India's Look-East Policy

"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 held East Asian Summit and from the level of interaction in the 4th India-ASEAN Summit, both held at Kuala Lumpur from !- 4 "ecember !##$, it is seen that the Loo%-East policy is bein& pursued a&&ressively and has started yieldin& results on the economic and political fields' (his policy )hich )as primarily directed to)ards improvin& relations )ith ASEAN )ill no) be enlar&ed to cover other nations of the re&ion such as *hina, +apan and Korea to facilitate more political and economic inte&ration' Look-East Policy Loo%-east policy )as launched in ,,! -ust after the end of the cold )ar, follo)in& the collapse of the Soviet .nion' After the start of liberali/ation, it )as a very strate&ic policy decision ta%en by the &overnment in the forei&n policy' (o 0uote 1rime 2inister 2anmohan Sin&h 3it )as also a strate&ic shift in India4s vision of the )orld and India4s place in the evolvin& &lobal economy3' (he policy )as &iven an initial thrust )ith the then 1rime 2inister Narasimha 5ao visitin& *hina, +apan, South Korea, 6ietnam and Sin&apore and India becomin& a important dialo&ue partner )ith ASEAN in ,,!' Since the be&innin& of this century, India has &iven a bi& push to this policy by becomin& a summit level partner of ASEAN 7!##!8 and &ettin& involved in some re&ional initiatives such as the 9I2S(E* and the :an&a 2e%on& *ooperation and no) becomin& a member of the East Asia Summit 7EAS8 in "ecember, !##$' India ASEAN India4s interaction )ith ASEAN in the cold )ar era )as very limited' India declined to &et associated )ith ASEAN in the ,;#s )hen full membership )as offered even before the &roupin& )as formed' It is only )ith the formulation of the Loo%-East policy in the last decade 7 ,,!8, India had started &ivin& this re&ion due importance in the forei&n policy' India became a sectoral dialo&ue partner )ith ASEAN in ,,!, a full dialo&ue partner in ,,$, a member of the ASEAN 5e&ional <orum 7A5<8 in ,,;, and a summit level partner 7on par )ith *hina, +apan and Korea8 in !##!' (he first India-ASEAN 9usiness Summit )as held at Ne) "elhi in =ctober !##!' (he then 1rime 2inister A'9' 6a-payee addressed this meet and since then this business summit has become an annual feature before the India-ASEAN Summits, as a forum for net)or%in& and e>chan&e of business e>periences bet)een policy ma%ers and business leaders from ASEAN and India'

<our India-ASEAN Summits, first in !##! at 1hnom 1enh 7*ambodia8, second in !##? at 9ali 7Indonesia8, third in !##4 at 6ientiane 7Laos8 and the fourth in !##$ at Kuala Lumpur 72alaysia8, have ta%en place till date' (he follo)in& a&reements have been entered into )ith ASEAN@ <rame)or% A&reement on *omprehensive Economic *ooperation 7for establishin& a <(A in a time frame of # years8 )as concluded in 9ali in !##?' An ASEAN-India +oint "eclaration for *ooperation to *ombat International (errorism has been adopted' India has acceded to the (reaty of Amity and *ooperation 7(A*8 in !##?, on )hich ASEAN )as formed initially 7in ,;A8' A&reement on 3India-ASEAN 1artnership for 1eace, 1ro&ress and Shared 1rosperity3 )as si&ned at the ?rd ASEAN-India Summit in Nov !##4' Settin& up of Entrepreneurship "evelopment *entres in ASEAN member states B *ambodia, 2yanmar, Laos and 6ietnam' 7(he one in Laos is already functional8

(he follo)in& proposals )ere announced by the 1rime 2inister at the 4 th ASEAN-India Summit@ Settin& up centres for En&lish Lan&ua&e (rainin& 7EL(8 in *ambodia, Laos, 2yanmar and 6ietnam' Settin& up a tele-medicine and tele-education net)or% for *ambodia, 2yanmar, Laos and 6ietnam' =r&anisin& special trainin& courses for diplomats from ASEAN countries' =r&anisin& an India-ASEAN (echnolo&y Summit in !##;' =r&anisin& education fairs and road sho)s in ASEAN countries' *onductin& an India-ASEAN I( 2inisterial and Industry <orum in !##;'

(he ASEAN re&ion has an abundance of natural resources and si&nificant technolo&ical s%ills' (hese provide a natural base for the inte&ration bet)een ASEAN and India in both trade and investment' (he present level of bilateral trade )ith ASEAN of nearly .S C D billion is reportedly increasin& by about !$ E per year' India hopes to reach the level of .S C ?# billion by !##A' India is also improvin& its relations )ith the help of other policy decisions li%e offers of lines of credit, better connectivity throu&h air 7open s%ies policy8, rail and road lin%s'

Improving relation with the countries in Asia according to the policy hailand! (he first <rame)or% A&reement for a bilateral <(A 7)ith an ASEAN nation8 )as si&ned )ith (hailand in =ctober !##?' .nder this a&reement, the commencement of <(A in Services and Investments )ill be in !##; and in :oods from !# #' Some 2emorandums of .nderstandin& )ere also si&ned in =ctober !##?, on tourism, a&riculture and cooperation in bio-technolo&y' A +oint Wor%in& :roup is also in place for information and intelli&ence sharin& on terrorism' "alaysia' India is 2alaysia4s lar&est tradin& partner amon& countries in the south, e>cludin& *hina and the ASEAN, )ith the bilateral trade valued at .S C 4'!, billion in !##4' Indian public sector underta%in&s such as 9FEL and I5*=N have underta%en and successfully completed a number of pro-ects in 2alaysia' (here are $A Indian -oint ventures in 2alaysia in the fields of palm oil refinin&, po)er, rail)ays, civil construction, trainin& and information technolo&y' "urin& the visit of 1rime 2inister 2anmohan Sin&h in "ecember !##4, India and 2alaysia a&reed to initiate a *omprehensive Economic *ooperation A&reement 7*E*A8' ! a&reementG2=.s )ere also si&ned coverin& )ide ran&in& cooperation in satellite technolo&y, biotechnolo&y, information technolo&y, infrastructure and education' Indonesia! "urin& the visit of the Indonesian 1resident, Susilo 9amban& Hudhoyono, to India in November !##$, Indonesia and India a&reed to establish a 3strate&ic partnership3 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 technolo&y fields' (hree 2=.s )ere si&nedone on marine and fisheries cooperation, one on establishment of +oint Study :roup for *E*A and one on trainin& cooperation for trainin& of diplomats' India has many -oint ventures in Indonesia since the ,A#s' (he bilateral trade currently at around .S C 4 billion )ill be tripled to .S C $ billion in the ne>t five years' Indonesia )as insistent on the inclusion of India into East Asia Summit and had supported India at the other forums li%e W(= and =I*' "yanmar! 2yanmar is the only ASEAN country )ith )hich India shares both land and maritime boundaries' Fence 2yanmar has to be accorded a special position in its

forei&n policy, especially in vie) of India4s strate&ic and security concerns' *onse0uent to visit of Senior :eneral (han Sh)e, *hairman S1"*,to India in !##4, the bilateral relations are at an all time hi&h' India has e>tended a number of &eneral and pro-ect-specific credit lines to 2yanmar in the last fe) years' A number of a&reements and 2=.s, includin& the (ripartite 2aritime A&reement bet)een India, 2yanmar and (hailand, the 9order (rade A&reement and an a&reement on *ooperation bet)een *ivilian 9order Authorities, have been si&ned' Indian companies are involved in oil and &as e>ploration in 2yanmar' A feasibility study has been underta%en for a rail lin% bet)een India and 2yanmar' India had up&raded the ;# %m lon& (amu-Kale)a-Kalemyo hi&h)ay in !## and )ill be maintainin& it for the ne>t si> years' (here is an on&oin& pro-ect for construction of a trilateral hi&h)ay from 2oreh in India to 2ae Sot in (hailand to 9a&an in 2yanmar, the pro&ress of )hich is bein& revie)ed re&ularly by the forei&n ministers of the three nations' (rue to 2yanamar4s assurances, it has been launchin& operations a&ainst the Indian rebel &roups such as NS*N 7K8 campin& in its soil' Singapore! *omprehensive Economic *ooperation A&reement 7*E*A8 bet)een India and Sin&apore )as si&ned on !, +une !##$ durin& the visit of Sin&apore 1rime 2inister to India' (his a&reement )hich came into effect on # Au&ust !##$, includes a bilateral investment promotion treaty, a double ta>ation avoidance a&reement and an air services a&reement in addition to an <(A' It may be recalled that it )as Sin&apore that paved the )ay of India4s association )ith A5<' Lee had also supported India4s bid for a permanent seat in the .N Security *ouncil' Sin&apore alon& )ith Indonesia had also supported India4s entry in to the East Asian Summit' #am$odia% Laos and &ietnam (hese three economically under developed countries of this re&ion, in comparison to the rest of ASEAN, have enou&h scope and opportunity for India to e>tend its influence and reap the benefits' Since ,D , )hen India reco&ni/ed the Fan& Samrin re&ime, India had cordial relations )ith *ambodia' India has entered into a number of bilateral treaties and a&reements for cooperation in the fields of trade, science I technolo&y, a&riculture, tourism, air services and visa e>emption' India has some ma-or pro-ects in the areas of education, entrepreneurship development and information technolo&y' India has helped *ambodia in a bi& )ay throu&h the I(E* pro&ramme' India and Laos have si&ned a number of a&reements and 2=.s in the fields of culture, cooperation in defense, cooperation in science I technolo&y, a&ricultural cooperation, dru&s and illicit traffic%in&, and e>emption of visas for diplomats and officials' India has also set up and Entrepreneurial "evelopment *entre in Laos and )ill be settin& up an Information (echnolo&y *entre shortly' India has a number of bilateral treaties and a&reements )ith 6ietnam in the areas of *onsular relations, Avoidance of "ouble (a>ation, Narcotics, Science I (echnolo&y and *ulture' Since ,A;, India has e>tended 4 lines of credit amountin& to 5upees ?,; # million to 6ietnam' Another credit line of .S C !A million to 6ietnam )as si&ned in Au&ust !##4 bet)een E>im 9an% of India and 2inistry of <inance, 6ietnam'

India is also helpin& 6ietnam in settin& up an Advanced 5esource *entre in I( in Fanoi and F5" in the field of I( in si> educational institutions in 6ietnam' India has also proposed in the 4 th India-ASEAN Summit at Kuala Lumpur in !##$ to set up *enters for En&lish Lan&ua&e (rainin&, tele-medicine and tele-education centers in these three states' he #hina 'actor( India getting pre)erence over china *hina is virtually dominatin& this re&ion' 9y the ASEAN-*hina Accord entered into in November !##4 7durin& the #th ASEAN Summit in 6ientiane8, the )orld4s bi&&est free trade area has been created removin& all tariffs' (he tariff cuts that be&an in !##$ )ill be completed by !# # dra)in& the ASEAN4s combined economies of .S C trillion closer to *hina4s .S C '4 trillion' In the *old )ar era, India perceived *hina as dan&erous country because of its hi&h military e>penditure and ambitious plans in this field' 9ut no) the ima&e of *hina has chan&ed and no) is seen as an economic po)erhouse' (o &ain confidence and to build trust amon& the Asian countries *hinese 1remier Wen +iabao, said in a speech durin& the last ASEAN Summit that 3*hina )ill continue to see% peace and development throu&h cooperation and )ill strive to achieve development that )ill brin& about peace, openness, cooperation and harmony as )ell as benefit to itself and other countries3' "espite the remar%s of the *hinese 1remier some analysts are of the opinion that *hina preferred a smaller Asian &roupin& 7)ithout .'S', India, Australia and Ne) Jealand8 that can inte&rate 0uic%ly on the economic front and )hich *hina can influence more si&nificantly' 1erhaps it is this increasin& influence of *hina and its motives that had prompted countries li%e Sin&apore and Indonesia to cooperate )ith India, Australia and Ne) Jealand into the EAS' Fence India must be a)are that it has not been invited to EAS because of its risin& economic potential alone but more as a balancin& force to offset the *hina factor' Althou&h it is bein& said that India and *hina are not rivals and they can complement rather than compete in the EAS' #onclusion Advantages o) the policy K ,, )as a turnin& point in India4s economic relations due to its ne) Loo% east policy' 9efore ,,# India4s main focus )as on the Soviet .nion because of )hich ties )ith the other ma-or Asian po)ers li%e *hina and +apan )ere not stron&' India4s in)ard-loo%in& orientation disconnected it from the nei&hborhood to the East, %ept it apart from the economic &ro)th of East Asia' 9y the turn of the ,,#s, India had totally mar&inali/ed itself' (he first phase of the Loo% East policy launched by the Narasimha 5ao :overnment in the early ,,#s focused on rene)in& contact )ith a re&ion that India had drifted a)ay from' K (he Loo%-East policy has been &iven a si&nificant thrust since the be&innin& of this century and the results achieved are evident as mentioned in the report' No) India has entered into the phase t)o of this policy ! (he second phase in India4s Loo% East

policy has a ne) dimension L the development of India4s remote northeast' India4s search for a ne) economic relationship )ith South East Asia is no lon&er driven by considerations of &lobali/ation, but to facilitate development of the Northeast by increasin& its connectivity to the outside )orld' Instead of tryin& to isolate the Northeast from e>ternal influences, as it had done in the past, Ne) "elhi is no) reco&ni/in& the importance of openin& it up for commercial lin%a&es )ith South East Asia' K Increased economic inte&ration )ith Asia has helped India because the core competencies of these economies are different' So India can import the &oods from other countries )hich can be produced by other countries at a lo)er cost then India' India can e>port those &oods for )hich India has a competitive advanta&e' (his arran&ement is mutually beneficiation for India and East Asia countries '"ue to this there is a Substantial potential of Asian Economic Inte&ration in helpin& Asia resume a hi&h &ro)th path. East Asia's Strengths 8 Electronic e0uipment !8 Feavy en&ineerin& pharmaceuticals ?8 1roduct development and mar%etin& 48 .nderutili/ed capacity in construction India's Strengths *omputer Soft)are Li&ht en&ineerin& and 1rocess development Fu&e potential demand

K Loo% east policy has helped India in stren&thenin& its place in the &lobal economy and &ets a better deal in its interactions outside the re&ion' America and European countries had entered into a lot of different mutual a&reement )hich has further increased their reputation and bar&ainin& po)er' India )as in dan&er of isolation in the &lobal economy' India )as not &ettin& its due importance' 9ut due to its Loo% east policy India economy is &ettin& inte&rated )ith the Asian economy, so India &ets support from Asian countries )hich have increased India4s importance at &lobal level' Short comings in the policy K (he Loo% East policy did not find +apan on its radar and failed to improve India4s economic ties )ith it' (rade )ith +apan actually declined dramatically droppin& its share to one-third of its level of A per cent in ,,?' =ne of the causes, of course, )as the fact that the +apanese economy )as sta&nate durin& this period' 9ut still it is difficult to e>plain the reason behind this dramatic drop' (his )as the bi&&est failure of Loo% east policy' <ailure to involve +apan and a build economic relationship )ith it also resulted in closin& the doors on +apanese forei&n direct investment 7<"I8' India missed out on +apanese <"I in the in the early ,,#4s because of its policies that discoura&ed <"I' <ollo)in& the reforms, ho)ever, the dedicated policy instruments of Loo% East policy should have succeeded in attractin& +apanese <"I to India but that did not happaned' "urin& ,,?-!##?, +apan4s &lobal <"I avera&ed at C $# billion a year, of )hich India received C !!# million a year or less than onefourth of per centM Even at the re&ional level, India received -ust ! per cent of +apanese <"I' 7*hina4s share )as # times hi&her at !! per cent8'9ut no) the situation is &ettin& better and trade )ith +apan is increasin&' K India has entered into a number of pacts, a&reements and <(As but its record for

implementation of such accords has been poor as can be seen from the follo) up of the Indo-(hai <(A and *E*A )ith Sin&apore' (he reason for poor implementation of the pacts, a&reements and <(As K (he Indian industry4s doubts about its competitive efficiency' K Indian industry does not )ant competition at home K Indian industry scared of cheaper e>ports to India from these countries' India should &o ahead )ith proper implementation of the pacts, a&reements and <(As )ithout botherin& about the aforementioned factors' (he Indian industry )ill ensure that India )ill al)ays &ain from these arran&ements' Suggested )uture )ramework K (he rise of *hina4s economic potential and the resultant influence on this re&ion should not deter India, as the re&ion is loo%in& for an alternative in India because of its fair practices and peace lovin& nature' India is preferred over *hina by many countries because India is democratic country' Fo)ever India has to set its house in order and &o ahead )ith its economic reforms, liberali/ation process and infrastructure development to &ain the confidence of this re&ion, )hich at present is not all that hi&h' Economic reforms and liberali/ation process is bein& ne&atively affected by the left parties )hich is supportin& the &overnment' K Each nation has its o)n characteristics B some are supportive of India, some are predominantly 2uslim, some are economically more developed then India, some are underdeveloped and one is a close nei&hbor influencin& the security of India' Fence India should tailor the bilateral relations )ith every country in different )ay to suit the re0uirements of that particular country and that of India' K ASEAN and EAS hold &reat promise for India' Ade0uate interaction )ith these &roupin&s )ill result in better inte&ration )ith this re&ion and facilitate India economic development' Indian businesses )hich are loo%in& to &o &lobal )ill &et hu&e mar%ets in other countries' (hey )ill be able to e>port their &oods and &et a mar%et share because of lo) tariffs due to the pacts, a&reements and <(As' Althou&h forei&n companies )ill also &et this advanta&e but Indian companies )ill be able to compete )ith these because of their competitiveness' K *2I and emer&in& <(As G 5(As bet)een Asian countries provide foundations for a broader and more ambitious initiative to ta%e the e>istin& India-ASEAN relationship to a hi&her level, li%e an Asian Economic *ommunity, )hich constitutes ASEAN, *hina, +apan, Korea and India as member countries' Such a community )ould be rou&hly the si/e of the European .nion in terms of income, and bi&&er than NA<(A in terms of trade' It )ould account for half the )orld4s population and it )ould hold forei&n e>chan&e reserves e>ceedin& those of the E. and NA<(A put to&ether' (his can &ive a &reater push to Indian &ro)th'