India has embarked on a period of radical changes in its foreign and economic policies

by Prabir De

People of India voted for the Prime Minister Modi. The NDA government has returned to the power with huge mandates. The first five years under the leadership of Prime Minister Modi have seen several changes in India’s foreign policy, of which the ‘Act East Policy’ was an important one. In 2014, when Prime Minister Modi took over the office, India’s Act East Policy (AEP) was unveiled at the 12th ASEAN-India Summit, held in Nay Pyi Taw, Myanmar. In his Opening Statement at the 12th ASEAN-India Summit, Prime Minister Modi said: “A new era of economic development, industrialisation and trade has begun in India. Externally, India's ‘Look East Policy’ has become ‘Act East Policy’.”Started with a fresh vigour in 2014, AEP indeed has added a new momentum while acting on east.

Since then ASEAN-India engagement has become deeper and new dimensions have been integrated with the relationship.Down the line, ASEAN partnership has scaled impressive new heights. India has not only developed strong bilateral relations with countries such as Bangladesh, Mauritius, Myanmar, Sri Lanka, Singapore, Vietnam, etc., but also steering a number of sub-regional programmes and projects such as the BBIN, the Trilateral Highway, etc., and is actively contributing to the success of several regional initiatives such as ASEAN, EAS, BIMSTEC, IORA, RCEP, among others.

India has embarked on a period of radical changes in its foreign and economic policies. People argue about whether these changes have gone too far or not far enough. But, the changes in the international affairs have been perhaps less dramatic but in numerous cases little less sweeping. The causes are also been similar. Alongside AEP, countries are also influenced by China’s BRI. In today’s multi-polar world, countries have to be imaginative in building new constituencies and seeking new partnership.

Under the AEP, the India-Japan strategic partnership has been lifted to an entirely new level, underscoring the importance of Indo-Pacific cooperation. India believes in an Indo-Pacific that is free, open and inclusive, and one that is founded upon a cooperative and collaborative rules-based order. ASEAN’s centrality remains the abiding contemporary characteristic of the Indo-Pacific at the regional level. India has placed the ‘Indo-Pacific’ at the heart of its engagement with the countries of South, Southeast and East Asia. In 2018, in his keynote address at the Shangri La Dialogue in Singapore, Indian Prime Minister Modi, had espoused a “free, open, prosperous and inclusive Indo–Pacific Region”. He had, in addition, called for common commitment, based on shared values and principles, to promote a rules-based order in the Indo–Pacific.Gradually, Act ‘East’ is transformed into Act ‘Indo-Pacific’.Nonetheless, ‘Connectivity’ is central to most of the regional initiatives in which India participates.

Act East cooperation offers many opportunities, but the region is also rife with threats and challenges. Today, India and ASEAN neighbours have been facing new challenges, not only in economic areas but also in the areas of security and environment. These were completely new and not were in 2014 when AEP was introduced. The region is faced with the US-China trade war, which has been escalating instead of cooling down. Chinese threat in the South China Sea is well known. Besides, there are many non-traditional security threats such as cyber security, terrorism, natural disasters, to mention a few. The problem is further compounded by the fact that countries are taking recourse of protectionism, both economic and otherwise. Countries in Southeast and East Asia would like India to play a more proactive role given the fact that these countries have been witnessing too much “China”. There is therefore a natural call to India from Southeast and East Asia to maintain a balance of power. It is high time that we address these challenges jointly by forging new partnership.

Recasting the AEP would pave the way in adding new momentum to ASEAN-India partnership as well as Indo-Pacific. Here is a 12-point agenda for efforts towards recasting the AEP.

First and foremost, complete the tasks as promised in the Delhi Declaration 2018. Three sets of tasks are worth mentioning: first, complete and scale up the digital connectivity projects in Cambodia, Lao PDR, Myanmar and Vietnam; second, complete the Trilateral Highway (TH), resume the replacement of 69 bridges along the TH and negotiate the Trilateral Motor Vehicle Agreement (MVA); and third, continue with the high impact projects such as fellowships for integrated PhD programmes to ASEAN scholars; set up a network of universities to encourage greater inter-university exchanges between ASEAN and India; celebrate the year 2019 as ASEAN-India year of tourism; resume the work of the Project Development Fund (PDF), among others.

Second; under the Prime Minister’s Sabka Sath, Sabka Vikas, Sabka Vishwas, we must empower our states in AEP, particularly Eastern and Northeastern states. Many of the states have taken Act East move but progress has been limited. To guide the states in implementing the AEP, setting up a NER branch of NITI Aayog or RIS would pave the way in bridging the gaps between Centre and States while implementing the Act East Policy. The Act East through the Northeastern region can flourish if the central and state governments work towards improving the connectivity in the region, particularly at the border areas.

Third, focus BIMSTEC. BIMSTEC is the natural connector of South and Southeast Asia. Complete the commitments taken at the fourth BIMSTEC Summit which was held at Kathmandu in 2018. While BIMSTEC connectivity master plan is ready, countries must enhance the negotiation process to conclude BIMSTEC MVA, BIMSTEC coastal shipping agreement, and BIMSTEC TFA. In parallel, inject capital and resources, as promised, towards strengthening the BIMSTEC Secretariat in Dhaka. Alongside, we must continue with our activities for BCIM-EC.

Fourth, SMEs drive the business – within and across borders. In earlier period, there was limited effort to engage SMEs in India-ASEAN activities. Under the new phase of AEP, we expect special focus shall be given on SMEs, which can build effective business networks across borders. Some of the projects such as the ASEAN-India SMEs Forum, special fund, etc. would fillip to trade and investment as well as integrating our producers and manufacturers in regional value chains. Many new industries in Northeast and East India are unaware of ASEAN market, both for finished as well as intermediate goods and services. SMEs in Northeast India need smart packaging technology or access to cold chain facilities.

Fifth, development cooperation projects earmarked for the Act East should be put in fast-track by avoiding cumbersome documentation and bureaucratic procedures. Let EXIM Bank of India opens branches in all South, Southeast and Far East Asian countries and Pacific and also strengthens the resources of existing offices. Build an effective network of export credit guarantee agencies between India and Southeast and East Asian countries.

Sixth, AEP mandates cooperation and synergy among multiple stakeholders. Funding on just-in-time is needed to activate the AEP. The Ministry of External Affairs (MEA) depends on the Ministry of Finance (MoF) for funding, whereas the MoF depends on Prime Minister’s Office (PMO) for political and statutory directions. The bureaucratic process often acts as hurdles, delaying the projects or funding. Therefore, a greater coordination between Prime Minister’s Office, Ministry of Finance, and Ministry of External Affairs is essential in implementing the Act East projects. Eastern and Northeastern states may appoint one Act East Office at the rank of Additional Secretary level to drive the AEP, and coordinate with the union government.

Seventh, low hanging fruits. Indian states are rich in culture.Tourism is the most immediate ‘money-making' opportunity, which has the potential to improve the connectivity between India and Southeast Asia. Air connectivity between Northeast India and Southeast Asia is immediately needed unlock opportunities. Ministry of Civil Aviation should walk extra mile to start international flights from Imphal and Guwahati and also upgrade the domestic airports into international airports in Northeast and others parts of India. Let’s celebrate the ASEAN-India Tourism Year 2019 with opening of the international flights from Imphal and Guwahati. This will also promote health tourism in Northeast. Imphal’s Shija Hospital is a case in point which has become a favourite destination of Myanmar people for their health check-up.

Eighth, expand the outreach. We must add Bangladesh and Sri Lanka in our AEP. A prosperous Bangladesh offers opportunities for India’s Eastern and Northeastern states. MEA may consider hosting annual dialogue on AEP involving neighbouring countries and Indian states.

Ninth, institutions and governance in institutions matter for AEP. No new institution is suggested but whatever the country has promised earlier we must implement it. Commitments like setting up of ASEAN-India Centre (AIC) or ASEAN Studies Centre (ASC) in Northeast India or opening up of foreign consulates in Northeast India are yet to be fulfilled. These should be taken up in this regime. Appoint one AEP Fellow in India’s missions in Southeast and East Asia whose role would be to conduct new policy research and design projects and implementable strategies.

Tenth, strengthen border infrastructure, logistics and last-mile connectivity. Let major border posts in Northeast and East India operate 24x7. Complete the construction of ICP projects and equip the ICPs with high speed Internet, food testing laboratories, warehousing including cold chains, security, banking facilities, etc. Developed border infrastructure reinforces country’s security. Some of the border posts (e.g. Moreh in Manipur) were not properly developed due to border disputes or lack of availability of adequate land, resulting in rampant rise in informal trade. Increasing duty structure is not the correct way to stop informal trade when border is open and porous. An innovative solution is needed to stop illegal trade at border, particularly at Moreh in Manipur. Building smart cities in Dawki (Meghalaya) and Moreh will enhance economic activities in the region. Greater involvement of youth through training and capacity building will help building bridges with local communities.

Eleventh, faster cross-border engagements, particularly in the Northeastern India, will wipe out the insurgency, which is the main constraint for expansion of trade and investment. States must encourage the start ups who are exporting processed food, organic fruits and vegetables, flowers, high-end fashion products through borders. New industrial incentives for construction of plant and machinery, lowering the GST rates of Northeast products and services, setting up technology development and incubation centres, trade financing and banking facilities will not only promote fresh investments but also generate employment.

Twelfth, multiple entry visa should be initiated for investors and traders coming from South and Southeast Asia. While airports accept E-visa, the same is not allowed at the border posts. The Ministry of Home Affairs (MHA) shall allow e-visa at least at the Moreh border check post to start with.

Time is ripe for India to establish a strong economic partnership with Southeast and East Asia. While this will reinforce India’s Act East, it would also gradually remove economic isolation of India’s North East. It must not be forgotten, however, that nothing much will work without institutional foundations, a set of rules, and finally, the confidence of countries and states in the whole system.