, as the region is looking for an alternative in India. However India has to set its house in order and go ahead with its economic reforms, liberalization process and infrastructure development to gain the confidence of this region, which at present is wanting in some respects.

Improvement of bilateral relations with the nations independent of the grouping is equally important. Each nation has its own characteristics � some are supportive of India at international fora, some are predominantly Muslim, some are economic tigers, some are underdeveloped and one is a close neighbour influencing the security of India. Hence the bilateral relations have to be tailored to suit the requirements of that particular state and that of India.

ASEAN and EAS hold great promise for India. Aggressive interaction with these groupings will result in better integration with this region and facilitate India�s entry into APEC, which is the major forum for the strategic and security concerns of this region.

The crux is,that this Look-East policy should reinforce and demonstrate India�s commitment to this region, which accounts for one-third of India�s trade. It should also be made clear that this commitment will not be influenced in any way by the improving relations between India and the U.S. and EU.