While India has stepped up its engagements with ASEAN in the past few years, there remains a clear disparity between its links with different countries. It could address this by boosting its ties with Cambodia, Laos, Myanmar and Vietnam.
Since 2014, India’s Act East Policy has helped it better engage with Southeast Asian and East Asian countries in economic and strategic areas. The policy has been partially successful. While India’s overall economic ties with ASEAN have grown, there remains a significant disparity in its engagements with individual countries.
In particular, India’s economic ties with the CLMV (Cambodia, Laos, Myanmar and Vietnam) countries remain weak. The CLMV sub-region within ASEAN has significant economic potential as one of the fastest-growing sub-regions in ASEAN. Both foreign direct investments and trade are on the rise—or they were before the coronavirus pandemic.
To promote investments in the CLMV countries, the Indian government created a Project Development Fund in 2017 to help Indian companies set up manufacturing bases in the region. Indian companies have started operating in the CLMV countries. Examples include VTSIX Group, a pharmaceutical company, investing in Cambodia; Grasim Industries, a textile company, operating from Laos; GAIL India and Essar Oil from Myanmar; and ONGC Videsh Limited, Tata Group and Adani Group operating from Vietnam.
Despite India’s focus on the CLMV countries, there are gaps in India’s engagements within ASEAN. By bridging these gaps, India could enhance its presence in Southeast Asia. Moving closer to these countries could then allow India to compete with China, offering ASEAN nations another viable alternative when it comes to investment and trade.
Where does India stand with the ASEAN bloc as a whole?
Within ASEAN, India’s strongest relationships are with Indonesia, Malaysia, Singapore, Thailand and Vietnam while it has weaker links with Brunei, Cambodia, Laos, Myanmar and the Philippines. Why the disparity? India had no coherent ASEAN-facing policy until it launched its Look East Policy in 1992. The absence of a formalized strategy led to it engaging primarily with the most-developed ASEAN countries at the time.
Trade is one of the most important parameters for engagement, and the disparity in India’s relations with different ASEAN countries is clear. Notably, Vietnam is the only CLMV country in the top five, and there is a large margin between the top five and bottom five countries.
This is a gap India must close if it wants to compete with China in the region. India defines its Indo-Pacific policy as ASEAN-centric, but these figures do not reflect that. Equal—or less disparate—engagement with all countries would give India a better outreach in the region.
Geographical proximity and long-standing cultural ties with the CLMV sub-region make a stronger case for India to focus on these countries. The construction of the India-Myanmar-Thailand trilateral highway should boost connectivity within the region.
Furthermore, India has proposed extending this highway to Cambodia, Laos and Vietnam. Although India and the CLMV countries share common Hindu and Buddhist culture, India is yet to take full advantage of this soft power connection with the region.
Should India include Brunei and the Philippines in its CLMV policy?
At the same time, India should also take steps to include Brunei and the Philippines in this list since India has minimal links with these two countries. India’s connection with Southeast Asia is often viewed through the prism of shared culture, a factor that is absent in case of Brunei and the Philippines, hence the limited relations.
However, the success of India’s Act East Policy demands its equal presence across the region. Just as its Look East Policy was reframed as the Act East Policy, India could formulate a CLMV+2 policy to accommodate Brunei and the Philippines.
A shift in India’s policy towards China could impact the former’s policy towards ASEAN countries in future. While speaking at the Shangri-La Dialogue in 2018 India’s Prime Minister Narendra Modi emphasized avoiding targeting one particular country, implying China, while protecting individual interests.
However, as tensions between India and China have risen in recent months, India’s stance against China has hardened. From the conflict in Galwan to restricting China’s investments in India (FDI, FPI and Pension Funds) to tacitly favoring the formation of the Quad, India’s policy towards China is changing.
India’s policy towards ASEAN has thus far emphasized collaboration with extra-regional powers such as fellow Quad grouping members Australia, Japan and the US. But India must focus equally on building cooperation within ASEAN, especially the CLMV countries.
Engagement with ASEAN through the Quad alone will not automatically build strong relations with Southeast Asian nations. Therefore, India needs to urgently revisit its Act East Policy to bridge the gap in its engagements with ASEAN countries. It is essential for two reasons: to strengthen links within the region and to strike a necessary counterbalance to China’s growing presence on India’s doorstep, especially in Pakistan and Nepal.