The first full moon after Diwali (Indian festival of lights) marks the
beginning of a seven day long festival of Bali Jatra (Journey to Bali) in
Cuttack (a city in Eastern state of Orissa). Small boats made of dried banana
tree stump are sailed into lakes and rivers to commemorate the annual sailing
season to Bali. Traders in ancient times would set sail to present day
Indonesia with retreating monsoon winds and come back with advancing monsoon. Items
like ivory, sandalwood, textile etc were exported and spices were imported. This
perhaps was the first engagement of India with what now has become ASEAN
(Association of South East Asian Nations, a trade bloc). The ships no longer
sail to Bali from there and business and cultural contacts were virtually lost
in post independence era. Things however have started to change since the last
decade.
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| Towards an integrated Asia |
India is now a summit level partner with ASEAN and has already signed a
free trade agreement (FTA) in goods. Bilateral trade has seen a sharp increase.
Provisional data posted by ministry of commerce shows the trade between ASEAN
and India at USD 79.2 billion (10% of total trade and an increase of 41% over
the last year). This figure is expected to reach USD 100 billion in the next
couple of years. On 20th and 21st December 2012 Delhi
will hold the India – ASEAN Commemorative summit to mark twenty years of
partnership. A FTA for services and investments is expected to be finalised
with ASEAN during this summit. The FTA once signed (formal adoption around
August 2013) will open up ASEAN for Indian companies to provide services in
sectors like finance, accounting, law, medicine, media and communication, business
process outsourcing, tourism etc. Inter regional investment will also get a
boost as a result of the FTA.
There is a lot of potential for trade between India and ASEAN, especially
due to a stable political environment and steady economic growth. These trade
and service pact however have to be supplemented by a strong infrastructure
network. Surface connectivity is absent between the two regions. With changes
in Myanmar politics Trans ASEAN surface connectivity seems more likely than
ever before. The intra ASEAN business and trade has made great progress in the
past decades but connectivity is still a big issue. Crossing borders on land is
a challenge and eats up a lot of time (not a good thing for people and goods
waiting to cross over). Compared to the ease of crossing land borders in Europe
ASEAN is still a long way to go. During his address, Prime Minister Singh spoke
about the urgency to build the India – Myanmar – Thailand trilateral highway
and further connect it to Cambodia and Vietnam in future. The urgency should
now flow from the dais to pouring asphalt.
Apart from the
business aspect of the summit there is a parallel strategic effort going on in
the region. India has dispatched a sail training ship, INS Sudarshini on a commemorative
expedition to the ASEAN countries. The ship is retracing the routes which the
ships from Cuttack might have taken, along the Monsoon route. At the time of writing
this blog the ship was anchored near Manila waiting for its next call at Da
Nang in Vietnam. The journey would take it across the fiercely disputed South
China Sea. Straits Times, a widely read newspaper in Singapore covered the
summit under a headline, “Amid China tensions, South-East Asia looks to India”.
This is in reference to the recent aggressive stance taken by China in the
South China Sea, where it virtually claims all of it as its sovereign
territory. India is obviously worried about the Chinese advances (an Indian
ship while in Vietnam territory was allegedly warned to retreat from Chinese
waters earlier this year). India has increased its military engagement with
ASEAN countries in the recent past. It has conducted joint naval exercise with
Singapore, Indonesia, Malaysia and The Philippines. India’s navy chief Admiral
D. K. Joshi’s comment on India’s preparedness to intervene in South China Sea
saw The Philippines welcome such a move. These steps might be seen as India’s willingness
to play a greater role in the region.
The South China
Sea is of strategic importance to not just China but to the larger Asia Pacific
region too. Its proximity to the Strait of Malacca is the primary reason of
concern in the immediate future. A quarter of world trade is carried out through
the straits which is a busy shipping lane connecting the Indian Ocean to the
Pacific. Chinese presences in the disputed waters will make it easy for it to
control the trade routes. India’s involvement is seen as a counter balance to
an aggressive China by the ASEAN and by US and Australia. The India – ASEAN summit
has definitely proved to be of economic importance. Its strategic importance is
yet to be seen.
