India’s Act East Policy : Issues and Challenges – Explained Pointwise

The Indian Railways has recently commissioned the new 51km track to Sairang, which is present close to the Mizoram’s capital Aizwal. It raises hopes for India’s ambitious Act East Policy which envisages rail & road links with South-East Asia.

After the end of the Cold War, the majority of countries made changes to their economic and strategic policies. It was to align themselves to the changing geopolitical realities. India also realized the importance of Southeast Asia in 1992, so it launched a ‘Look East Policy’. The policy aimed at better integration with the region and other US allies after the end of the Cold War era. This policy was upgraded to ‘Act East Policy’ in 2014 for cultivating extensive economic and strategic relations with the nations of Southeast Asia.

The policy has helped in encouraging cooperation on various projects like Kaladan Multi-Modal Project, Trilateral Highway, etc. However, there are many factors that are acting as hurdles in smooth cooperation.

About India’s Act East Policy:

• It was launched at the 12th ASEAN-India Summit in 2014 held in Myanmar. The policy is based on 4 C’s – Culture, Commerce, Connectivity, and Capacity Building. 
• It is an effort of India to cultivate extensive economic and strategic relations with the nations of Southeast Asia and further strengthen its relationship with Indo-Pacific.
• India’s focus under Act East remains on:
  • Enhancing economic relations with ASEAN.
  • Ensuring greater infrastructural connectivity & foreign direct investment.
  • Augmenting regional development in North-East India.
• Act East Policy envisages rail & road connectivity to improve trade with ASEAN & other East Asian countries like Japan & South Korea, deepen diplomatic engagement s, and build stronger security cooperation.
• It is the successor & more ambitious version of 1992 Look East Policy – which was initiated in 1991. 

Comparing Look East with Act East:

Progress made under the Act East Policy:

1. Engagement with ASEAN: ASEAN-India engagement has become deeper and has scaled new heights. India is now the 4th largest trading partner of ASEAN. Southeast Asian countries favor India’s increased involvement to counter China’s expansionist policies in the region. India has allocated $1 billion for promoting connectivity at the India-ASEAN Summit.
2. Cooperation on Regional Initiatives: India is steering a number of sub-regional programmes and projects such as the BBIN corridor, Myanmar-Thailand Trilateral Highway, Kaladan multimodal project etc.
3. North-East development: One of the key objectives of the Act East Policy is the transformation of the Northeast region – which is seen as India’s gateway to the ASEAN bloc. Various initiatives under AEP have been undertaken for the development of North East such as:
   • Centre has increased its budgetary allocations for the region by 300% in the period from 2014-15 to 2024-25.
   • More than  10,000km of highways & 800km of railway tracks were built, 8 new airports have been established in the region.
   • The Government of Japan has decided to invest around Rs 13,000 Crore in several ongoing, as well as new projects in different states of India’s North-Eastern region. India-Japan Act East Forum was established in 2017. It focuses on specific projects for economic modernization of India’s North-East region.
   • The recently inaugurated Sairang railhead in Mizoram is strategic vis-a-vis the Act East Policy. It is expected to be vital for transhipment of goods from India-funded Sitwe Port in Myanmar. 
4. Security Engagement: Defence cooperation has increased with East Asian countries. In 2014, India and Vietnam signed a Memorandum of Understanding (MoU) that opened up a line of credit for Vietnam to purchase defense equipment from India. Since 2015, India has carried out joint maritime-law enforcement patrols and military exercises with ASEAN countries. 
5. Far East involvement: India has also reached out to Far East economies especially Russia. India has announced to extend a $1 billion line of credit towards the development of the Russian Far East. This is important as it is an energy-rich region and would help India’s economic growth.

Factors inhibiting the success of Act East Policy:

1. China Factor: There has been a growth in China’s influence combined with ongoing India-China tensions. Both China’s direct influence and that of ethnic Chinese in the region are on the rise.  
2. There is disappointment in the region with India’s economic policies. Important economic agreements signed between India and East Asian countries are rather scarce. So far, India has only signed a memorandum of cooperation on oceans and fisheries with South Korea. Further India was the only country to withdraw from the recent Regional Comprehensive Economic Partnership (RCEP) deal.
3. Myanmar Crisis: The ongoing political turmoil and civil strife in Myanmar pose a significant hurdle. Myanmar is a crucial land bridge for India’s connectivity projects (like the India-Myanmar-Thailand Trilateral Highway and the Kaladan Multi-Modal Transit Transport Project). Instability delays these projects, raises security concerns, and disrupts cross-border trade and movement.
4. Slow Progress of Key Projects: Major connectivity projects like the India-Myanmar-Thailand Trilateral Highway and the Kaladan Multi-Modal Transit Transport Project have faced significant delays due to various reasons, including security concerns, legal and logistical issues, and land acquisition challenges.
5. Inadequate Infrastructure in Northeast India: The success of the Act East Policy heavily relies on robust infrastructure in India’s Northeastern states, which serve as the gateway to Southeast Asia. However, this region still grapples with inadequate road, rail, and air linkages, hindering seamless connectivity.
6. Ethnic Conflicts: The ongoing ethnic conflict in Manipur, for instance, poses a direct threat to the policy’s objectives. Instability in the Northeast impedes infrastructure projects, deters investment, and raises concerns about cross-border insurgent movements and arms smuggling.
7. There is rising concern in the region with India’s approach towards its minorities, especially Muslims and Christians.
   • Growing concern about Hindu majoritarianism in India has impacted civil society attitudes in countries like Indonesia, Malaysia, Thailand and Singapore. 
   • India deployed the soft power of “Buddhist diplomacy” but that too has not gained much traction as inter-religious tensions in the region grow. 

Way forward to overcome the challenges of Act East Policy:

1. Expedite Flagship Projects: The government should complete the tasks promised in the Delhi Declaration 2018. This includes:
   • the digital connectivity projects in Cambodia, Lao PDR, Myanmar and Vietnam 
   • the Trilateral Highway (TH) and 
   • the Trilateral Motor Vehicle Agreement (MVA)
2. Role of States: There must be empowering of States by the government to play a better role under the Act East Policy. For instance, a Northeast branch of NITI Aayog can be set up to bridge the gaps between the Centre and States while implementing the Act East.
3. Regional Groupings: The government should also focus on regional groupings like BIMSTEC which is a natural connector of South and Southeast Asia. Countries must enhance the negotiation process to conclude BIMSTEC MVA, BIMSTEC coastal shipping agreement, and BIMSTEC TFA (Trade Facilitation Agreement).
4. The development cooperation projects for the Act East should be put in fast-track by avoiding cumbersome documentation and bureaucratic procedures. For this, EXIM Bank of India should open its branches in all South, Southeast and East Asian countries. Further, coordination between Prime Minister’s Office, Ministry of Finance, and Ministry of External Affairs needs to be enhanced for timely implementation.
5. The government should reap the low-hanging fruits in India- Southeast Asia countries. For instance, international flights can be started from Imphal to other countries for boosting medical tourism. Imphal’s Shija Hospital has already become a favourite destination of Myanmar people for health check-ups.
6. The country should expand the outreach of Act East policy by adding neighbouring countries like Bangladesh and Sri Lanka. This would enable better development of India’s Eastern and Northeastern states.
7. Countering Chinese Influence: While engaging with China, India needs to proactively offer viable alternatives and strengthen its own partnerships to balance growing Chinese influence in the region, particularly in critical infrastructure and strategic sectors.
8. Prioritize Peace and Stability: Ensure peace and stability in India’s Northeastern states by addressing ethnic conflicts, insurgency, and cross-border issues. A stable Northeast is fundamental to the success of the AEP.

Conclusion:

India needs to further revamp the Act East Policy in such a way that its soft power enhances in the Southeast Asian region. This would produce multiplier effects in achieving the intended objectives of Act East policy.