India will seek deeper economic ties with ASEAN

Outlook

Indian Prime Minister Narendra Modi since 2014 has spoken of transitioning from a ‘Look East’ to an ‘Act East’ policy, pledging greater engagement with South-east Asia.

Delhi’s initiative is about palliating separatist feeling in India’s restive north-east and pushing back on China’s Belt and Road Initiative. Enhanced physical connectivity with Myanmar and Thailand should boost economic prospects in the north-east. It may also help India reduce dependence on the strategically sensitive Siliguri Corridor and respond to Chinese infrastructural investments in South-east Asia.

India and ASEAN will seek to boost bilateral trade, but protectionist demands may keep India out of RCEP.

Impacts

• India will push to extend the India-Myanmar-Thailand Trilateral Highway into Cambodia, Laos and Vietnam.
• Delhi and Naypyidaw will step up talks over an India-Myanmar oil pipeline.
• India’s credit line of 1 billion dollars will help develop further physical and digital connectivity with ASEAN.
• The many exempted items in India-ASEAN trade suggest a lack of economic complementarity.
• India not signing up to RCEP would disappoint ASEAN members more than China.