Arm in arm

India is now proactively engaging with ASEAN countries, hoping to deepen friendship and make its northeastern region an economic hub

shankar

Shankar Kumar | January 22, 2018


#South East Asia   #Republic Day   #Northeastern Region   #BRICS summit   #ASEAN  


A confident New Delhi’s efforts to consolidate its ties with ASEAN will see a new meaning and significance when it conducts a commemorative summit with the group on January 25 and makes all 10 heads of state of the Southeast Asian countries chief guests for its Republic Day function the next day.

This will be the third major diplomatic event of its kind in India after the October 2015 Africa summit and the October 2016 BRICS summit. South Block sources say New Delhi will use the summit to declare a plan to connect ASEAN with the ambitious Asia-Africa growth corridor, an initiative in which Japan, China’s powerful geopolitical rival in Asia, will initially invest $30 billion while India will put in $10 billion.         

“If you see the world map, you will realise that from Lao PDR to Myanmar to Bangladesh to Kolkata to Kanyakumari to Mauritius and then to Mozambique, there is a seamless flow of sea water. We want to use it for the smooth flow of trade and commerce in goods [from Southeast Asia] to Africa and for that the northeast region will be a major centre of activity,” Sachin Chaturvedi, director general of ministry of external affairs-funded Research and Information System for Developing Countries (RIS), told Governance Now.

Asian Development Bank, Asian Infrastructure Investment Bank (AIIB) and other multilateral agencies like the World Bank are also being approached for the funding of port and other infrastructural projects in the northeast, Myanmar and Bangladesh.

During June 23-28, India will host a governing council meeting of AIIB in Mumbai in which the finance ministers from 84 countries are expected to participate and discuss an India-led proposal on the development of coastal economy in the Indian Ocean region and need for funding ongoing infrastructure projects. Significantly, Japan is playing a crucial role in India’s connect with Southeast Asian countries and Africa.

“They [Japan] are engaged in several developmental projects in India. They are also closely connected with Myanmar, Thailand and Bangladesh. They are involved in Asia-Africa growth corridor; they are involved with our ASEAN partners. They are part of Indo-Pacific prosperous region; they are important for us for their various other ongoing projects. So Japan’s participation is multi-pronged gain for us,” says Chaturvedi.

During the January summit, prime minister Narendra Modi and the ASEAN countries’ leaders will not only discuss issues related to road, maritime and air connectivity, special economic zones, industrial corridors and introduction of shared cultural pasts of India and Southeast Asian nations in school syllabus in consonance with the ‘Shared Values, Common Destiny’ theme of the conclave, they will also see that a forward move is made for the speedy implementation of issues discussed in the meet. What, however, excites India is that its engagement with ASEAN has become raison d’être to make the country’s northeast region a hub of economic and people-to-people connect activities between the two sides.

The ongoing India-Myanmar-Thailand highway project, expected to be completed by 2020, is seen by experts as the highlight of those activities. The trilateral highway will be further extended to Vietnam. According to the RIS director general, there are plans to develop special economic zones along the trilateral highway, a 1,360-km long stretch which starts from Moreh in Manipur and ends in Mae Sot in Thailand. Interestingly, the SEZ issue was thoroughly discussed at the India-ASEAN think-tanks meet in Jakarta on January 6-7.

The meet, inaugurated by external affairs minister Sushma Swaraj, also became the platform for discussion on connecting through sea link Myanmar’s Sittwe Port with Bangladesh’s Chittagong port and Odisha’s Paradeep port, currently being developed as deep sea port along with 10 other Indian ports under the ambitious ‘Sagarmala’ project.

Officials privy to the proceedings at the India-ASEAN think-tanks meet say that once these ports become operational, they will not only leverage India’s economic influence in Southeast Asia, but also bring prosperity to the country’s northeast. “We are also proposing a dedicated development corridor from Manipur to Myanmar to take care of export promotions from India and Myanmar,” says a senior government official.

However, before turning the northeastern states into a launch pad for India’s developmental and economic engagement with ASEAN and Africa, the region needs to have its own production base. At present the resource mobilisation in each state of northeast is not more than 9 percent. This worries policymakers. “How you will create an entrepreneurial base if the tax collection is very small there? If you depend on central grants for 80 to 90 percent of your requirements, the local economy can’t grow. More entrepreneurial activity, more business transactions and more local production are essential if the economy has to grow,” says the official.

Yet the good news for the northeast is that the centre is speeding up road, rail and air connectivity initiatives in the region. During his visit to Mizoram on December 16, Modi told a gathering that all state capitals of the region will be brought on the rail map.
“We are committed to bring all the state capitals of the northeast region on the map. The government of India is executing 15 new rail line projects of 1,385 km length, at a cost of over Rs 47,000 crore,” said Modi who celebrated three years of his government by inaugurating India’s longest Dhola-Sadiya bridge, spanning 9.3 km across the mighty Brahmaputra in Assam on May 26, 2017.

The ministry of road transport and highways has already announced pumping in Rs 1.45 lakh crore for building roads in Arunachal Pradesh, Assam, Nagaland, Manipur, Mizoram, Meghalaya and Tripura. The government aims to complete all road building projects in the northeast by 2019.

If FICCI official Gunveena Chadha is to be believed, the air connectivity programme from the northeast to ASEAN is also gathering momentum. Malaysia’s AirAsia airline, already operating from different Indian cities, is also planning a direct flight from Guwahati to Kuala Lumpur and other world destinations, while Vietnam and Thailand are also planning to operate their flights from Assam’s capital.

Experts feel that if social infrastructural institutions like quality educational institutes and hospitals are strengthened in the region, it would prove to be the icing on the cake for the local people. As per an estimate, about 700 to 800 students go to China each year for medical education. It speaks volumes of outflow of money from the region on medical education. But then there is equally a critical lack of healthcare facilities in the region.

“In the case of Manipur about Rs 1,500 crore is flowing out of the state in terms of medical treatment or in the form of outflow of students. If we extrapolate that for all the eight states in the region, we may get a startling figure. Health and education are intertwined and feed each other for achieving human resource development in the region,” states a note prepared by RIS on ‘Development of North Eastern Region of India and Act East Policy’. 

On June 22, 2017, Manipur in partnership with the Confederation of Indian Industry (CII) held a conference on promotion of healthcare systems and medical tourism. The participants called for investments to set up medical colleges and hospitals in Assam, Meghalaya, Manipur, Sikkim and other northeastern states. It is felt that once healthcare infrastructure gets developed in the northeast and bottlenecks in connectivity are reduced then people from countries like Myanmar, Bangladesh, Bhutan and Nepal, which lack sufficient quality medical facilities, will flock the region for treatment and hence help the developmental plan of the area. In view of this, it has been proposed to set up a joint coordination committee involving officials from the ministries of health, home affairs, external affairs, civil aviation and DoNER (development of northeastern region). 

A special session will be held on the northeast during the India-ASEAN summit where participants will also dwell on strengthening cultural connectivity between the two sides. Formation of Buddhist circuits crisscrossing India, Myanmar, Thailand, Lao PDR, Vietnam and Cambodia will get due attention in the meet, but a considerable focus will be given to bring India and ASEAN countries’ shared cultural pasts in the school syllabus of the two sides.

“Now an assertive foreign policy is being pursued and against that background we are coming out with several proposals on our cultural connectivity programme,” says an official requesting anonymity.

Such exercises are aimed at bolstering India’s soft-power diplomacy, yet what pinches New Delhi the most is the burgeoning trade deficit with ASEAN.

Trade deficit which was $4.98 billion in 2010-11 ballooned to $9.56 billion in 2016-17. India signed a free trade agreement (FTA) with ASEAN for goods in 2009 and for services and investment in 2012. The FTA in goods was implemented in January 1, 2010. But instead of turning out to be a positive factor in trade and commerce between the two sides, the FTA with ASEAN has become a sea of woes for policymakers and perhaps this is why New Delhi is hesitant to go ahead with the regional comprehensive economic partnership (RCEP), a trade bloc in which China, Japan, South Korea, Australia and New Zealand are also participants.

Since May 2013, the RCEP working group has held 20 rounds of negotiations on trade in goods and services, in addition to nearly a half dozen commerce-minister level meetings. Yet no concrete picture has emerged out of those exercises.

Instead India, as per highly placed sources, is being pressurised by the partners of RCEP to remove tariffs on 90 percent of the goods and bringing it down to zero. “It would be a recipe for disaster if we bind ourselves to such a proposal. We are already facing huge deficit in trade with ASEAN after we signed FTA with it. Therefore, we will not do anything that will kill our farm productivity, dairy products and others,” a source said.

Interestingly, while ASEAN and its associates want India to remove tariff on trade in goods, New Delhi wants ASEAN and its associates to ratify trade in services so that the country’s IT professionals and other skilled persons work in those countries. The issue will be discussed during a three-day India-ASEAN business summit during January 22-24 in New Delhi.

Earlier New Delhi wanted to go with a three-tier tariff reduction plan on goods imported from ASEAN and its five associates. Now India is ready to go with a single-tariff plan under which it aims to reduce tariff on 65 percent of imported goods from RCEP countries while completely ruling out any move to reduce the tariff to zero percent. Besides, India has made it clear that it has no problem in terms of investment if it is made under the ‘Make in India’ initiative. India’s concern is that if it goes by the RCEP countries’ demand, Chinese goods will start getting dumped into Indian markets through ASEAN routes. All indications show that the working group’s negotiations on goods and services would continue and the matter is not going to be resolved soon.

In spite of such problems, the India-ASEAN summit is likely to be very important for New Delhi as it will take a call on increased people-to-people, cultural and academic connectivity between India and ASEAN to stymie China’s influence in the region. For the first time, more than two leaders will be chief guests on India’s Republic Day. India invited more than one leader as the chief guest during the Republic Day celebrations only thrice. UK chancellor of exchequer RA Butler and Japanese chief justice Kotaro Tanka were the chief guests on January 26 in 1956, while Soviet Union leader Alexei Kosygin and Yugoslav leader Marshal Josip Broz Tito were chief guests in 1968. Then in 1974, Tito once again was the chief guest along with Sri Lankan prime minister Sirimavo Bandaranaike. Hence, the presence of all ASEAN leaders as chief guests at the official Republic Day function will highlight the importance India attaches to the group under its ‘Act East’ policy.

(The article appears in the January 31, 2018 issue)

shankar@governancenow.com

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