Binit Lal E-Content for Dept of Political Sc M.A. Political Sc. Sem- 2 Nalanda College Paper: Contemporary Issues in IR

Topic: Evolution of Look East to Act East Policy

1. Introduction:

One of the primary focus of India‘s foreign policy since 1991 has been the ―Look East‖ policy. The initial orientation of the project was primarily focussed on the ASEAN countries, which then opened onto India‘s eastern neighbours like China, Japan, and South Korea and, lately, South Pacific states including Australia and New Zealand too.

The end of cold war heralded a new set of changes - qualitative and structural in nature- that thereby created distinct orientations in the foreign policies of India and countries of Southeast Asia. India‘s changing relation with Southeast Asia was meant to build up strong political, economic and strategic ties with these countries. This further saw a dilution of past inhibitions from Southeast Asian countries that opened themselves up to develop friendly and warm relations with India. This region thus gained more prominence in the foreign policy of India through the adoption of Look East Policy in 1991 which was introduced by Indian Prime Minister P. V. Narsimaha Rao.

2. Concept of Look East Policy:

The beginnings and evolution of the Look East Policy was to be done with a lot of fanfare and rigour, even though it was not to be smooth sailing all the way. The relations with ASEAN witnessed India becoming a sectoral dialogue partner with ASEAN in 1992 and full dialogue partner in 1995.In July 1996, I.K. Gujral the then Foreign Minister of India, first participated in the ASEAN conference in Indonesia. Giving positive appraisal of the Indian government of this new relationship, he said, "we see the full dialogue partnership with ASEAN as manifestation of our Look East destiny...... India would work with ASEAN as a full dialogue partner to give real meaning and content to the prophecy and promise of the 'Asian century' that is about to draw upon us"1

On a closer look at India‘s Look East policy, what gets revealed is that along with improved relations with Southeast Asia it was an attempt to relieve the negative reaction to navy and the political atmosphere in a Post-Cold War world. This policy was an attempt to strengthen strategic relations with many countries on bilateral and multilateral platform and also intended to have closer links with ASEAN on political and economical grounds. Further, it was also an attempt to make a place for itself in the larger Indo- Pacific region by showing India‘s economic potential for investment and trade. It had a major impact on India‘s foreign policy. By moving away from the policy of aloofness over regional multilateral relations, India started to participate in regional organisations. The Look East Policy built a road for co-operating several regional and smaller countries of Southeast Asia. At the end, it helped India in coming out of the closet and feelings of leaving out in Asia pacific organisations like Asia Pacific Economic Cooperation (APEC) or the ASEAN Post-Ministerial Conferences (ASEAN-PMC) after becoming dialogue partner of ASEAN. ASEAN is only forum for regional cooperation and strategic collaboration. However, both of the parties have not admitted the rise of China in the background of the Look East Policy openly, but it makes a significant impression on it.

4. Compulsions for Look East Policy:

It was sensed in the political circle that India‘s reluctance to join any International forums of this sort could damage our long term interest in the wider Asian region. Especially with the announcement that India will be opening its economy for the global integration. Being an outsider to the most important regional arrangements, India was increasingly concerned about the adverse impact of the growth of regionalism. Since the 1980s indeed the number of regional trade agreements effected had increased dramatically. No fewer than thirty four regional agreements were notified to GATT (General Agreement on Tariff and Trade) Under Artical XXIV, between 1990 and 1994. India was then afraid that this proliferation of regional trading arrangements would lead to protectionism and inward looking trade blocs. In the beginning of the 1990s, the world trading system seemed to be on the way to getting fragmented into three

1Gujral, I. K., 25 July, 1996, cited in The Times of India major regional blocs, with the North American Free Trade Agreement (NAFTA), the European Union and, possibly, Japan with East Asia.

4.1 India's Hesitancy about Projecting NE India in its Look East Policy:

For an enhanced approach of Look East Policy of India, North Eastern States need to give a direct role in it. The NER has a natural advantage for border trade. The same justifies the need for and significance of establishing Regional Cooperation for facilitating growth of business and investment between the NER and the South East Asian Nations (ASEAN). If it happens, then the NER of India could become an economic bridgehead for tapping a market of 500 million people in our extended neighbourhood in South East Asia. Indo-Myanmar Cross Border Trade through Moreh-Tamu sector (Manipur), Champhai-Rih sector (Mizoram) and Nathur Pass (Sikkim) cross border between India and China is the continental dimension so far. Further opening up of Stillwell road and more border trade will boost the regional economic cooperation between India and South East Asian countries.

North East India is closer with South East Asian countries' markets than mainland India i.e. Delhi, Mumbai and Chennai. Hence, the region has more advantages to have trade relation with Myanmar and other South East Asian countries.

4.2 Changing International Order

After World War II, the world was ruled by victors of it, the USA and the Soviet Union because of their military and economic power. In economic domain, many Bretton Woods institutions like World Bank and IMF were created where the US Dollar has an upper hand. International trade was monitored by GATT and then WTO. After the failure of League of Nations, United Nations was crafted on the learned lessons for a nuclear era (Frédéric2001: 92). These nuclear weapons had significant impact on international order. The international politics was defined by many events that were significant in nature like the Cold War, the war in Vietnam, Non- Alignment, Bipolarity, and rapid growth in international trade and emergence of new nations after end of colonialism. Advanced healthcare and medicine availability explode the population. In Indian context the life expectancy rose up to 70 from 27 at the time of Independence. The most rapid growth happened in India and China with more than two billion in both the countries. 4.6 The Rise of China

The transformation of Chinese economy in context of geo-politics and geo-economics is the significant example of technology development. In comparison to India, China‘s rise shook the world order. It was greatest transformation in human history. It diminished the hegemony of western developed economies over the global economy. The transformation in Chinese economy clearly started in 1978 and since then it has overtaken the economy of Japan. With GDP around USD 10 trillion in real terms, it is catching up with the USA.

China has become the largest merchandise exporter in the world with huge trade surpluses with major economies. The One Belt and One Road initiative is the most geo-strategic initiative for geo-economics. However it is doubtful for continued financing of the project by China because of burden of debt over Chinese banks. Its military modernisation especially of navy has led it to the path of becoming great power and dominating the Indo-Pacific region. With the shift of global economy to Asia, China has flexed its muscles for becoming economic and military power. The BRI project has lured many countries to remain in Chinese geo-economic orbit. However, India has opposed it for it goes through the Pakistan Occupied Kashmir (PoK) that is matter of its sovereignty, but India can‘t stop it progressing.

4.7 Multi-polarity

After the Cold War, the International power structure was likely to lead by a multi-polar world with more than 3 Superpowers. It depended on large demography and economies of the world. After Bi-polar world, the USA, China, France, the UK, India, Russia, Brazil, Germany and Japan became leading power for balancing the Power vacuum where India was a huge market for energy, goods and investment. It had a significant impact on India‘s domestic and foreign policy. One such organisation of multiple countries is G-20 which later became regional forum for global economies and fiscal policies. The G-7 group of developed countries has only Japan from Asia even not the fastest growing economies of today- India and China. That is why it is less credible.

4.8 Strategic Considerations

On the strategic front, India made leaps and bounds towards establishing a closer relationship with its Asian partners. Prior to the early 1990s, a fixation on U.S. - Soviet relations and border conflicts with China, Pakistan, and Bangladesh had largely directed India‘s political attention northward and westward. Strategic engagement with ASEAN was also blocked amid fears in Southeast Asia that India was expanding its military presence in the Indian Ocean and aimed to extend its influence into the region.

Once the geopolitical barriers of the Cold War were broken, Southeast Asian countries became more receptive to cooperating with India strategically. Along with India, Southeast Asian countries were too ―facing the trauma of an uncertain future‖ in the post-Cold War atmosphere of political flux. Indian involvement in regional forums and bilateral partnerships also benefited Southeast Asian countries because its presence balanced China‘s growing influence in the region. As a result, Southeast Asian countries‘ changing perception of India was especially well received in New Delhi. Past constraints to the west—a region full of ―imponderables, challenges and troubles‖ for India—meant that the east was the ―only direction in India‘s strategic neighborhood where opportunity beckoned.‖

4.10 Economic Considerations

India‘s Look East policy undoubtedly marked a monumental shift in India‘s foreign policy. In the absence of the Soviet Union, it gave New Delhi a clear geopolitical direction to base almost its entire post-Cold War external relations upon. India could not, however, ignore the crippling state of the Indian economy in the early 1990s as entirely independent from creating a new approach to Indian foreign policy. In an effort to converge economic and strategic interests, the Indian Ministry of External Affairs created an Economic Division to give stronger consideration to India‘s economic interests during the conduct of its foreign affairs. It also aimed to form closer relationships with its Asian countries, as India‘s trading options had been limited progressively over the last four decades. During the Cold War, India‘s share in global trade had decreased from 2.5% during the 1950s to 0.5% by the start of the 1990s.24 In short, even though Look East established a clear direction for Indian foreign policy and became quickly one of its most important dimensions; there was a strong economic rationale behind its implementation. 4.11 Cultural Consideration:

India‘s cultural relation with Southeast Asia is centuries old and serves as a living link between the two regions. Civilizational and cultural links date back thousands of years, since the prehistoric times. The region found mention in many Indian classical works as the Ramayana, while Indian merchants began bringing Hinduism and Buddhism across the sea by the 1st century AD, influencing the development of kingdoms and empires like Srivijaya in Sumatra and the Majapahit in Java, Bali and the Philippine archipelago.

Hindu religious symbols are very popular in Indonesia. In the medieval periods, Indian kings had considerable influence in this region as the Hindu temples of Barabadur in Java, Indonesia and Angkorvat temple in Cambodia bear testimony to it. Similarly there was a flourishing trade relations between the two regions.

5. Advantages of Look East Policy:

Look-east policy was launched in 1992 just after the end of the cold war, following the collapse of the Soviet Union. After the start of liberalization, it was a very strategic policy decision taken by the government in the foreign policy.

The Look-East policy has been given a significant thrust since the beginning of this century and the results achieved are evident as mentioned in the report. The second phase in India's Look East policy has a new dimension — the development of India's remote northeast. India's search for a new economic relationship with South East Asia is no longer driven by considerations of globalization, but to facilitate development of the Northeast by increasing its connectivity to the outside world. Instead of trying to isolate the Northeast from external influences, as it had done in the past, New Delhi is now recognizing the importance of opening it up for commercial linkages with South East Asia.

Look east policy has helped India in strengthening its place in the global economy and gets a better deal in its interactions outside the region. America and European countries had entered into a lot of different mutual agreement which has further increased their reputation and bargaining power. India was in danger of isolation in the global economy. India was not getting its due importance. But due to its Look east policy India economy is getting integrated with the Asian economy, so India gets support from Asian countries which have increased India's importance at global level.

8. Look East to Act East Policy

With many early shifts in the foreign policy of Modi government, one of them was the ―Look East‖ policy (LEP) to ―Act East‖ policy. The changes or shifting in foreign policy of any country balances with the international order that inevitably affects the domestic and foreign factors of the country. For example; the rise and fall of Soviet Union or rise of China had a huge influence over South and South East Asia. India formed the Look East Policy in the backdrop of end of Cold War but after two decades when the world has different scenario to deal with, the policy was also required to deal in different way in the region. Domestic developments in the nation also persuaded the policy makers to change the course of it.

The domestic factors like growing demand for energy, economic developments for a huge population in a unipolar world after the End of Cold War demands closer relations with eastern bordering states also. India reformed its economy in 1991 and opened it for investment to boost its foreign policy. Several economic problems forced the Indian state to liberalise its domestic policy for Privatisation and economic liberalisation. Along with this on a foreign policy ground, Look East Policy helped India in expanding its trade relations and investment opportunities in the ASEAN region. These two factors of changing the economy for betterment, has transformed its foreign policy in the region with increased number of bilateral relations and investments in a dynamic global order.

With the changing of name from ―Look East‖ to ―Act East‖ policy, is a realization that India is shifting its trade to Eastern borders by 50% now onwards. This shift has many drawing factors also like inability of SAARC for better economic unification in South Asia and rise of Bangladesh, Myanmar and other countries of ASEAN in economic and geostrategic sense in the region. South Asian countries have a high trade ratio with other parts of the world than involving this region. The trade percentage share of this Southeast region with South Asia only accounts to 5% which has all the chances to have a better share.

9. India’s changing global priorities and the Act East Policy:

The national development of any nation is connected with foreign policy of it. In the present globalized world, any international development can have a quick result on the desired outcomes of policy of any nation. It is said that ―Foreign policy of a nation is sub- set of a nation‘s national policies‖ therefore it is connected with national goals and objectives which gets directions from the contemporary political order. Though it is based on the priorities of ruling government, it is little acquainted with ideology of ruling party in some areas. In case of India, it is manly guided by the national interests of development and national security unlike China where the foreign policy is driven by the interest of ruling Chinese Communist Party‘s interests only where it is a kind of top down decision making.

The development in all the sectors after independence till now like energy security, manufacturing, services, technology, information technology etc. and timely revolutions like Green Revolution, White Revolution etc. is because of these shifts in the policy making along with policy formation.

10. Future Challenges

India has many domestic issues to deal with like poverty, education, health, access to clean water and pollution while trying to make an enhanced presence in the dynamic international scenario. The first and foremost goal of all the domestic and foreign policy formation is to reach the scale of developed nation from a developing country. However, the foreign policy making ultimately relies on the efficiency of the government in dealing with domestic problems and challenges. On considering such trends, India has focused on economic diplomacy in its foreign policy while shifting from old and traditional political domain. With the promotion of traditional merchandise exports, India has started focusing on technology flow, climate change, increased FDI and on the areas which are in larger interest of national interest.

Because of unresolved border dispute and China-Pakistan Nexus, the relations with China are a major security concern along with a challenge for foreign policy makers in economic development of India. Because of easy and cheap availability of Chinese goods in Indian markets, many small and medium markets have been forced to loss their base while China has become one of India‘s biggest trading partner. This stubborn presence of China has affected the India‘s foreign and economic policy of India with a huge trade deficit with China. China blocks import of those products which can compete with its indigenous products and services using non- tariff barriers. The policy of India is a combination of cooperation, competition and avoidance of conflict with China. The Doklam issue is one of nice examples of avoidance of conflict. Therefore, its foreign policy provides an opportunity to other countries to take leverage of it because they are also suffering in a similar manner from China‘s policies. India had slowly and in a steady manner enhanced its collaboration with other democratic nations like Japan, the USA, and Australia including Indonesia and Vietnam for its geo-political and economic interest.

10.1 Energy Security

Energy security is the important factor in India‘s foreign policy for national development. The import of energy is the largest source of development and energy demand fulfilment of the country which is about to reach at 90% in the next decade requirement. After shell gas invention in US and success of ―fracking‖ technology, oil producing companies cut the production dipped the oil prices in historic way and it subsequently led to a balanced payment sheet for India.

The shift from traditional energy sources to renewable energy sources is a result of concerns for climate change. The growing use of solar and wind energy along with other renewable energy resources are providing opportunities for investment in this sector and business opportunities as well becoming a field of economy. The smooth supply of oil and gas is top is top priority of India‘s foreign policy who took benefits from these low prices of oil.

10.2 Changing Economic Order

The governing system through economic values has been changing in the world order. The institutions like International Monetary Fund and the World Bank has intensified the dominance of Western countries in economy and finance in liberal world order for the so called sake of global commons. The discriminatory policy of European countries towards African and Asian countries by imposition of financial restrictions and being lenient towards other European countries has forced these African and Asian countries to look for other financial institutions. Under neo-colonial approach, these institutions have been forcing developing countries to resist changes. In a recent case, IMF included the Chinese currency in the institutional basket and accommodated higher quota for China and India in the voting method of the institution. This shift will unavoidably affect the geo-economic policy of them.

This happened because institutions like BRICS New Development Bank and Asian Infrastructure Investment Bank (where India is a founding member) are coming as new destinations for financial help for Asian countries. These institutions have challenged the prevailing world order led by US. The energy market is tied to US as all the trade is done in US$ while more countries are looking for energy partners for oil and gas. These uncertainties‘ are challenge to India‘s foreign policy and national interests. The race for energy resources has led to focus on the oceans of the Earth which is called ―Blue Economy‖. It has brought new features in the economic sphere like environment, marine and coastal economy. For the sustainable development, India is continuing challenging other countries in this field. China‘s thrust to occupy in South China Sea is also claiming its rights over the Sea to control the marine resources and also for controlling the Sea Lanes of Communication. For India, the Bay of Bengal and Indian Ocean are fulfilling these interests by being a huge strategic area of interest.

11. Act East Policy:

India has continued a strong appease for its continued relations with ASEAN. Narendra Modi‘s proclaimed during his visit to Nay Pyi Taw in 12th ASEAN Meeting that was held in November 2014 about the shift in Look East policy to Act East Policy. It was further taken by high level visits and interaction on multilateral stage dependence in economic sphere. These high level visits had also happened in Myanmar, Vietnam and Singapore by Prime Minister, President and Foreign Affairs Minister‘s visits to each other countries.

12. Act East: What it means

The key point in the Act East policy is India‘s reluctance in taking steps ahead for articulation of the policy. It is still in evolution period. It is formed with the sense of keeping it in mind the rapid developments and complex security and economic perspectives.

By the analysis of the policy since 2014, it is clearly reflecting that India is keen on playing a dynamic role in the Eastern Asian borders. The maximum statements about the policy are made by Indian PM Narendra Modi who has mentioned the policy on several occasions. First he mentioned in the ASEAN Summit 2014 and second in his visit to South Korea in 2015. He focused on India‘s importance in the partnership and the policy. The then Foreign Minister of India, Sushma Swaraj had also mentioned the policy during her Bangkok visit in June 2015 and proclaimed efforts of India for engaging in the Southeast Asia through this policy. The policy also found a mention in President Pranab Mukherjee‘s speech on the occasion of meeting of Heads of States of the Pacific Island countries in August 2015.

It has made a significant development since it was first talked about by the Indian PM in 2014. It has been on activation for greater geographic coordination and collaboration in comparison to Look East Policy. In similar view of Modi government to attain a global and regional influence on a greater level, the policy is also aimed at placing India as important player in the regional affairs. Though the clear vision about the policy would be known it due course of time, the shift in Indian engagement with regional leaders has shown the picture of its enhanced involvement in the region.

The focus of the shifted Act East policy, brought three aspects of the partnership, called as 3-C‘s. These aspects are: Culture, Commerce and Connectivity. Now there is need to look at 3-D‘s, and they are: Diversity, Democracy and Defence. The move of ties beyond trade and commerce, can give a strengthened defence relationships. . Given that there have been no political tensions with the region; the ability to build intense political level relations should be pursued further. Moreover, for India, the core of its policy has been to look at the ASEAN as an entity that lies at the heart of the region. This has led to India giving ASEAN centrality in its dealings with Southeast Asia. As this centrality remains uncertain, India too will need to recalibrate its relations, both at the bilateral and multilateral levels (Mishra 2015). Moreover, ASEAN lacks in strategic sovereignty because major leaders of the region are engaged in complex geo-politics of the region so ASEAN has to look at many leaders to take it ahead than on one. This deficiency also caused trust deficiency for India as well and ultimately leading to challenge India‘s ties with the organisation. One more point to add here is perception of threat from North –South direction by these countries not from East-West direction. This perception has China in its background in northern side of the region which looks at these countries as subordinate not equal in political context. In Indian context, India has only cultural and religious significance termed as soft influence which is not considered as threat to them. So they are not considering India as suitable partner for security ties on the Western direction. India needs to work on changing the mind of these nations and their national leaders to change their perceptions about security threat and India‘s importance.

14. The Benefits:

The shift of manufacturing industries to lower middle class economies benefitted ASEAN members including India. The ‗Make in India‘ initiative of Modi government in India was aimed to collaborate with the least developed economies of the region and this would be beneficial for all the members of the collaboration. India should now also focus on transport facilities in the region and connectivity between the nations. India limited its focus on capacity building of human resources and significant projects for poverty attenuation. There is around 6 times increment in the trade between both the sides from 2006 to 2015 that has reached to 12 billion US dollar. The global recession of 2015 has affected this trade also reaching export at $ 9 billion and import at US$ 3.8 billion in 2015-16. Major part of this trade was dealt with Vietnam while Cambodia and Lao PDR has a lower status despite the index ration went up to double.

Despite exporting row commodities like meat products and sugar to Vietnam and Myanmar respectively, India has a vast scope of bilateral trade growth in automotive, electrical goods, pharmacy products and manufactured products. However, being the highest importer from Vietnam, India imports only electrical goods and machinery. There is also scope of increasing import index in engineering goods, food processing, textiles, pharmaceutical products and agricultural products and machinery.

15. Conclusion:

Two and half decades passed away since India initiated the Look East Policy (LEP) with the view of strengthening its strategic and economic relations with Eastern neighbours along with South Eastern also. The impetus in regional integration received through LEP has gained new momentum through the Act East Policy (AEP). The LEP was devised as a strategy to boost trade and foster economic cooperation with far Eastern neighbours. But, the incentive to intensify political dialogue was not there. India‘s dynamic participation in constructing a common market with interconnected programs has influentially increased the size of its genuine image in South- eastern and Eastern Asia. India‘s Act East Policy (AEP) with its objective of identifying and threading the cultural tangibles and intangibles to place, India in their cultural mosaic must be understood in the light of the attempt to create an alternate discourse to the predominant Western ones. The influences of ancient civilisations like India or for that matter China have to be understood in the light of continuity rather than through time periods or historical epochs. The Act East Policy (AEP) seeks to trace the historical continuity of the relationship that is embedded in the cultural links between the two sides – India and ASEAN countries. Human relations have preceded structural relations.

There is a need to review the past and undertake new strategies to help achieve a new paradigm of ASEAN-India relations.