By Ong Tee Keat

KUALA LUMPUR, Malaysia: To begin with, may I congratulate the organiser on hosting such a forum event in the interest of enhancing the Track 2 diplomacy between India and Southeast Asia, including Malaysia.

In this occasion, I am tempted to unpack several dimensions of India’s engagement with ASEAN from the Southeast Asian perspective, rather than limiting my scope of discussion to Malaysia-India bilateral trade per se.

By and large, India's engagement with ASEAN has been progressing steadily since 1990's. In retrospect, it all began with a “Sectoral Dialogue Partnership” in 1992, which evolved into a full “Dialogue Partnership” in 1996 and a summit level Partnership in 2002. The relation was further elevated to Strategic Partnership in 2012, and Comprehensive Strategic Partnership in 2022.

In parallel to this, on the economic front, signing of the ASEAN-India Framework Agreement on Comprehensive Economic Cooperation laid the foundation for the establishment of an ASEAN-India Free Trade Area (FTA). The coming into fruition of the ASEAN-India Trade In Goods Agreement ( AITIGA) in 2009 witnessed the creation of one of the world’s largest free trade areas with more than 1.9 billion people and a combined GDP of US$ 5.36 trillion.

The subsequent entry into force of both the ASEAN-India Trade in Services Agreement and the ASEAN-India Investment Agreement in 2015 further brought the economic ties to a new level.

To-date, as Prime Minister Narendra Modi's “Act East” policy has come of age after a decade, ASEAN - which is profiled by Modi as the “central pillar of India’s Act East Policy” -- is now India's 4th largest trading partner, while India ranks 6th to the regional bloc.

Trade between the most populous nation and the Southeast Asian bloc has reached a new height of US$131 billion in 2023, a significant leap from USD 77.0 billion in 2019.

But beyond the galloping bilateral trade figures of USD 131 billion lies an alarming deficit of US$43 billion on the part of India. The asymmetry of ASEAN-India trade relations was attributed to the purportedly "ill-conceived" ASEAN-India Trade In Goods Agreement " which is said to be unfair to the Indian industries, under the lenses of New Delhi.

In contrast, from the Southeast Asian entrepreneurial perspective,  India's trade policy still appears relatively protectionist, thus restricting its market access to its trade partners. The 11th hour withdrawal from the Regional Comprehensive Economic Partnership (RCEP) further bolsters the perception that India prioritises its domestic economic interests more than enhancing collective aspirations through multilateral economic cooperation.

Through the prisms of business community across the region, arguably the ASEAN-India Trade In Goods Agreement (AITIGA) is seen as one with the lowest level of trade liberalisation and the most restrictive rules of origin requirements.

On top of that, it is perceived that India's low integration with the East Asia-centric global value chain (GVC), alongside its relatively under-developed manufacturing base, inhibit the most populous nation from becoming a preferred destination for the GVC diversification and an alternative manufacturing hub. This is particularly so when more industries were seeking to relocate their production bases out of China amid the escalating Sino-US tension.

In this context, certain ASEAN member states with manufacturing prowess may stand to rival against India as the choice of destination for GVC diversification. None-theless, as globalisation is becoming increasingly decentralised, coexistence and partnering of multiple destinations for GVC restructuring is no longer a myth. The entrenched China-ASEAN partnership in the East Asia-centric GVC shouldn't be the reason to alienate India from partnering with ASEAN in harnessing economic opportunities arising from the GVC shift.

This resonates with what the Indian External Affairs Minister S. Jaishankar reckoned, “ A better-connected India and ASEAN would be well-positioned to promote decentralised globalisation and resilient and reliable supply chains”.

Indeed, given the prevailing scenario of multi-polar order shift, deeper participation in the global value chain amid decentralised globalisation would only enhance India's real and perceived geopolitical and economic influence in the region. This is absolutely relevant and crucial to New Delhi in its relentless quest for global stature through championing the Global South's cause.

In reaching out to ASEAN, India should be well aware that it is the economic well being of the region that matters most to the bloc. Despite that the overlapping territorial claims between China and a few claimant states from among ASEAN member states over some parts of South China Sea remain real and inconclusive, ASEAN as an entity, perhaps with the only exception of the Philippines, generally rule out the possibility of courting external intervention from the major powers, notably the US-led West.

ASEAN, having pronounced its centrality in addressing its security concerns and development priorities, remains steadfast in observing its non-aligned commitment to the Sino-US geopolitical rivalry. This reminds the world of its consistency in endeavouring to make the region a zone of peace, freedom and neutrality (ZOPFAN) , as was underscored in the 1971 ZOPFAN Declaration in Kuala Lumpur. The Declaration publicly stated the bloc's collective intent to keep Southeast Asia "free from any form or manner of interference by outside powers" , alongside "broadening the areas of cooperation."

New Delhi might have placed ASEAN at the heart of its Indo-Pacific vision for regional security and growth as was  referenced in SAGAR – Security and Growth for All in the Region), but ASEAN's bet is visibly focused on economic growth in pursuit of common prosperity for the region.

Under the framework of ASEAN Outlook on the Indo-Pacific (AOIP) -- the bloc's initial strategic response to the US' Indo Pacific Strategy in 2019 -- the ASEAN Indo Pacific Forum's emphasis on economic cooperation and sustainability said it all. The Forum was made part of the ASEAN Business and Investment Summit, instead of addressing the controversial regional security concerns since its inaugural event in 2023.

At the same time, defense ties between India and ASEAN through joint military exercises such as the ASEAN-India Maritime Exercise and India's participation in the ASEAN Defense Ministers’ Meeting Plus (ADMM+) do not make India an ideal bet for the bloc to hedge against a rising China in the region as was trumpeted by some political pundits from the West. After all, ASEAN's collaborative outreach under the ASEAN-led mechanism has never been intended to target any third party.

As India is actively posturing itself as the voice of the Global South on the world stage, striking the delicate balance between the conflicting East and West, alongside bridging the North and South divides, the nation should be ready to focus more on the delivery of promised commitments in its capacity as a rising power from the Global South.

In this context, mammoth infrastructure projects in the pipeline like the India-Myanmar-Thailand (IMT) trilateral highway and the Kaladan Multimodal Transit Transport project are set to enhance logistical connectivity with ASEAN

In the same vein, the India-Middle East- Europe Economic Corridor (IMEC) -- a mega transnational rail and shipping route connectivity project --- spearheaded by India also promised the world with more ambitious economic integration through inter-modal connectivity between Asia, Arabian Gulf and Europe. This looks set to be a game changer that could ultimately reshape the global map of connectivity. It's a real test of India's potential as an emerging power. In return, the geopolitical dividend is equally rewarding as its delivery would certainly endear the biggest democracy to the entire humanity.

*Tan Sri Ong Tee Keat is President of the Belt and Road Initiative Caucus for Asia-Pacific (BRICAP), a former Malaysian Transport Minister and has actively promoted connectivity and people-to-people exchanges among countries along the "Belt and Road" region via chambers of commerce and think tanks.*

This speech was delivered at the India-Malaysia Trade KL Conference 2024 with the theme “Exploring India-Malaysia Relations: Expanding Cooperation in Trade, Security & Regional Development”