India-ASEAN relations and India’s exit from RCEP

Author : Prarthna Nanda

Year & Course : Ist Year & LLB

College : Faculty of Law, University of Delhi

Abstract

India has a rich history of cultural and religious ties with SEA and East Asian regions. Since the 6th century BC, Buddhism has flourished to India’s neighbours. Hindu religious beliefs were evidently popular in Indonesia and Cambodia. As heritage goes hand in hand, commercial and trade relations have also existed and continue to do so. This article analyses the India’s relations with southeast Asian nations over various socio-political periods with an emphasis to RCEP, why India opted out of it, whether India should review its decision and the way forward from here.

Keywords – India, Southeast Asia, ASEAN, RCEP, Trade

India’s Relation with South-East-Asia And The ASEAN.

The real genesis of ‘Look East’ policy started in these early years of independence. One of India’s first visionary strategic analysts, K.M. Panikkar recognised India’s requirement and the overall general importance of building relations with the Southeast Asia way back in the 1940s.

At the time of independence, India’s primary emphasis was decolonisation. Having experienced 200 years of oppression, racism and poverty, India’s view against colonisation were strict and firm. She believed the strategic autonomy in the functioning of the country could only be preserved if India dealt with other states which had recently been decolonised. India, at that time, being a strong advocate of decolonisation, helped Indonesia when the Dutch were trying to colonise it, by taking the issue to the United Nations.

In order to ensure a stable existence, Indonesia and Burma vehemently supported India’s Non-Alignment Policy. Decolonisation was also initiated for the states of Laos, Vietnam and Cambodia. As per the Geneva Accord, on Indo-China, three international commmissions, all chaired by India, were formed for these abovementioned states. From 23 March to 2 April, 1947, before its formal independence, India hosted the Asian Relations Conference at New Delhi which was attended by 25 Asian Nations. Despite the initial efforts of India to build relations with its Asian neighbours, not much progress was shown post-independence[i].

India’s defeat in the Indo-Sino War made the SEA States develop a perception that India might not be able to provide them military support when needed. The Indo-Pak wars followed, which formed the image an image of India as a State only concerned with wars. India’s criticism of USA in Vietnam War followed by India signing a treaty with USSR in 1971 during the leadership of Mrs. Indira Gandhi intensified the fears of SEA States even more with respect to India-US relationship. India was seen as an Anti-West nation. In 1967, when the ASEAN was created, it had a pro-west tilt to it. India was completely isolated at that time. Ross. H. Munro in his paper argues that India was the biggest loser by the end of Cold War as it had no useful friends.[ii] However, by the second half of 1990s, India emerged as a winner than as a loser.

Post-Cold War ‘Look East’ Policy

Political developments during late 90s affected nations all over the world. Clearly, India was a part of it too. It was only after the end of the Cold War and the collapse of USSR when India started building friendly relations with the USA. At that time, the country was going through a turbulent period of economic instability, terrorism, rampant poverty and political precariousness. Combined with the domestic issues were the issues of the neighbourhood, mainly Pakistan and China. Perceiving India as a potential regional barrier in terms of trade, ASEAN initiated a ‘Look West’ policy. India responded to it in friendly manner.

Launched in 1991 by the Narsimha Rao government was the ‘Look East’ Policy with the aim of fostering friendly relations, extending military and economic cooperation between India and the S.E.A States. Finally, in the tenure of former PM, Manmohan Singh, India signed a Free Trade Agreement with ASEAN[iii] for the trade of goods only.

A demand has been made to extend this F.T.A for service sector as well. India enjoys a better position in supply for services, such a negotiation would boost India’s economic presence in SEA regions.

Over the decades, India’s trade with the SEA States has risen from US $2.4B in 1990 to US $23B in 2005 (ASEAN) to US $80B in 2020[iv]. This region alone accounts for 30% of India’s trade. Although these efforts have been met with considerable success, India still lags behind (the target trade value is US $200B) China in the volume of trade being conducted with these regions.

Act East Policy

In order to overcome the lacunae of Look East Policy, the central government in 2014, launched an “Act East Policy” at Myanmar in November 2014.

This policy focuses on India’s extended neighborhood in the Asia-Pacific region. What was once conceived as only an economic policy has now transformed into a political, cultural and strategic policy. India, through this policy has upgraded its relationship ASEAN, ROK, Japan etc. India has also actively engaged itself in BIMSTEC, Asia Cooperation Dialogue (ACD), Mekong-Ganga Cooperation and Indian Ocean Rim Association (IORA). The Act East Policy placed Indo-ASEAN relationship as a domestic agenda. Along with connectivity projects, smart cities, infrastructure and manufacturing, people-to-people exchange has also been prioritized. The objectives of ACT EAST Policy are promotion of economic cooperation, building cultural ties and developing a strategic relationship with countries of the Asia- Pacific through bilateral arrangements. The North-Eastern states of India have been prioritised in the Act East Policy. This policy will cover matters of trade, commerce and cultural exchanges between North East India and the Asia Pacific regions. Major projects which have been taken up under the Act East Policy are the Kaladan Multi-modal Transit, Transport project, The India-Myanmar-Thailand Trilateral Project, Rhi-Tiddim Road Project etc.

RCEP

The Regional Comprehensive Economic Partnership is made up of 10 S.E.A Nations + 5 others namely, South Korea, Japan, China, Australia and New Zealand. It makes up one of the world’s largest trading blocs across the world. Introduced in 2011 during the 19th ASEAN Meet at Bali, Indonesia and beginning its negotiations during the 21st ASEAN Summit in Cambodia in 2012, RCEP started out with the goal of reaching a third of the world’s GDP with contribution of almost half of the world’s population. It is also expected to add $209B to the world income and by 2030, it aims at adding $500B to the world trade. RCEP includes a mixture of countries with high, low and medium incomes and expects to cut off almost ninety percent of the import tariffs among the signatories, framing common rules for trade, commerce and Intellectual property.[v] India has been a part of RCEP negotiations ever since RCEP came into existence until it opted out of the agreement in November 2019. With this, India blocked itself from being a part of one of world’s largest trade blocs. Without India, the population cover of RCEP falls from half of the world to 30% of the world.[vi] However, the event was not of any surprise as India has been raising its objections to RCEP for quite some time now.

India’s Withdrawal

The trade and agriculture sectors of India expressed their contentions before signing of the deal stating that if signed, it would mean an inflow of Chinese goods in the Indian markets[vii] thereby affecting local businesses across the country.[viii]As mentioned earlier, India has a trade deficit with most member nations of the RCEP and the elimination of tariffs under this agreement would have enhanced it further. The government had called for a mutually beneficial RCEP Agreement but the current position of RCEP might have a negative impact on India’s strategic interests in the SEA regions owing to the economic imbalance in trade between India and the regions. Data suggests that members of the RCEP are at present responsible for 70% of India’s trade deficit.[ix]Apart from this, India has already signed FTAs with all other states involved apart from China. Allowing this trade would justify the fears of local traders and industrialists. The dairy industry in particular would face stiff competition if elimination on Tariffs happens via RCEP, mainly from Australia and New Zealand. Another reason would be the non-acceptance of Auto Trigger Mechanism by RCEP members. To deal with the rise in imports, India had been seeking an auto-trigger mechanism which would have allowed India to raise tariffs on imports when quantities of imports exceed a certain threshold. India’s decision to withdraw from RCEP disappointed the SEA States. Despite rounds of negotiations, the two were unable to reach a common consensus where bilateral interests could be prioritized. This has diminished the possibility of India being the centre in the sphere of ASEAN and SEA region in general.

Review on policy

Opting out of RCEP is a step back at India’s Act East Policy, wherein India had promised to support and promote the interests of smaller states along with its own. India needs to acknowledge that RCEP is not just a China centric deal, rather it is a deal of all states of strategic importance in the SEA region. An inspiration can be taken from Japan and Australia who put their geopolitical differences with China aside to be a part in this deal. India’s decision of opting out of RCEP might impact its ties with other member nations, thereby giving China an edge over itself. There are worries that India’s decision might impact the Indo-Japanese-Australian network in the Indo-Pacific region. Lastly with global supply chain and economies getting severely hit by the Covid-19 pandemic[x], RCEP can act as a fallback for re-stabilisation of economy providing a unique opportunity to India in terms of job creation and supply chains.

Way Forward

Departure from RCEP does not necessarily mean a departure from Act East Policy in general. Alternatively, India can now focus more on what is popularly known as the SAARC of India- BIMSTEC and Mekong Ganga initiative. The Security and Growth for All in the Region (SAGAR), which focusses on port-led development is another such example of India developing its relations with the SEA states. India has also collaborated with Singapore and Thailand to conduct their first naval exercise, SITMEX which highlights on Andaman Sea as a geostrategic point. As an original negotiating partner, India still has the option for joining RCEP. However, it is possible that India may be exploring its reviews of bilateral agreements[xi] which were pre-existing. There are 20 such agreements under negotiations. India has individual agreements with South Korea, ASEAN bloc, CEPA agreement of India and Singapore, several rounds of negotiations have been undertaken for the review of Indo-Korean CEPA in 2016. The same is now being done with Japan. Acknowledging India’s economic concerns and trade deficit questions, the RCEP too has left the door open for India and has waived an eighteen-month cooling period for new applicants. Given the present India, the author believes that India should take a certain amount of time to fix its domestic needs first and then review its decision, it must bring in the required reforms to accommodate changes, must protect and preserve its personal interests while also preserving the interests of member nations, must hold diplomatic talks and negotiations for agreements which side at India’s favour. 


[i]   Haokip, Thongkholal. “India’s Look East Policy: Its Evolution and Approach.” South Asian Survey, vol. 18, no. 2, Sept. 2011, pp. 239–257. doi:10.1177/0971523113513368

[ii] Munro, Ross H. “The Loser: India in the Nineties.” The National Interest, no. 32, 1993, pp. 62–69. JSTOR http://www.jstor.org/stable/42896847.

[iii] https://asean.org/asean/asean-member-states/

[iv] https://www.orfonline.org/expert-speak/indias-act-east-policy-and-regional-cooperation-61375/#_ednref7

[v] What is RCEP and what does an Indo-Pacific free-trade deal …

[vi] India stays away from RCEP talks in Bali – Nikkei Asia

[vii] RCEP and India – The Statesman

[viii] RCEP: Why did India opt out of RCEP, one of the world’s …

[ix] Why India is wise not to join RCEP – RaboResearch

[x] India not ready for RCEP | East Asia Forum

[xi] India: Short-term focus on bilateral trade instead of RCEP

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this:
search previous next tag category expand menu location phone mail time cart zoom edit close