Busy Asean days ahead: Govt looks to strengthen political, economic ties
For the government, the last week of January will focus on India’s reach in Southeast Asia as business delegations and government officials from the Association of Southeast Asian Nations (Asean) pour in here. However, beyond the spectacle, a shaky trade deal and China’s growing footprint in the region will keep discussions tight. After a picture-perfect trip by Israeli Prime Minister Benjamin Netanyahu last week, the government is preparing to project heightened trade and security ties with the 10 Asean nations, whose leaders would be the collective guests of honour on Republic Day. Before that, starting Monday, the Asean-India Business and Investment Meet and Expo will see trade and economy ministers from the region visit India, with a large business delegation. However, not a single company from Singapore, source of the second highest foreign direct investment into India, featured in the list of visiting companies made available to the media ahead of the event. The Asean bloc has been moving closer to China, which has funded massive infrastructure projects and boosted trade across the region. India has recently sought to court the block. Asean is home to 640 million people, close to nine per cent of the world’s population, more than the European Union. In 2015, their combined nominal gross domestic product had grown to a little more than $2.8 trillion. If Asean was single entity, it would be the sixth largest economy in the world — behind America, China, Japan, France and Germany. The government’s Asean-India Plan of Action for 2016-20 is based on the pillars of political security, economic and socio-cultural ties. However, while social closeness has been witnessed as tourists from India have flocked to nations such as Cambodia, Vietnam and Singapore, trade remains weak. Delhi’s trade and investment ties have been pegged at ‘lower than potential’ by the government, at a little more than $71 billion.
The hope in Delhi is to improve it to $200 bn by 2022. Currently, import from the bloc exceed export by $9.6 billion.</span> However, the 2022 aim is subject to a successful outcome of the proposed Regional Comprehensive Economic Partnership (RCEP) deal by the end of 2018. The latter is a proposed free trade agreement (FTA) between the 10 Asean economies and six others with which the grouping currently has FTAs — Australia, China, India, Japan, South Korea and New Zealand. India and Asean nations have shared similar, as well as diametrically opposite positions on variables of the deal—tariff reduction in goods and liberalisation of services trade, among others. The bloc recently blamed Delhi for stalling the deal consistently. “Asean nations had hoped to finish negotiations by 2017-end, the 50th foundation year of the bloc. But, growing acrimony between India and developed economies such as South Korea and Australia on matters of agricultural trade and immigration has prevented that,” says Sachin Chaturvedi, director-general at trade and foreign policy think-tank RIS. While RCEP issues will be discussed, a commerce ministry official said trade talks should be left to the official negotiation rounds, 20 of which have taken place, apart from five ministerial meetings, three inter-session ministerials and one summit-level talk between the heads of states. The next round, to take place in Indonesia, is not expected to drastically change things, the official added. There are differences within the bloc as well. Smaller nations such as Cambodia and Laos maintain vastly different trade positions from the commodity-heavy and much larger economies of Malaysia and Indonesia. “India and China had earlier scrambled to gain the support of one nation or the other, effectively splitting the group,” a Delhi-based trade expert says. However, all participating nations had last year announced the RCEP should be completed by 2018, though member-nations have not agreed on several issues. The government would also be looking to focus on traditional textiles and promoting them in the regional and global market. A unique fabrics show is also planned with support from the Textiles ministry, sources said, where Asean and Indian designers will present traditional designs.