India’s partnerships in the Indo-Pacific region
THE end of the Cold War brought about a paradigm shift in the economic and strategic policies of most countries in Asia. Several countries which had been constrained by the pressures of the Cold War for years started making appropriate policy changes to be in tune with the changing economic and security situation in the region. India, a leader of the nonaligned movement with close economic and security ties with the former Soviet Union, had to find new space for itself in the unfolding economic and strategic landscape of Asia.
India’s response to the end of the Cold War could be identified in three main areas: First, India’s adoption of economic reforms in 1991 marked a dramatic shift in its development strategy. The earlier emphasis on the role of the state as the driving force of economic growth was replaced by a new policy of encouraging the private sector. Foreign direct investment, discouraged earlier, became a catalyst for economic transformation.
Second, the end of the Cold War had freed India from its ideological constraints, enabling it to adopt a multi-dimensional foreign policy that encompassed the forging of a closer economic and strategic partnership with the United States. Their relations steadily warmed up and culminated in the signing of a historic civilian nuclear agreement in 2008. The growing Indo-US engagement, in turn, encouraged other countries like Japan, South Korea and the ASEAN to strengthen their ties with India.
Third, the launching of the Look East policy in the early 1990s was India’s response to the new challenges it faced in the region after the end of the bipolar system. India’s relations with Southeast Asia are centuries old, but this historical advantage was not fully factored into India’s policies towards the region soon after independence. It is true that in the initial years after freedom, Indian leaders had a vision of future cooperation with Southeast Asian countries and the convening of the Asian Relations Conference (1947) was clear evidence of that vision. India’s contribution to the decolonization process in Asia was acknowledged by the countries of the region. But after the Afro-Asian conference held in Bandung in 1955, the momentum in their interactions slowed down and what followed was a period of lull and stagnation. India’s firm commitment to nonalignment did not always favourably resonate with many Southeast Asian countries, as many US allies among them considered it as inimical to their interests.
In the post-Cold War period, there was a strong rationale for India to cultivate closer relations with the countries of the region for mutual benefit. The Gulf War of 1990-91, which severely hit the Indian economy and the fall of the Soviet Union on which the Indian economy depended so much, made India seek alternative regions with great potential. Unfortunately, its own immediate neighbourhood, South Asia did not offer much by way of trade or investment. Political conflicts, lack of trust and economic backwardness compelled India to look to Southeast and East Asia for new paths to traverse. By the nineties, China was already busy implementing its modernization programme. Japan as the second biggest economy of the world had forged strong trade, investment and other economic links with ASEAN countries. ASEAN having established itself as a political and economic bloc, had emerged as a manufacturing hub for Japan and other advanced countries. Realizing that ASEAN and East Asia offered great prospects for growth, India launched its Look East policy.
India has forged many useful and robust partnerships in the Indo-Pacific region ever since it started pursuing its Look East Policy in 1991. Today, India’s robust partnerships with the ASEAN, Japan, South Korea, and Australia testify to the success of its eastward drive.
When the Look East policy was adopted, the main driving motive was economic, but over the years it has tended to acquire significant strategic dimensions too. One can state that India’s partnerships with the countries of the region have rested on the following three major pillars: (a) elaborate institutional structures; (b) economic interests including connectivities and (c) strategic interests.
When we examine India’s partnership with various countries of the region like ASEAN, Japan, South Korea and Australia, one common feature that stands out is the evolution of a vast network of institutional mechanisms to support the expanding engagements. In the case of the ASEAN, India joined it in 1992 as a sectoral partner and went on to become a full-fledged partner in 1994. Today it is an active member of the ASEAN Regional Forum (ARF), the East Asian Summit (EAS) and the ASEAN Defence Ministers Meeting Plus. Presently, there are more than twenty five institutional forums in which India interacts with the ASEAN.
The same characteristic feature is seen in India’s relations with Japan and South Korea. In the case of Japan in particular, there is a vast network of institutional mechanisms that bind the two in such forums like annual summit, strategic dialogue, defence dialogue and numerous forums on counterterrorism, energy cooperation, UN reforms, and maritime security. Step by step, Indo-Japanese partnership has broadened its interests. In the initial years, it was narrowly focused only on economic matters like trade, investment and development assistance. But since the year 2000 when they launched the global partnership, it has significantly expanded to include a vast spectrum of interests such as counter terrorism, maritime security, energy cooperation, UN reforms, climate change and cyber and space security. In addition, India and Japan have institutionalized 2+2 meetings. There is also a Japan-India-US trilateral dialogue at the level of joint secretaries and is likely to be raised to ministerial level. It is difficult to cite any other bilateral partnership in Asia with such vast institutional mechanisms.
Similarly, both India and South Korea have forged several bilateral mechanisms to strengthen their partnership. A joint commission for bilateral cooperation at the level of foreign ministers has been actively meeting since 1996. So far eight meetings have been held to discuss both regional and bilateral issues. In addition, a Foreign Policy and Security Dialogue at secretary level is meeting regularly. Besides these forums, regular exchange of visits at the highest levels have taken place. The defence ministers and the national security advisers of both countries have been meeting to carry forward their strategic cooperation.
As noted earlier, the Look East policy was initially governed by economic considerations. There has been a steady growth in the economic presence of India in the Indo-Pacific region though its full potential is yet to be harnessed. Both India and ASEAN have promoted their bilateral trade which now accounts for $80 billion annually and is expected to reach $100 billion by 2015. They have set a target to reach $200 billion by 2020. In a bid to boost their trade, both India and ASEAN have signed two trade agreements in goods and services which have created one of the biggest free trade areas with a market of 1.8 billion people and a combined GDP of $2.8 trillion.
India’s economic engagements with Japan have systematically increased over the years. Both signed a comprehensive economic partnership agreement (CEPA) in 2011 and it is expected that the volume of their trade and investment will grow in the coming years. Currently, the volume of bilateral trade is only around $18.5 billion. Japanese private investment in India has been growing rather gradually, but many vigorous steps have been taken to attract Japanese investment. Japan’s cumulative FDI inflows during April 2000-February 2014 amounted to $15.97 billion and Japan occupied the position of fourth biggest investor in India accounting for 7.5%.
Japan’s official development assistance (ODA) continues to be the core component of bilateral cooperation. India was the first country to receive Japanese ODA as early as 1958 and since then Japanese assistance has flowed into several critical areas of the Indian economy including power, environment, urban transportation, urban water supply, and sanitation, rural drinking water supply, tourism irrigation, agriculture shipping, railways and renewable energy. India has been the biggest recipient of Japan’s ODA since 2005. It is worth noting that although Japan’s overall ODA volume has been decreasing during the last ten years, it has maintained a high level of assistance to India without any change.
Japan’s economic involvement in India has deepened with its participation in certain flagship projects like the Delhi-Mumbai freight corridor and the Delhi-Mumbai industrial corridor. These projects which span six major Indian states are likely to transform vast areas into flourishing investment and manufacturing bases. A similar industrial corridor between Chennai and Bengaluru in South India is also being planned to encourage the manufacturing and investment prospects of the region.
When Prime Minister Modi met his Japanese counterpart Shinzo Abe in September 2014 at their first summit, Japan agreed to extend $35 billion of public and private investment to India over a period of five years to finance projects including infrastructure, connectivity, transport, smart cities, clean energy and agriculture and rural development. Japan has evinced keen interest in the ‘make in India’ policy and will encourage its business houses to invest more in India. In recent years the number of Japanese companies operating in India has exceeded 1200 and is likely to grow further. The prime minister has assured Japanese investors that his government will remove all bureaucratic obstacles to Japanese investment by keeping a special Japan cell in his office for clearing investment proposals.
The Republic of Korea has not lagged behind in its economic partnership with India. A comprehensive economic partnership agreement between the two was put into effect in 2010 and it contributed to the expansion of bilateral trade. Trade between them rapidly increased to reach $ 20.5 billion in 2011, though it tended to decrease in the following years. But they have set a target of $40 billion by 2015. South Korea has maintained a high investment profile in India and South Korean brands in electronics and automobiles have become household names in India.
Connectivity is the buzzword in the region. Both China and Japan have recently announced ambitious plans to invest massively in the improvement of infrastructure facilities particularly in the Mekong region. ASEAN countries are quite happy that both China and Japan vie with each other in planning to provide such facilities. Though India has not made any such big announcements, it is very much involved in some important connectivity projects in the Mekong region. India considers Myanmar as the gateway to the ASEAN region and with the opening of that country, India sees bright prospects for enhanced trade and investment with the ASEAN countries. It rightly believes that India’s northeastern states will also find new opportunities for their economic development. India’s involvement in projects like the Kaladan Multimodal Transit Scheme and the Thailand-Myanmar-India Trilateral Highway could boost its trade and investment.
In addition, both India and Japan have shown interest in building maritime connectivity between Dawei Port in Southern Myanmar and the Chennai Port in South India. As a preliminary step, Japan is aiding India in modernizing and expanding the Chennai port and developing a new container port at Ennore close to Chennai. Chennai is a major hub of automotive and other industries and will be upgrading its infrastructure facilities in the coming years. It is expected that Chennai will become the gateway connecting ASEAN and India. ASEAN countries are appreciative of the establishment of India’s Inter-Ministerial Group on Connectivity and welcome exchanges between this forum and the ASEAN Connectivity Coordinating Committee to explore ways to support the master plan on ASEAN connectivity.
As mentioned earlier, though the Look East policy started with economic goals, it has over the years increasingly assumed strategic dimensions. Forging strategic partnerships with Japan, South Korea, Australia and most ASEAN countries, India is playing an important role in regional forums like the East Asian Summit, ARF and ASEM. It has articulated its views on issues such as safety of the sea lanes and freedom of nations to conduct commerce in the open seas without obstacles. India has also entered into long-term defence cooperation projects involving joint production and training. It is worth noting how India has deepened its cooperation, particularly with Japan, Vietnam and Singapore.
As noted earlier, for a long time the India-Japan partnership was narrowly focused on economic engagements, but in recent years both countries have increasingly stressed their strategic ties. In 2006 they turned their global one into a strategic and global partnership. In 2008, they followed it up with an agreement on security cooperation. Both countries are keen to coordinate efforts in addressing several regional and global issues like counterterrorism, safety of the sea lanes, cyber security, energy cooperation and so on. They conduct regular naval exercises and help other Asian navies in capacity building. More recently, both countries evinced a great deal of interest in defence production.
The removal of Japan’s self-imposed restriction on export of defence equipment has opened up new opportunities for India to diversify its arms purchases, including the possibilities of joint production of arms. India is now in the process of purchasing Japan’s indigenously produced US-2 amphibian aircraft and negotiations have been underway for some time in this regard. They are also working hard to hammer out an agreement on civil nuclear cooperation and should it materialize it will go a long way in deepening their strategic partnership.
Like Japan, South Korea is also interested in promoting its civil nuclear ties with India and it has already entered into an agreement. In December 2014, India’s External Affairs Minister Sushma Swaraj visited Seoul to participate in the bilateral Joint Commission to further expand the strategic and economic engagement between the two countries.
India’s increasing proximity to the US after 2000 and China’s assertive maritime postures brought about a major change in the attitudes of many Indo-Pacific countries towards India and would even welcome a larger strategic role for New Delhi in the region to provide some balance against China. In particular, the China factor was very salient in the newly emerging strategic calculations of Vietnam and Singapore.
India’s partnership with Vietnam has been very robust, cordial and historically rooted. Their interests converge on a range of bilateral and regional interests. As early as 2000, the two countries signed a protocol for defence cooperation that included India’s supply of defence equipment and training to Vietnamese personnel. In 2003, they signed a joint declaration on ‘the framework for comprehensive cooperation’. They followed it up by signing a joint declaration on strategic partnership in 2007 which emphasized the following three areas: (a) cooperation in defence supplies, joint projects, and intelligence exchanges; (b) cooperation in capacity building, technical assistance and information sharing for sea lane security; and (c) cooperation in combating terrorism.
This agreement soon started assuming greater importance as China’s increasing maritime activities in the South China Sea area clashed with Vietnamese interests. Around this time in 2011, Vietnam was keen to seek India’s cooperation in resource development in the South China Sea and signed an agreement with India’s Oil and Natural Gas Corporation. As China protested against the agreement, India withdrew from it, but after a year decided to continue the project. India clarified that it supported freedom of navigation in international waters including in the South China Sea and access to resources in accordance with accepted principles of international law.
In the last year since the new government was formed under Narendra Modi, both countries have taken several steps to strengthen their partnership. India’s External Affairs Minister Sushma Swaraj and President Pranab Mukherjee made official visits to Vietnam in August and September 2014 respectively. Vietnam’s Prime Minister Nguyen Tan Dung paid a visit to India in October. Both countries are keen to strengthen their partnership in the defence and economic spheres. India has already pledged to extend a credit of $100 million for cooperation in defence production. They also conduct regular naval exercises and believe in the freedom of navigation for unimpeded commerce. In the economic sphere, they are keen to increase the volume of annual trade to $15 billion by 2020.
Singapore and India have maintained strong cooperative relations in the defence field. They set up an annual defence dialogue between defence secretaries as early as 2003. The defence ties first started with cooperation between the two navies, but later expanded to include the air force and the army. Apart from regular naval, air force and army joint exercises, Singapore has frequently allowed India’s naval vessels to dock at the Changi Port. Both countries share mutual concerns on the need to keep the Indian Ocean area free from the dominance of any single country.
Australia is another country which shares many common strategic perspectives with India and yet the two countries had not fully tapped the potential for cooperation. The signing of a joint declaration for security cooperation in 2009 saw the commencement of their strategic partnership. Strangely no Indian prime minister had visited Australia for twenty eight years till this was broken by Narendra Modi in November 2014. He stated, ‘It has taken a prime minister of India 28 years to come to Australia. It should not have been so. And this will change. Australia will not be at the periphery of our vision, but at the centre of our thought.’
After a long delay both countries have entered into a civil nuclear agreement and will soon operationalize it. They have also announced a new bilateral strategic framework which envisages annual meetings between leaders, defence ministers, and regular exchanges between armed and non-defence forces to address piracy, counterterrorism and cyber security.
There are great opportunities for mutual cooperation especially in the maritime sphere. To be sure, in 2007, Australia took part in the multilateral naval exercise conducted in the Bay of Bengal. But since India stopped such multilateral exercises, Australia’s participation came to a stop. In 2013 it was announced that both countries would start their joint exercises in 2015. In addition, there are certain multilateral forums such as the Indian Ocean Rim Association and the Indian Ocean Naval Symposium where the potential for their cooperation looks strong.
Indo-Pacific countries appreciate the categorical position taken by India on maritime issues and would welcome a larger Indian naval presence in the Indian Ocean. India supports the unimpeded right to freedom of navigation in the open seas in tune with the UNCLOS. It is also strongly in favour of protecting the global commons and adopting a code of conduct in the South China Sea. This has resonated well on the Indo-Pacific countries. India’s initiatives such as the ‘Milan’ naval exercises since 1995 and the Indian Ocean Naval Symposium since 2008 have been welcomed by most countries of the region.
Finally, what is the position of the Look East policy regarding China? Sino-Indian relations have also benefited from New Delhi’s eastern drive and China is today India’s biggest trading partner. Both countries have also encouraged mutual exchanges of visits at the highest level. Nevertheless, it has to be admitted that the unresolved border issue continues to cast a shadow on bilateral relations.
One may recall how Chinese President Xi Jinping’s visit to India last year was vitiated by the sudden Chinese army’s intrusions in the eastern Ladakh area. But India has always believed in pursuing a policy of constructive engagement with China. It knows that in any scenario of future Asian security, China will figure prominently and therefore it is essential to encourage China to play its role as a responsible country in the region. India believes in constructing a transparent, inclusive and democratic regional order free from the hegemony of any single country. Keen to see that the new regional order in Asia is not China-centric, many Asian countries want India to play a more active role in the region by providing a degree of balance to the geostrategic situation in Asia.