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Day 61 – Q 2. What are India’s economic and strategic interests in the ASEAN? Has India been able to tap the potential that Indo-ASEAN engagement offers? Critically comment. 

  • IASbaba
  • August 19, 2020
  • 0
GS 2, International Relations, TLP-UPSC Mains Answer Writing
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2. What are India’s economic and strategic interests in the ASEAN? Has India been able to tap the potential that Indo-ASEAN engagement offers? Critically comment. 

आसियान में भारत के आर्थिक और सामरिक हित क्या हैं? क्या भारत उस क्षमता का दोहन करने में सक्षम है, जो भारतआसियान जुड़ाव प्रदान करता है? समालोचनात्मक टिप्पणी करें।

Demand of the question:

It expects candidates to write about India’s economic and strategic interest in ASEAN. It also expects to write about whether India is successful in tapping the potential that Indo-ASEAN offers or not.

Introduction:

The Association of Southeast Asian Nations is a regional organization which was established to promote political and social stability amid rising tensions among the Asia-Pacific’s post-colonial states. ASEAN works with motto of  “One Vision, One Identity, One Community”.

Body:

Economic and strategic interests of India in  the ASEAN:

  • 3 Cs–Culture, Connectivity and Commerce– will shape India’s ties with the ASEAN bloc. India’s trade with ASEAN stands at approx. 10.6% of India’s overall trade. 
  • ASEAN is India’s fourth largest trading partner. Bilateral trade between ASEAN and India has crossed US$ 80 billion mark.
  • Singapore has become India’s investment and trading hub in the East.
  • ASEAN occupies a central place in the security architecture of the Indo-Pacific region due to Maritime cooperation in terms of connectivity, safety and security.  
  • India’s export to ASEAN stands at 11.28% of our total exports. The ASEAN-India Free Trade Area has been completed.
  • India and ASEAN can collaborate to combat terror financing, cyber security threats, tax evasions and many more. 
  • India needs ASEAN support in achieving a rules-based regional security architecture. Partnership with ASEAN nations might help India counter the growing presence of China.
  • ASEAN is seen as the most successful regional organisation next only to the EU. ASEAN India-Business Council (AIBC) was set up in 2003 to bring key private sector players from India and the ASEAN countries on a single platform.
  • To develop connectivity through water, ASEAN and India are working on the Kaladan MultiModal Transit Transport Project. ASEAN-India cooperation in maritime domain is one of the key focus areas for growth and development of the Indo-Pacific region.
  • Under New Delhi’s ‘Act East Policy’, India has been increasing its engagements with the ASEAN.
  • Delhi Declaration: To identify Cooperation in the Maritime Domain as the key area of cooperation under the ASEAN-India strategic partnership.

Potential of Indo-ASEAN relations and India’s performance:

  • ASEAN commands far greater influence on Asia-Pacific trade, political, and security issues than its members could achieve individually.
  • It constitutes 3rd largest population in the world, of which more than half is below thirty years of age. It is also the Fourth most popular investment destination globally.
  • ASEAN’s share of global exports has also risen, from only 2 percent in 1967 to 7 percent by 2016, indicating the rising importance of trade to ASEAN’s economic prospects.

Hence, ASEAN has tremendous potential in terms of economic and strategic partnerships. However, India’s performance is of complex nature when it comes to tap potential of ASEAN:

  • One major reason, among many, is a lack of agreement over product standardisation between India and most other countries in Asia.
  • Exporters many times complain they are not able to sell, as their products do not meet the required quality standards required in a foreign land.
  • At a time when the world economy is doing well, it is ironic that India’s trade deficit has widened to $14.88 billion in December 2017 from $10.55 billion a year earlier.
  • Between 2008 and 2016, India’s trade with ASEAN region has increased faster than two of its two largest trading partners, namely, European Union and the United States
  • Two way trade between India and ASEAN has moved from $65.1 billion in 2015-2016 to $71.6 billion 2016-2017. However, this figure is meagre in comparison to China’s $452.3 billion in 2016.
  • Interestingly, in spite of all non-tariff measures and higher tariffs directed against Chinese exports, the country’s trade with ASEAN has flourished. Over the last 15 years, China has emerged as first or second largest trading partner with almost all Southeast Asian countries.

Following steps are needed to be taken to improve relations with ASEAN countries:

  • First, as cost of production is lower in Laos, Cambodia, and Myanmar, it means that Indian firms can gain significantly by investing in these countries.
  • Investing in these regions meant a bigger market for Indian firms. ASEAN region has a combined GDP of $2.7 trillion.
  • Indian firms can evade protectionist measures targeted against their exports if they start exporting from ASEAN region.
  • Investing in these regions will also ease out some of India’s energy requirements, enabling the Indian to access cheaper foreign energy (oil and power) and minerals from Cambodia, Myanmar and Vietnam.
  • Participating in the South-east Asian production network will allow India to increase its manufacturing base besides creating jobs for its young population.
  • Also we need to open dialogue with ASEAN countries to modify the terms of Regional Comprehensive Economic Framework in such a way that it should not harm India’s economy much, as India stood away from RCEP citing this reason.

Conclusion:

ASEAN region due to its demographic dividend advantage, technological advancement and wide market economy hold immense potential for growth and development of Indian sectors of economy such as horticulture, dairy etc. Hence, it’s a great opportunity for India to mingle its objectives of Make in India with needs of economies in the ASEAN region, which will ensure a greater growth for Indian economy and creation of more jobs in India.

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