India and different international Blocs

INDIA-ASEAN

India recently celebrated 25 years of partnership with ASEAN and has elevated its relationship to strategic level in the past 5 years. India’s relationship with ASEAN is pivotal to the success of the Act East Policy which seeks multi-dimensional cooperation with ASEAN countries. The India-ASEAN partnership is based on the pillar of 3Cs- Connectivity, Commerce and Culture.

Why ASEAN for INDIA?

Economic Cooperation: The service market of south-east Asian tiger economies and the trade in goods and services have been a characteristic feature of India’s Look East policy and aims to be strengthened through the Act East
Maritime Security: India and ASEAN desire to share cooperation to ensure a free and open Indo-Pacific conducive to economic engagements and secure from traditional and non-traditional threats. China’s extra-regional presence in the Indian ocean and the South China sea claim heighten the importance of maritime security
Cultural Cooperation: India and ASEAN have rich cultural links that are leveraged for intra-regional tourism and to enhance people to people connectivity.
Development of North-East: ASEAN remains a pivotal player in ensuring connectivity and development of north-eastern states. As the act east policy iterates, India looks east through north-east

Why India or ASEAN?

Maritime Security
Balancing China: ASEAN countries are heavily dependent on China in defence and infrastructural development. China’s peaceful rise and cheque book diplomacy have invoked a desire among ASEAN to seek a better balance of power in South Asia through increased strategic cooperation with India
The market for their goods: ASEAN benefits heavily from economic cooperation with India and has seen its trade surplus soar over the years.
Cheap Labour: India also provides cheap labour to South East Asia particularly in the skilled IT sector and service sector.

Economic Cooperation:

The ASEAN Economic Community (AEC) agreement has 4 basic pillars of engagement: competitive economic regions, equitable economic development, a single market and production base and integration with global economy

The RCEP agreement seeks to reduce tariff and non-tariff barriers between India and ASEAN nations with greater impetus to provide free trade between nations.

The ASEAN Framework Agreement on Services has the potential to enhance trade in services an area of key concern for India with its large quantum of skilled employees in the service sector.

Global Production Networks (GPN) aims to promote parts or component industries of India and ASEAN countries. This would help bridge technology requirements in electrical machinery, vehicles and professional and scientific equipment.

Connectivity Projects

Kaladan Multimodal Project: India-Myanmar connectivity project to enhance the connectivity of North-East regions through Myanmar.

India-Myanmar-Thailand Trilateral Highway

Defence Cooperation

Maritime Security: As per the Delhi Declaration, India and ASEAN countries has enhanced maritime cooperation and security in the Indo-Pacific to guard against traditional and non-traditional threats. All nations committed to freedom of navigation particularly in the context of extra-regional presence of China in the Indo-Pacific

Counter-Terrorism: The Delhi declaration between India and ASEAN states focuses on combating terrorism, disrupting terror networks, tracking cross border movement of terrorists and monitoring recruitment of terrorists through the internet

Cultural Cooperation

Buddhism: India’s rich Buddhist heritage is shared by the South-East Asian nations that has a large Buddhist population. The common cultural linkages can be leveraged to promote tourism and people-to-people exchange between countries.

Conclusion

India has always looked East to see the nurturing sunrise and the light of opportunities. The peace and stability of the Indo-Pacific is hence indispensable to India’s future.

RCEP

A mega free trade agreement between ASEAN countries and 6 regional countries including India, China, Australia, Japan, South Korea and New Zealand to liberalize investment, reduce tariff and non-tariff barriers to trade and remove service trade restrictions. Such a move is seen to induce positive competition among manufacturers and service providers with the consumer ultimately benefiting with a wider range of choices at affordable prices.

Concerns regarding RCEP

High Trade Deficit: A free trade agreement (FTA) would force India to reduce import tariffs thus bourgeoning its trade deficit with South-East Asian nations and particularly with China given the presence of cheap Chinese goods in Indian market
Competition from Domestic Industries: The RCEP would provide South East Asian nations and China with a concessional tariff rate market that might cause tough competition for India’s domestic industries in pharma, medical, textile and dairy sectors even in public procurement
E-commerce Issues: Asymmetrically disadvantageous to India as most data servers are located outside India who are able to process the information and acquire data intelligence that becomes a valuable economic resource.
IP Laws: Japan and South Korea are pushing for TRIPS plus which are stricter terms for IP as compared to current TRIPS regime followed by India in accordance with WTO. A stricter IP regime in the RCEP would be disadvantageous to India’s generic medicine industry.
Service Trade: India aspires to liberalize service market of RCEP bloc to leverage its demographic dividend. However, several of the countries including Australia have put restrictions on the immigration and temporary movement of service personnel into their country

Obstacles to Trade and Investment between India and ASEAN

Poor Physical Connectivity: Maritime and air routes to South East Asian nations are not robust enough to accommodate an increased flow goods or commodities from India to South East Asia
Lack of Competitiveness: The complex tax structure, poor technology and production methods have held back Indian manufactured goods from gaining access to South-East Asian nation markets
Differential Environment in South-East Asia: Multiple countries are at differing levels of socio-economic development which necessitates SMEs adopt a country-specific supply chain strategy
Lack of Research and Development: Low R&D means low innovation or diversified products while it also affects profitability and efficiency in production. This reduces market for Indian goods in ASEAN
Chinese Presence: China has outsourced a large quantum of its production to CLVT countries which has dented the prospects of Indian exporters
Political Issues like the South China Sea between ASEAN nations that hurt free navigation prospects

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Way Forward

‘Make in India’: SMEs need to be incentivized to produce more within India. The tax structure and compliance shall be eased to enhance their competitiveness in the global arena
FDI relaxation: Foreign direct investment can enable technology upgradation to enhance efficiency in the production of SMEs enabling increased profitability
- The recent relaxation in the SRBT sector is an opportunity for the same
Improving Connectivity: India can focus on existing road and rail connectivity projects and establish multi-nodal links with SEAN countries.
- Trilateral National Highway – India, Myanmar and Thailand: The Indian government plans to extend it to Laos and Vietnam under the Dawei project
- Kaladan multi-nodal project – Kolkata with Sittwe port for the movement of cargo through sea route extending to Laos, Cambodia and Vietnam
Line of Credit: India has proposed a line of credit of 1billion$ to promote physical and digital connectivity with ASEAN

United Nations

Introduction

As the principal multilateral organization of the world, the United Nations presents India with a global platform to cooperate, to raise issues, to participate democratically and to voice the concerns of the developing world. In the era of the Asian Century, India’s voice can only growth within the UN.

Conclusion

After 70 years of meaningful partnership, the growth of India’s democracy, economy and global reputation render democratization of the United Nations an inevitable scenario. India can no longer a mere representative of the third world but shall raise to a leadership position to solve issues of climate change, poverty, protectionism and terrorism that the world faces today.

SAARC

Ever since its inception, SAARC has failed to achieve its stated objectives of an integrated peaceful South Asia owing to problems of instability, terrorism, non-cooperation and difficult geography. An analysis on what ails the South Asian Organization is pertinent to revamp its functioning to achieve the slated goals

Issues

Pakistan as an irritant
Consensus-based organization finding it difficult to reach common ground
Issues of terrorism, insurgency and instability
The least integrated region in the world
No regular meeting due to political and controversial issues between nations that as per its rule book cannot be discussed
India’s predominance as a big brother alienates other member countries

Way Forward

Reform working of SAARC: SAARC’s procedure of working may be changed to eliminate avenues for unilateral scuttling of agendas. This can ramp up multi-lateral pressure on Pakistan

Conduct Regular meetings: SAARC must follow the example of ASEAN and conduct regular meetings to achieve political consensus on issues that plague South Asia and evolve cooperation on them

Cultural Diplomacy: SAARC countries must leverage their cultural similarities and draw inspiration from ancient civilizations of Islam, Buddhism and Hinduism that connect them emotionally.

Policy of Asymmetrical Engagement: India must not assert its supremacy over smaller countries in the neighbourhood. As elucidated in the Gujaral Doctrine, it must shed its big brother attitude and be accommodative of diverse and independent aspirations of sovereign units of South Asia

Conclusion

The working of SAARC needs to be reformed to ensure that plurilateral decisions can yield pressure on non-cooperating countries. A mix of pressure and incentives can help achieve the slated goals of politico-economic integration and a peaceful South Asia.

GS-2 Notes By UPSC Topper Ravisankar Sarma