3. India-ASEAN Relations

Historical Context and Elevation of Partnership

• India was a Sectoral Dialogue Partner of ASEAN in 1992.
• In 1995, the relationship became that of a Dialogue Partner. Consequently, both began to have more frequent interactions up to the Foreign Minister level.
• The relationship further entered Strategic Partnership in 2012 and, in 2018, concentrated on cooperation in the maritime domain.

Economic Powerhouse-Gateway to Southeast Asian Markets

• ASEAN is an important economic bloc for India, providing an access to the market of over 650 million people with a collective GDP of USD 3.2 trillion.
• India is among the topmost trade partners of ASEAN accounting for 11% of India’s global trade.

Strategic Counterbalance:

• ASEAN is a very important strategic partner for India at a time of increasing tensions in the international political landscape, particularly with China.
• ASEAN provides an avenue for India to exercise its role as a net provider of security in the region through participation in summits like the East Asia Summit and ASEAN Regional Forum.

Connectivity Catalyst

• ASEAN plays a significant role in the Indian vision for enhanced regional connectivity.
• The India-Myanmar-Thailand Trilateral Highway and the Kaladan Multi-Modal Transit Transport Project are examples of India’s efforts to integrate physically with Southeast Asia.

Cultural Confluence

• The historical and cultural bonds between India and Southeast Asia are deep-rooted and provide a unique foundation for soft power diplomacy.
• The establishment of the ASEAN-India Network of Universities in 2022 further strengthens academic and cultural exchanges.

Technological Synergy

• ASEAN’s fast digitalizing economies offer tremendous opportunities for India’s IT sector and start-up ecosystem.
• ASEAN-India Science and Technology Development Fund facilitates joint research in cutting-edge areas.

Maritime Security Cooperation

• ASEAN is an important partner in India’s maritime security strategy, especially in the context of the Indo-Pacific region.

Energy Security and Sustainability

• ASEAN’s energy-rich members open up opportunities for India to diversify its sources of energy, which is crucial for its fast-growing economy.

Important Issues of India-ASEAN Relations

• Trade Imbalance
  • India’s trade deficit with ASEAN has witnessed a sharp growth, more than doubling since FTA was enforced in 2010.
• Infrastructure Connectivity
  • Even though India and ASEAN have strengthened their digital and cultural connectivity, physical infrastructure connectivity is still developing.
• Geopolitical Balancing
  • India’s attempts to become a counterbalance to China have received mixed responses from ASEAN countries.
• Regulatory Hurdles
  • Non-tariff barriers to trade and investment exist between India and ASEAN countries in the form of differences in regulatory standards and procedures.

India-ASEAN Trade Inequality and Measures to Improve Relations

Major Issues

• Manufacturing Competitiveness
  • The productivity levels of Vietnam and Thailand are higher than that of India, which affects exports and imports.
  • The imbalance in trade arising from India’s involvement in the ASEAN-centric regional value chains is increased.
• Services Trade Restrictions
  • Language among other factors impede India to balance the trade deficit in the goods sector.
• Rules of Origin Abuse
  • Weak rules of origin in AIFTA create an opportunity for non-ASEAN countries such as China, to route its exports to India through ASEAN, thereby augmenting the deficit.

Steps toward Strengthening Relations

• Rebalancing the ASEAN-India Free Trade Agreement
  • India should also seek a critical review and rebalancing of AIFTA for redressing this trade imbalance.
• Infrastructure Connectivity
  • India has to speed up the completion of the key connectivity projects such as the India-Myanmar-Thailand Trilateral Highway and must extend it to the rest of its neighbors, Cambodia, Laos, and Vietnam.
• Manufacturing Competitiveness
  • It should focus sector-specific interventions in addition to joining manufacturing initiatives undertaken with ASEAN countries.
• Enhancing Energy Cooperation
  • India should propose a comprehensive “ASEAN-India Energy Partnership” focusing on energy security, clean energy transition, and technology cooperation.
• Enhancing Strategic and Defense Cooperation
  • India should deepen its strategic engagement with ASEAN, particularly in maritime security.
• Aligning on Climate Change and Sustainability
  • India should propose an “ASEAN-India Green Partnership” focusing on climate change mitigation, renewable energy, and sustainable development.