The ‘Act East’ policy has not brought the expected gains for India

The ‘Act East’ policy has not brought the expected gains for India

From the day PM Narendra Modi unveiled his government’s policy to ‘Act East’, India’s ties with its eastern neighbors have gained a lot of traction. The policy aims at enhancing India’s economic engagement with Southeast Asia and greater infrastructural connectivity between India and the ASEAN nations. India’s focus under Act East remains on enhancing economic relations with ASEAN and greater infrastructural connectivity, regional development in the region through increased co-operation in energy, trade, investment, and people-to-people and cultural exchanges. The larger purpose of this new policy is to counter China’s growing influence in the region.

Progress made under Act East Policy:

Engagement with ASEAN: ASEAN is one of the most important international bodies for India. It is a rapidly growing region with huge economic potential and ASEAN India relation being the cornerstone to ensure peace and stability in this region. After completing four years of Act East policy, it is time to assess whether India succeeded in increasing its engagement with the ASEAN member States.

Strong relations with neighbours: India’s Act East Policy has been an inclusive policy from the very beginning, setting a priority on strengthening relations with all our neighbors. This strategy does not detract from our time-tested bilateral relations that are a source of strength to India. Our Act East Policy is about ensuring that our relationships with neighbors such as China and others do not cause any concerns to these central partnerships.

North-East investment: In spite of creating a separate ministry to deal with the region, the Act East Policy announced by PM Modi has not had much success. The North-East states have been ignored for a long time and many promises made by the Government regarding infrastructure development in the region have not materialized.

Security Engagement: In India, the Act East policy is also known as ‘Look East’ in which India is pursuing an “open and outward-looking engagement with our Eastern partners and neighbors through a series of regional groupings”. It aims to develop partnerships among Southeast Asian nations to ensure the security and development of the region.

Far East involvement: India has also opened its embassy in North Korea. As a result of this, two strategic projects have been initiated to open the Far East and Eurasia economic corridor. This is being done to ensure more trade between China/Russia as well as other Far East nations. It is also being done to boost India’s own economy as its involvement in the region will help it to grow in economic strength.

Various concerns:

China’s influence: South Asia, the sea lanes of communication (SLOCs), and the Indian Ocean are vital for India’s national security. Waterways are matrices that not only carry trade and energy, but also deliver vital goods to India, sustain its power projection capabilities, and connect it with its regional partners. The rising influence of China in Southeast Asia and the Indian Ocean Region poses a direct geopolitical challenge to India. The Act East Policy has been less effective in tackling China’s influence in the region.

Trade deficit with ASEAN: India's trade deficit with ASEAN countries is currently around US$24 billion and is why New Delhi remains keen to renegotiate the terms of the ASEAN-India FTA to ensure a more level playing field for Indian exports to ASEAN. The share of ASEAN in India’s total trade deficit increased from about 7% to 12% during the last Among the 15 RCEP countries, India faces trade deficits with all except Laos, Cambodia, Myanmar and the Philippines. China, accounts for 60% of the total deficit.

RCEP failure: RCEP deal has been short of India’s exception which has become a failure to complete this important agenda for all parties. India has been demanding the remaining countries be more open in terms of the services sector. However, there is no conclusion regarding these demands in the RCEP framework.

Limited economic engagement: For a long time, analysts and experts regarded the lack of economic engagement as a reason for India's growing relations with East Asia lagging behind the high level of defense and security cooperation. In recent years, Japan has taken active steps to expand its strategic space in Asia through promoting the creation of a Northeast Asian economic community comprising the countries on both sides of the Pacific Ocean.