Economic Highlights

New Delhi, 14 November 2014

 ‘Look’ To ‘Act’ East

MORE POTENT THAN ECONOMY

By Shivaji Sarkar

You “Look East” and action comes from the West. While Prime Minister Narendra Modi’s visit to ASEAN summit in Myanmar has brought its eastern neighbours closer, the far-western friend, the US, has succumbed to gestures and agreed to have a mouthful of a deal outside the WTO to end hunger pangs in India.

This is the beauty of a sober yet aggressive diplomacy, more so when it is linked to finance and economy. Modi’s “Act East” from what was Atal Behari Vajpayee’s “Look East” is seemingly yielding results. No wonder, US President Barack Obama at Myanmar’s capital calls Modi “man of action”. Obama has realized that despite India being a rising economic power, its actions could not be ignored even if the mighty US has to remain the super power.

Modi’s push for a balanced Regional Comprehensive Economic Partnership Agreement gives equal emphasis to goods and services. This could become a springboard for regional integration and prosperity. It would also lure the western powers to come closer to India, if not for any other reason at least to maintain their supremacy in world affairs.

The US, of course, has not given concession to India alone. While its move is restricted to not blocking India’s food security and waiving off penalty at WTO, it has given a larger concession to China in terms of greenhouse gases. Beijing has only agreed to peak pollution at 2000 level instead of 1990. The US deal gives China the freedom to increase pollution till 2030. It, however, puts pressure on New Delhi to commit on environmental pollution. India had earlier taken a view that the western nations had been the polluters and developing countries should not be forced to pay for western sins by curbing their own growth.

It is a ding-dong diplomacy of extending one hand and withdrawing the other. India certainly cannot get much by cajoling. It has been witnessed that India’s reticence at WTO has given it more weightage than years of persuasive diplomacy.

The ASEAN meet has given India an opportunity to establish closer ties with a region, which has emerged as an economic bloc. Ignoring it for long has also allowed China to capture markets closer to the Indian borders, be it Myanmar or Thailand or even Indonesia, which is only 100 nautical miles away from Nicobar Islands.

The relationship with ASEAN has a different fall out too. India’s distant borders get secured. Indonesia seeks to secure important choke points in the Indian Ocean such as Malacca, Sunda, Lambok straits. Jakarta’s earlier proposal for an Indo-Pacific “treaty of friendship and cooperation” supposes closer ties with countries such as India on transnational security challenges. In the wake of recent confrontation over Vietnamese oil well with China, this comes as an added bonus. The East is becoming more interesting for extending Indian goodwill and winning friends.

Seeking deepening of ties with ASEAN, India on November 8 stated it would soon draft a five-year plan of action starting 2016 to take the “trajectories” of common interests with the 10-member ASEAN for boosting trade and people-to-people contact.

In her address at the 12th India-ASEAN meeting in Nay Pyi Taw, External Affairs Minister Sushma Swaraj stated the NDA government would like to stand with the grouping and take the relationship forward so the people’s aspirations for growth and development could be fulfilled. India wanted connectivity in all its dimensions - geographic, institutional and people-to-people. She also referred to 5Ts of the Government of India — Tradition, Talent, Tourism, Trade and Technology — reflecting priority areas and noted that in foreign policy connectivity precedes these all.

Insofar as bilateral trade is concerned, it grew by 4.6 per cent from $68.4 billion in 2011 to $71.6 billion in 2012. ASEAN’s exports were valued at $43.84 billion and imports from India amounted to $27.72 billion in 2012. The target has been set at $100 billion by 2015 for ASEAN-India trade.

This is a modest target. The scope is much beyond. Some individual countries could have that level of trade if they are integrated with India. Hurdles apart, which adversaries are prone to create, India has to and must consolidate its immediate eastern neighbours for mutual economic benefit. Importantly, the shipment cost to the region is the lowest. The major problem is that not many shipping lines have dedicated services in the region. The proposed road and rail links, or seamless travel in SAARC and ASEAN are dreams yet to be achieved. Till such time, the sea route has to be strengthened.

The Shipping Corporation of India (SCI) is not unwilling but it has demanded subsidy as trade is still sparse. Compared to what the country is losing on Air India, SCI is demanding a pittance, much less than Rs 100 crore a year. It is worth it. It would gradually strengthen the country’s shipping line and also make trading easy to various destinations starting from Myanmar to Indonesia, a region that traditionally had trading links more with India than any other country.

Modi has stated closer ties with Indonesia are a distinct possibility. How much India would gain in terms of ‘make in India’ or investment may not be easy to assess. Historically, it is well-known that ancient Kalinga and Chola kingdoms had large trade and domestic activities because of their links with South-East Asia.

At present, ASEAN stands at a juncture where it is looking to integrate nations in the region not just in matters of trade alone but also in the larger sense of the coming together of countries as a consolidated centre of power. India is on board at the right time and goes beyond to impact even Australia and integrate it with Indian ethos.

It is likely to pay dividends for the people of India with new opportunities, job markets, trade and strengthening the shared cultural legacies. Closer home, Indians would be having access to prosperity at lesser cost than looking to the West.

Thus, Indo-ASEAN ties are more significant than mere economy. Pursued doggedly it could be the harbinger for a change in global economy, security and politics. Prime Minister Modi has set the ball rolling. South Asia and South-East Asia would be able to perceive the difference may be in less than a decade. --- INFA

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