India has stepped up its already vigorous effort to improve connectivity with Asean by road, rail, air and sea in order not to miss trade opportunities not only with the 10 Southeast Asian countries, but also with China, say experts.
The easiest way to link India and Asean is by land through the northeastern states that share borders with Myanmar and China, said participants at the Delhi Dialogue VI, held earlier this month in the Indian capital.
However, work needs to be done on many different fronts in order to fully connect India with Asean, said politicians, technical experts, diplomats, academics and businesspeople who took part in the sixth annual event dedicated to India-Asean relation.
Some of the biggest drawbacks, they said, involved domestic connectivity within India itself, as well as weak air links; Asean-India open-skies talks have made little headway in the decade since the idea was first proposed.
Connectivity is one of the big jigsaw puzzles India needs to complete in order to fully realise the Look East policy that it first articulated in 1992, said Anil Wadhwa, secretary (East) of the Ministry of External Affairs. India’s northeastern states remain crucial to this process because of their geographic proximity to Asean. On the Asean side, Myanmar is the landbridge for transport links.
India started construction last year on the India-Thailand-Myanmar Trilateral Highway. The four-lane, 3,200-kilometre road starts from Moreh in Manipur and will run via Myanmar to Mae Sot in Tak province in Thailand. India has given a US$500-million loan to Myanmar, part of which will be used to fund the highway project scheduled to be completed in 2016.
In addition to road connectivity, India needs to have more air and maritime links. Trade between India and Asean in 2012-13 fiscal year (ended March 31, 2013) was valued at $76 billion. India aims to increase the number to $100 billion by 2015 and $200 billion by 2020, and better transport connections will be a key element to help accomplish the goal, added Mr Wadhwa.
Geethanjali Nataraj, a senior fellow with the Observer Research Foundation, a multidisciplinary public policy think-tank, said that one of India’s major trade partners in the past was the United States, but now China had become the country’s largest trade partner. Asean, in terms of trade activity, is also playing a bigger role. Consequently, India wants to strengthen its partnerships with these two big economies.
Currently, there are two major regional trade pacts involving Asean: the Regional Comprehensive Economic Partnership (RCEP) and the Trans-Pacific Partnership (TPP). For India, the focus is only on the RCEP, which comprises the 10 Asean countries plus China, India, Japan, South Korea, Australia and New Zealand.
The TPP is a much broader pact initiated by the United States in an effort to shore up its influence in Asia. Among the Asean states, only Singapore, Vietnam, Malaysia and Brunei are taking part in the TPP negotiations. The others involved are Australia, Chile, Canada, Japan, Mexico, New Zealand, Peru and the United States.
“The TPP is huge in terms of global trade, but India is not a participant. This is our concern. So, we have to try to create more connectivity with Asean countries,” said Ms Nataraj.
Dr Hidetoshi Nishimura, executive director of the Economic Research Institute for Asean and East Asia (ERIA), said the Mekong-India economic corridor and the Trilateral Highway project were the most important links for the two sides. These routes will link India not only to Thailand but also to Ho Chi Minh City in Vietnam and Yunnan in China. However, there is one missing link.
“Domestic connectivity is equally important,” he said. “India also has to invest in creating transport links within its country; otherwise, it will not truly benefit from the connectivity with Asean as goods cannot be delivered smoothly and logistics costs will be expensive.”
He raised the example of China, which has invested billions of dollars in domestic transport networks as a core element of its economic development over the past three decades. As a result, shipments of imported goods from Asean countries can be made smoothly and on time. As a result, the GDP of the country and of many of its key cities has doubled.
MP Bezbaruah, a member of the North Eastern Council for Meghalaya state, said the Northeast of India was a very important part of the connectivity plan; however, the region has had little direct involvement in policy-making. “So, they don’t know what is going to happen,” he said.
Mr Bezbaruah recommended the Indian government set up an institute in the Northeast with people in charge of the region’s development and links with Myanmar and Thailand.
More local involvement is important since the area has potential to be an economic zone. Having manufacturing close to the market — Asean countries and their 600 million people in this case — will be advantageous to India.
“We (India) have to be competitive. The government should provide (investment) incentives to the industries,” he added.
In regard to air connectivity and tourism, Mr Bezbaruah said there was room to increase flights to the Northeast of India. Sikkim in particular has more potential to attract more Asean tourists.
“We have the Kolkata airport, which serves only 4% of total arrivals to India. This is a very small portion and we can use this airport to accommodate more flights,” he said.
In the private sector’s view, Indian corporations should have their own “Look East” policy to integrate with Asean, said Madhu Kannan, group head for business development of Tata Sons Ltd.
Tata Sons recently set up an office in Singapore to help drive its business in Asean. The Indian conglomerate and Singapore Airlines are setting up a full-service airline, which is yet to be named, in India in a bid to increase flights from India to Asean. Tata will hold a 51% stake in the airline and SIA the rest.
Singapore Prime Minister Lee Hsien Loong last year made a pitch for an Asean-India Air Transport Agreement as India is one of the top 10 sources of tourists in Southeast Asia.
It was 10 years ago when then-prime minister Atal Bihari Vajpayee first announced plans to pursue an open skies agreement with Asean. But negotiations have never really taken off, as resistance to liberalisation remains strong among Indian carriers, many of which are struggling financially.