Rewind: The long road to East
In the midst of changing geopolitical order, the challenges seem endless but also provide an opportunity for India to advance its Act East Policy
By Anudeep Gujjeti, Dr Akhil Kumar
India’s ‘Act East Policy’ completes ten years in 2024. The culmination of the Cold War in the early 1990s led to a major shift in the economic and strategic policies of several countries within the Asian continent. For India, the country not only lost its long-standing and time-tested partner the Soviet Union on which its economy was heavily dependent but also the Gulf War in 1990-91 led to a rise in oil prices which severely affected its economy. Consequently, India, to ensure its economic sustenance, was compelled to look for alternative regions such as Southeast Asia with which it shares historical and cultural ties.
The ‘Look East Policy’ was first conceived by former Prime Minister P V Narasimha Rao during his visit to Singapore in 1994 wherein he called for ‘forging a new relationship’ with the region. The successive governments pursued this policy as India’s pivot to Southeast Asia. As India embarked on its economic reforms under Rao’s leadership, the ‘Look East Policy’ was started to accelerate its engagement with Southeast Asian countries which resulted in India’s sectoral dialogue with ASEAN (Association of Southeast Asian Nations) in 1992 and thereafter matured to the ASEAN-India Comprehensive Strategic Partnership in 2022.
• The Look East Policy was conceived by former Prime Minister PV Narasimha Rao in 1994 wherein he called for ‘forging a new relationship’ with the region
During the Cold War years, India remained aloof and distant from the region until it reinvigorated its ties with these countries in the post-Cold War years. In his memoirs, former Foreign Secretary JN Dixit stated ‘ASEAN chose to engage with India gradually and on experimental basis as it wanted to assess India’s commitment to its economic liberalisation policies.’
Look East to Act East
When Prime Minister Narendra Modi was elected to power, he rechristened the ‘Look East Policy’ as ‘Act East Policy’ during the India-ASEAN summit at Naypyidaw, Myanmar, in 2014 emphasising the country’s willingness to play a more active role in the region. Notably, Modi stated that this policy is based on 4Cs — Culture, Commerce, Connectivity and Capacity Building — to promote greater economic and strategic cooperation with key countries in the region. Unlike the Look East Policy, the Act East Policy was envisaged to transcend the boundaries and became more comprehensive as India aimed to enhance connectivity, and economic and security relations with Southeast Asia, Northeast Asia and Oceania, and most importantly to integrate its Northeast by making it as a crucial gateway to the region.
Reiterating the importance of connectivity and its benefits to the region, External Affairs Minister Dr S Jaishankar at the Asian Confluence River Conclave 2022, opined of creating an “east-west lateral” by having a “land connectivity through Myanmar and a sea connectivity through Bangladesh” which if becomes viable can open up “way to Vietnam and Philippines, from Haiphong to Hazira and from Manila to Mundra.” He stated that such connectivity can make “a difference to the Indo-Pacific Economic Framework that is now in the making.” This indeed has a transformational value but at the same time, challenges galore.
Evolving Order
The world has changed drastically in the past three decades and more so in the last ten years. In the early post-Cold War years, there was an emphasis on opening up economies and liberalising the trade regimes of countries which led to a more interdependent and integrated world which is no longer the case in contemporary times.
The world is witnessing an intersection of national security and economic policies which means that economic policies of major powers, especially the US, are being framed with national security concerns in mind. This can be seen as a consequence of supply chain disruptions and threats to critical sectors of the economy that have emerged over the past decade, especially after the Covid-19 pandemic, the aggressive rise of China, Russia’s invasion of Ukraine and domestic politics of various nations. Most importantly, the defining geopolitical challenge for the world is the decreasing role of the US as a leading power and the rise of China, especially in the Asia-Pacific region.
Simultaneously, India is also facing significant challenges both in its immediate and extended neighbourhood. For instance, Myanmar is embroiled in a civil war after its military took over. This has not only resulted in migration into India’s Northeast but also posed challenges to several ongoing regional connectivity projects such as the Kaladan Multi-Modal Transport Transit Project, between India and Myanmar, especially aiding the development of India’s landlocked Northeastern States, Rhi-Tiddim road infrastructure project and India-Myanmar-Thailand trilateral highway project. The delay in the completion of infrastructure projects may lead to an escalation of budgetary allocations and may hinder the progress of trade between the nations.
• Unlike the Look East Policy, the Act East Policy aims to enhance connectivity, economic and security relations with Southeast Asia, Northeast Asia, and Oceania
Similarly, the anti-government protests in Bangladesh which ousted former Prime Minister Sheikh Hasina, who maintained cordial relations with India, threw the ongoing projects between both nations into limbo. The political upheaval in the neighbouring nation will not only affect the ongoing infrastructure and development projects but will also lead to a rise in cross-border crime and narcotics smuggling as they share a long border posing new security challenge to India. The developments in Bangladesh and Myanmar also affect the functioning of BIMSTEC (Bay of Bengal Initiative for Multi Sectoral Technical Cooperation). Both these nations are important pillars of the ‘Act East Policy’ connecting India’s Northeast to Southeast Asia.
Economic Pillar
A key aspect of Act East is its economic relationship with ASEAN. In the area of foreign direct investment (FDI), most of the Southeast Asian countries emerged as major investors in India in the post-Cold War years. Among the ASEAN economies, Singapore continues to be the major investor in India with a share of almost 98% of India’s FDI inflows from ASEAN, followed by Thailand (0.8%) and Malaysia (0.8%).
However, India faces a trade deficit with ASEAN. Bilateral trade between India and ASEAN stood at $131 billion in 2023 (ASEAN accounts for nearly 11% of India’s global trade) but with a trade deficit of $43 billion for India. This is reaffirmed by the results of the annual ‘State of Southeast Asia’ survey report, 2024, which shows that India ranks behind other major powers (including the United States, China, Japan and the European Union) on both hard and soft power indicators in the perception of Southeast Asian states. The trade deficit has, in particular, seen a steady rise post the pandemic driven by a jump in India’s imports of mineral fuels and oils from the region.
India’s withdrawal from Regional Comprehensive Economic Partnership (RCEP) negotiations due to its domestic constraints in economic reforms and Prime Minister Modi’s Atmanirbhar Bharat (self-reliant India) may move ASEAN nations away from engaging with India as they prioritise trade with RCEP members. This may lead to a spillover effect on India’s bilateral trade with ASEAN as joining the RCEP would have required India to eliminate tariffs on almost 90 per cent of the items it trades with ASEAN as well as with Japan and South Korea. The RCEP is the world’s biggest trading bloc, accounting for around 30% of global GDP and trade.
At the domestic level, challenges are insurmountable in linking its Northeast with the region due to the insurgencies and turmoil unfolding in Manipur in recent times. The challenges seem endless but at the same time, they provide an opportunity for India to advance its ‘Act East Policy’ with much vigour in the coming decade.
In international relations, geography remains static which means we cannot choose our neighbours but geopolitics is dynamic. India sees a role for itself in shaping the economic and security architecture in the region, although it is no longer part of RCEP negotiations.
Indo-Pacific
In the past decade, India has institutionalised its political engagements with ASEAN and fostered ties with middle powers such as Japan, South Korea and Australia, which also have interests and concerns in the Indo-Pacific region. Beijing’s increasing assertion (Chinese multi-layered conflict with Vietnam and Philippines in the South China Sea) and the evolving geopolitics in the Indo-Pacific region are turning out to be major challenges. India proved itself to be a net security provider in the Indian Ocean region and is now seeking to extend its role to the Indo-Pacific region through an increasing number of strategic dialogues with like-minded nations within the region.
• A key aspect of Act East is its economic relationship with ASEAN but India’s withdrawal from RCEP and its Atmanirbhar initiative could see these nations prioritising trade with RCEP members
Transcending the existing ASEAN framework, India’s engagement with other major powers, including the US, Japan, and Australia through initiatives such as QUAD (Quadrilateral Security Dialogue), although initiated in 2007, was only revived in 2017 and gained traction with six leaders level summit between 2021 and 2024. According to C Raja Mohan, Professor, National University of Singapore, “For India, the challenge is to make a sustained effort to address ASEAN’s concerns over the Quad. New Delhi must also ensure that the Quad will not only coexist with ASEAN, but also complement ASEAN’s efforts for regional peace and security.”
The high-level visits such as Dr S Jaishankar’s official visit to Singapore, the Philippines, Malaysia, and Laos and Narendra Modi’s visit to Brunei (first by an Indian Prime Minister) and Singapore are a testament to it. India’s support for the Philippines’ right to protect its territorial sovereignty in the South China Sea and its supply of the BrahMos missile system in early 2022 reflects India’s nascent but expanding trajectory of defence exports to Southeast Asia.
Other countries such as Thailand, Indonesia, and Vietnam also evinced keen interest in procuring defence exports from India. India and Vietnam also joined a logistics military pact in 2022 which enabled two countries to access each other’s military bases to enhance the existing defence cooperation. An increased number of joint exercises, broad-based dialogues on capacity building and defence collaboration with countries of the region prove that the Act East Policy is giving equal importance to the economy as well as defence to expand its sphere of influence in this strategically significant region.
With the inclusion of the Indo-Pacific in Act East, India desired to balance China’s rise and its dominance within the region. The maritime domain is becoming increasingly central to securing India’s strategic and economic interests in the Indian Ocean, where tensions between China and other powers like the US, Australia and Japan are rising.
• With the inclusion of Indo-Pacific in its Act East Policy, India is looking to balance China’s rise and its dominance within the region
India must effectively manage its affairs at the domestic, regional, and global levels to play an active and influential role in shaping the evolving global order in the Indo-Pacific, rather than solely using it as a tool to enhance its economic stature. In international relations, as in the adage “A smooth sea never made a skilled sailor,” it is through persistent diplomatic engagement and the resolute pursuit of ambitious policies that nations such as India can attain significant power and influence in the midst of changing geopolitical configurations as the ‘Act East Policy’ enters its fourth decade.
Speed Bumps
The developments in Bangladesh and Myanmar may affect the functioning of BIMSTEC (Bay of Bengal Initiative for Multi Sectoral Technical Cooperation). Both these nations are important pillars of ‘Act East Policy’ connecting India’s North East to Southeast Asia.
Myanmar is embroiled in a civil war which has not only resulted in migration into India’s northeast but also posed challenges to several ongoing regional connectivity projects such as the Kaladan Multi-Modal Transport Transit Project, between India and Myanmar, especially aiding the development of India’s landlocked Northeastern states, Rhi-Tiddim road infrastructure project and India-Myanmar-Thailand trilateral highway projects
(Anudeep Gujjeti is a PhD candidate, University of Hyderabad, Research Associate, Council for Social Development and Young Leader, Pacific Forum, USA. Dr Akhil Kumar is a PhD, Department of Political Science, University of Hyderabad)
