Modi’s third term could be boon for India-Asean cooperation
India’s recent general elections were spread out over the course of six weeks but still managed to provide a thrill. The results suggest the Indian voter decided to humble the mighty and restore balance.
The victory for Prime Minister Narendra Modi, the Bharatiya Janata Party and its alliance partners has secured a mandate for political and economic reform, although they will have to engage in negotiations and are likely to face stronger opposition.
As Modi begins his third term, India’s “Act East” policy is poised for a recalibration. New Delhi’s economic and strategic engagement with Southeast Asia saw an upswing during his first two terms. Modi may now inject new vigour into this key foreign policy as India seeks a stronger Indo-Pacific presence.
On the economic front, trade and investment links with Southeast Asian nations have received a major boost, with annual bilateral trade surging from around US$80 billion in 2014 to more than US$110 billion by 2021-22. However, the existing trade accord with the Association of Southeast Asian Nations – the Asean-India Free Trade Area – is seen as heavily favouring the Asean side, frustrating India.
India’s exports to Southeast Asia saw a moderate increase in the 2023 financial year, rising to US$44 billion from US$42.3 billion the previous year. Meanwhile, imports from Asean nations rose at a sharper pace, from US$68 billion to US$87.6 billion.
The economic outreach to Asean nations under Modi’s government has been hampered by a reluctance to undertake market reforms and liberalise tariffs. This has led to frustration among several Southeast Asian states, leaving the economic dimension of Act East lagging behind the policy objectives.
On the strategic front, India’s efforts as part of the Act East policy have helped bring seven Asean members into the Indo-Pacific Economic Framework, an initiative aimed at strengthening economic cooperation across the two critical regions. India’s Indo-Pacific Oceans Initiative and Asean’s outlook on the Indo-Pacific present opportunities for maritime collaboration.
Modi’s re-election is likely to give the economic imperative greater importance as
India attempts to position itself as an attractive alternative to China for investment and manufacturing under the government’s production-linked incentive schemes.
Fresh momentum could also be injected into expanding economic cooperation agreements with Asean to include commitments by India to greater service-sector liberalisation.
The security dimension is also likely to be scaled up. Maritime engagement, joint operations such as naval exercises between India and Asean states, capacity building and exports to Asean navies are just some areas that could see increased collaboration.
At the same time, expect India to continue to develop its soft power across Southeast Asia, through expanded cultural exchanges, education links and development assistance programmes, to bolster its image as an attractive counterweight to China’s hard power.
For smaller Asean states walking a tightrope between the Indian and Chinese spheres of influence, Modi’s third term holds both opportunities and challenges. An economically integrated, strategically engaged India provides a counterweight to Chinese dominance. Productive engagement with India can help Asean states hedge against overreliance on Beijing while enhancing their leverage.
However, they will have to deftly manage potential flashpoints arising from New Delhi’s geopolitical rivalry with Beijing. And Asean centrality could face new strains if US-China tensions cast a larger shadow over the region.
Ultimately, a revamped Act East policy will aim to protect India’s core strategic and economic interests across Southeast Asia while promoting its vision of an open, inclusive and rules-based Indo-Pacific regional architecture.
As India tries to convert its heft into greater strategic alliances, Asean’s neutrality will come under pressure in the years ahead. For the time being, though, developments in India will continue to bolster ties with Asean, one of the most successful regional economic alliances.
Professor Syed Munir Khasru is chairman of the international think tank IPAG Asia-Pacific, Australia, with a presence also in Dhaka, Delhi, Vienna, Dubai and Mauritius