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Underestimating ASEAN’s strength

Indian Prime Minister Narendra Modi’s recent bilateral visit to Vietnam and the back-to-back trip to Laos for attending the ASEAN Summit, coincided with simmering tension in the South China Sea due to increased military activities in the disputed reefs by even non-stake holding nations.s
Ever since Beijing initiated its ambitious and rather extensive land reclamation process and building of military infrastructure and support facilities in this resources rich region aggressively, a virtual cold war has erupted. Countries like Vietnam, the Philippines, Brunei, Malaysia and even Taiwan are getting locked in a bitter war of words over right to territory and sovereignty of ocean areas, stretching hundreds of miles.
Since Soviet Union’s collapse in 1991, New Delhi has instinctively looked eastward to stabilize its tottering economy and promote growth. As a result, bilateral trade between India and ASEAN, the 10-nation group boasting of a fairly large, fast growing and relatively affluent market, rose from $2 billion in the early 1990s to $72 billion by 2012 and thereafter sliding to $58.7 billion in 2015, which is less than 10 percent of India’s total global trade.
ASEAN, being India’s fourth largest trading partner is working closely with New Delhi to achieve complete economic integration between the two. This will in turn benefit 1.8 billion people approximately or 1/4th of the total world population. Moreover, with a combined GDP of $4 trillion, India and ASEAN not only created 30 functional dialogue mechanisms, covering the fields of commerce, tourism, agriculture, environment, renewable energy, telecommunications and foreign affairs, but also formalized a free trade area in July 2015 following inclusion of Indo-ASEAN trade in services and investment agreements.
It is in this backdrop — and also keeping in mind the momentum generated by the new Act East Policy announced during East Asia Summit in Myanmar in November 2014 — that Modi should have concentrated on bolstering the economic ties further, instead of converting ASEAN into a forum for venting frustration and anger at China, for its economic initiatives in South Asia or adventurism in South China Sea, and Pakistan, over terrorism. Harshavardhan Neotia, president of FICCI (Federation of Indian Chambers of Commerce and Industry), believes there are tremendous prospects of cooperation between the governments and the industry in identifying impactful technologies from India and ASEAN for appropriate markets and Modi’s very presence in the summit was expected to be the much awaited catalyst for a strategic transformation in ASEAN-India bilateral ties.
The business community on both sides were waiting with bated breath when Modi embarked on his ASEAN trip, hoping that the Indian premier will push the envelope on the question of charting a richer and deeper economic integration that would benefit all stakeholders. And, there obviously are valid reasons for such optimism.
India’s resilient economy, maintaining a steady growth rate of 7 percent even during global recession, can easily complement the ASEAN economic ecosystem, strengthened by a young workforce, rising income, robust infrastructure and adequate investor confidence, thereby fostering a strong Indo-ASEAN economic community, possessing common vision and identity. As asserted by Neotia, the Indian industry was expecting a relook at certain issues, like ASEAN-India trade in goods agreement, to reboot a sluggish trade flow aggravated by diminishing demand globally coupled with economic depression and the Eurozone crisis.
The FICCI president is convinced that there is a genuine case for further liberalization of tariffs on products placed in the sensitive track and exclusion list, as he advocated for active liaison with export-import banks and other such financial funding institutions to augment trade and investment flows and minimization of major tariff and non-tariff barriers. And Modi could have, in the least, signaled his intent to resolve these issues by taking it up at the appropriate ASEAN level.
Surprising it is that for some unknown reasons he wasted this opportunity to show some imagination that could have laid the foundation for India and ASEAN together becoming the fulcrum of the much anticipated Asian century.
Let us not forget that Modi himself pushed for deeper foray into Southeast Asia and Asia Pacific’s politico-strategic sphere through radical transformation of India’s out-dated Look East Policy, launched by the late Indian premier Narasimha Rao way back in 1992, that became necessary due to rapidly evolving geo-political realities in Asia’s east.
To be fair to Modi, he did manage to impart a strong push to New Delhi’s ties with ASEAN through high level contacts — India’s president, vice president and prime minister visited nine out of 10 ASEAN countries in the last two years — apart from focusing on promoting connectivity with ASEAN states through Myanmar and Thailand, for which a $41 billion corpus was allocated by the Indian government.
Very rightly, Modi’s government has recognized that the locked economy of India’s resources rich north-eastern theater, defined by isolation and insurgency, can be opened up to everybody’s mutual benefit if only the historic trade routes to Southeast Asia, which once formed the lifeline of the local community, is reactivated. According to India’s federal planning body data, while poverty ratio in most parts of India has registered a decline, it has increased in the five north-eastern states, where separatists are using economic deprivation as an ideological justification to consolidate their agendas.
But alas, Modi ended up succumbing to intellectual bankruptcy, even as the ASEAN summit went soft on Beijing over territorial wrangling while Southeast Asian nations agreed to formalize a dispute resolution mechanism by 2017 at the cost of leaving India marginalized.