ASEAN & India’s ‘Act East’ Policy Association of Southeast Asian Nations [] Formed on 8 August 1967 in Bangkok as an outcome of Bangkok Declaration [] Political and economic organization of ten countries located in Southeast Asia [] Aims include accelerating economic growth, social progress, socio-cultural evolution among its members, protection of regional peace & stability, and opportunities for member countries to discuss differences peacefully [] Membership - 10 States & 2 Observers - Timor-Leste & Papua New-Guinea [] Myanmar, Thailand, Laos, Vietnam, Cambodia, Singapore, Malaysia, Indonesia, Philippines, Brunei ASEAN -- Headquarters @ Jakarta, Indonesia * Sec. General – “Lê Lương Minh” & Current ASEAN Chair – Malaysia * GDP (PPP) -- US$ 7.6tn * 27th ASEAN Summit was held in Kuala Lumpur, Malaysia, 18-22 November 2015 ASEAN Way -- Principles followed by ASEAN > Principle of Musyawarah (Deliberation) & Mufakat (Consensus) > Not to use force/ confrontation > Non-interfere in the internal matters of states > Informal discussion & minimal institutionalization ASEAN Free Trade Area (AFTA) > Trade Bloc agreement by the member countries supporting local manufacturing in all ASEAN countries > To increase ASEAN's competitive edge as a production base in the world market > To attract more foreign direct investment (FDI) to ASEAN. ASEAN Plus Three (APT) [] Includes ASEAN Countries along with China, Japan & South Korea [] Constituted in 1997 for coordination & cooperation between countries [] Meeting held during each ASEAN summit ASEAN Plus Six -- APT along with India, Australia & New Zealand Strait of Malacca > It is a narrow, 805 km (500 mi) stretch of water between the Peninsular Malaysia and the Indonesian island of Sumatra > Over 94, 000 vessels pass through the strait per year, carrying about one-quarter of the world's traded goods > About a quarter of all oil carried by sea passes through the strait, mainly from Persian Gulf suppliers to Asian markets – 15.2 mn barrels per day > Malaccamax -- largest size of ship capable of fitting through the 25-metre-deep (82 ft) Strait of Malacca India-ASEAN Relation: ‘Look East’ Policy [] Combined Population - ~ 1.8 bn (1/4th of world’s population) [] Combined GDP - ~ US $10 tn [] Two-way Investment - US $40 bn in past decade [] India-ASEAN Trade - Expectation of US $ 200bn by 2022 [] India’s ‘Look East’ Policy 1. Developed and enacted during the governments of P.V. Narasimha Rao & Atal Bihari Vajpayee 2. Cultivating extensive economic & strategic relations with ASEAN nations 3. Giving emphasis of historic cultural and ideological links 4. To create and expand regional markets for trade, investments and industrial development 5. To build strategic and military cooperation with nations concerned by the expansion of China's economic and strategic influence [] India had signed TAC Treaty (Treaty of Amity & Cooperation) with ASEAN in 2003 [] India-ASEAN Free Trade Agreement > Framework for deepening trade and investment ties > Tariff liberalization of over 90 percent of products traded between the two dynamic regions [] India-ASEAN FTA in Goods > Main products: – Metal Parts & Components, Electronic Components, Processed Fruits, Ceramics, Fertilizers, Coconut & Vegetable Oil and Chemicals like Fatty Alcohol & Refined Glycerin. > Concerns: 1. Cheaper palm oil from ASEAN is hurting local producers in Kerala 2. Groundnut and Pepper farmers also suffering due to cheaper ASEAN imports 3. Overall, the goods Imported from ASEAN nations increased but our Exports did not increase. Consequently, Trade Deficit between India-ASEAN widened [] India-ASEAN FTA in Services & Investment > Follows ‘8+1+1’ Pattern: ASEAN Countries except Indonesia & Philippines > For Indonesia: Special terms because services sector is vital for the economy of Indonesia, & worries of local service sector getting hurt > For Philippines: Separate Special terms as ~50% of workforce of Philippines is in IT Sector India-ASEAN Relation: Importance Strategic [] ASEAN nations are at the intersections of major land & sea routes [] Maritime boundary disputes between China & a number of ASEAN countries & they look towards India as a counterbalance against China [] A stronger posturing at ASEAN increases India’s stature as a global power Economic [] In terms of income, India-ASEAN community is roughly the size of the EU [] ASEAN is India’s fourth-largest trading partner after EU, US & China [] India – ASEAN is slated to grow faster than the rest of the world due to a favorable demographic profile and growing market for goods and services [] India-ASEAN linkage provides for large-scale movement of people, capital, ideas and creativity Energy [] ASEAN countries particularly Myanmar, Vietnam & Malaysia can potentially contribute to India’s energy security – Significant Oil & Natural Gas deposits [] India and several ASEAN countries are net importers of hydrocarbon -- regional cooperation for financing exploration & drilling activities India’s ‘Act East’ Policy India’s ‘Act East’ Policy is proposed as a new Foreign Policy by PM Narendra Modi for ASEAN countries > To emphasize a more proactive role for India in the ASEAN region > A tool for forging strategic partnership and security cooperation with countries in the region in general and Vietnam & Japan in particular > A more action-oriented policy towards ASEAN nations Key Engagements: > Establishment of a special purpose vehicle for project financing > Building of Roads, Ports & Transport Infra (E.g.-- India-Myanmar-Thailand Trilateral Highway, Kaladan Transport Project etc.) > Building Information Highways > Inviting ASEAN countries to participate in India’s ongoing economic transformation > Emphasis on connecting North-Eastern part of India to the ASEAN Region for better & rapid development of the N-E region which can bring significant benefits to India