Bilateral/International Relations

KEY POINTS

Progress

·         Ever since the launch of the Look East Policy in 1991, the India – ASEAN bilateral relations have travelled a long distance.

·         The India-ASEAN bonhomie has broadened at political, strategic, security and defence level ties, in addition to the economic realm.

·         The two sides established a Sectoral Dialogue Partnership in 1992 later transformed to a full-fledged dialogue partnership in 1996 and further transformed to a strategic partnership level in 2012.

·         India also became a member of ASEAN Regional Forum.

·         The economic integration process further strengthened after the creation of the ASEAN-India free trade area in 2010 followed by the implementation of the India-ASEAN agreement on services and investment in 2015.

·         ASEAN is now clearly the central pillar of India’s Act East Policy.

Challenges

·         SMEs are a vital aspect of both Indian as well as the ASEAN economy, contributing nearly 45% to the Indian manufacturing.

·         However, a range of factors hamper FDI inflows and SMEs collaboration between India and ASEAN countries.

·         Some of them include –

a)     challenges in establishing a supply chain

b)     poor infrastructure

c)      bad maritime and air connectivity

d)     bureaucratic costs involved in complex tax and duty structures

e)     licensing, and other business activities

·         Complexity - All the countries of the region have differing levels of socio-economic development, posing a challenge.

·         The Indian SMEs have to adjust with a new set of supply-chain strategies to each country's varying regulatory requirements.

·         Technology - The SME sector in India is hugely dependent on foreign technologies because of lack of in-house R&D.

·         China - The CLVT countries (Cambodia, Laos, Vietnam and Thailand) are emerging as manufacturing hotspots for China.

·         China is increasingly outsourcing its production to countries along the Belt and Road project, mainly ASEAN members.

·         The dominant Chinese footprint in the region makes the competition even tougher for Indian SMEs.

Way ahead

·         India's logistics sector and the supply-chain environment should be developed to a world-class level.

·         To achieve that, the ongoing projects for infrastructure development and connectivity such as

a)     India-Myanmar-Thailand Trilateral Highway

b)     Bangladesh, Bhutan, India and Nepal (BBIN) Motor Vehicles Agreement, 2016

c)      Kaladan Multimodal Transit Transport Project (linking the Kolkata with Myanmar’s Sittwe port)

should be carried on without delays.

·         LDCs of ASEAN bloc, like Laos, Vietnam, Cambodia and Myanmar, are the beneficiaries of generalised system of preferences in US and EU.

·         Indian manufacturers setting up business units there, are bound to get the benefits, while exporting to the US and EU markets.

THIS YEAR INDIA AND ASEAN RELATIONS MARK 25 YEARS. FOR INDIA RELATIONS WITH ASEAN IS A STRONG PILLAR IN LOOK EAST POLICY.

                                                                                               RELATIONS ARE PROGRESSED GRADUALLY SINCE TIES BETWEEN INDIA AND ASEAN TOOK OFF. WE HAD  A SECTORAL DIALOGUE AND THEN MOVED TO FULL FLEDGED DIALOGUE AND NOW WE HAVE A STRATEGIC PARTNERSHIP WITH ASEAN. INDIA HAS BECAME A MEMBER OF ASEAN REGIONAL FORUM. BASICALLY TIES WITH ASEAN PRIMARILY FOCUS ON ECONOMIC AND COMMERCIAL ISSUES. WE HAVE MOVED FORWARD FROM LOOK EAST POLICY TO ACT EAST POLICY TAKING RELATIONS AHEAD. WE HAD A FREE TRADE AREA WITH ASEAN IN SERVICES AND INVESTMENT. ASEAN IS INDIAS 4TH LARGEST TRADING PARTNER AND WE ARE 7TH LARGEST PARTNER TO ASEAN.

                                                                                                  EVEN WITH THIS RELATIONS STILL ASEAN AND INDIAN  DIDNOT NOT REACH ITS TRUE POTENTIAL. INDIAS FDI IN ASEAN IS 31 BILLION AND ASEANS FDI IN INDIA IS 25 BILLION. THERE ARE SEVERAL REASONS FOR THAT EXPLAINS WHY IT DID NOT REACH FULL POTENTIAL 

A) SUPPLY CHAIN ISSUES.

B) POOR INSFRASTRUCTURE STRUCTURE.

C) BAD MARITIME CONNECTIVITY.

D) AIR CONNECTIVITY.

                                                                                                 IN ORDER TO IMPROVE OUR CONNECTIVITY WITH ASEAN AND BENEFIT MUTUALLY WE NEED TO CONCENTRATE ON TRILATERAL HIGHWAY BY INCLUDING MORE ASEAN COUNTRIES , BBIN MOTOR VEHICLES AGREEMENT AND KALADAN PROJECT. THE UPCOMING SUMMIT CAN ENHANCE FOR MORE CONNECTIVITY AND COLLABORATION.