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

Introduction

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.

The fragile nature of the relationship was recently highlighted by an unpleasant tweet by the Delhi CM over the threat of a new Covid-19 variant from Singapore. The tweet received criticism from both the Singapore Government and the Civil Society. The situation now presents an opportunity for India to introspect on the concerning factors that act against the success of Act East policy and take some remedial steps.         

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 and foreign direct investment  
  • Augmenting regional development in northeastern India 
• It is the successor of 1992 Look East Policy.

Comparing Look East with Act East

• First, the scope of Act East policy is wider. It focuses on boosting economic co-operation, building infrastructure for greater connectivity, improving strategic & security ties.
  • On the other hand, Look East mainly focused on boosting economic cooperation.
• Second, the Act East policy was launched to tackle the changing Geo-political scenario. The aim was curtailing Chinese dominance in the South China Sea and its rising influence over the Indian Ocean Region.
  • However, Look East mainly aimed to boost trade and investment relations with Southeast Asian countries. The fall of the USSR has induced India to look for alternate options for sustaining its economic growth.
• Third, heavy focus is being given to the development of the North East region under Act East policy. This factor was neglected in India’s plans of forging deeper ties with East Asia under the Look East policy.
• Fourth, Act East Policy focuses more on historical, cultural, linguistic, and religious ties through more people-to-people exchanges. This factor was also absent under the Look East policy.

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: The Act East Policy focuses mainly on the Northeast 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 will identify specific projects for economic modernization of India’s North-East region 
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. 
   • Similarly, the first summit of QUAD grouping took place in 2021.
5. Far East involvement: Recently, India has 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. First, there has been a growth in China’s influence combined with growing China-India tensions. Both China’s direct influence and that of ethnic Chinese in the region are on the rise. Further the civil society is impressed with the way China has handled the pandemic and provided aid to the region.
   • On the other hand, Sino-India relations are undergoing severe stress as seen in the 2020 Galwan valley clash.   
2. Second, 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. Third, 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. 

Suggestions to improve the relations

1. 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. 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. 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.

Conclusion

India must take a fresh look at its Act East policy and the impacts of unsatisfactory economic performance and sectarian politics at home. The country must revamp its 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.