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What is India’s Look East Policy?

India’s Look East policy, which was initiated in 1991, marked a strategic shift in India’s perspective of the world. It was developed and enacted during the government of Prime Minister P.V. Narasimha Rao and rigorously pursued by the successive governments of Atal Bihari Vajpayee and Manmohan Singh. The essential philosophy of the Look East policy is that India must find its destiny by linking itself more and more with its Asian partners and the rest of the world, and that India’s future and economic interests are best served by greater integration with East and Southeast Asia. Thence, Look East policy is an attempt to forge closer and deeper economic integration with its eastern neighbors as a part of the new realpolitik in evidence in India’s foreign policy, and the engagement with Association of South East Asian Nations (ASEAN) is a part of the recognition on the part of India’s elite of the strategic and economic importance of the region to the country’s national interests. As Prime Minister Manmohan Singh said, the Look East policy is not merely an external economic policy; it is also a strategic shift in India’s vision of the world and India’s place in the evolving global economy.

The Look East policy is the product of various compulsions, changed perceptions and expectations of India in the changed international environment. The end of cold war brought about a fundamental change in the international system, which focuses on the economic content of relations and led to the burgeoning of the formation of regional economic organizations. While India was opening up to the world market, it became aware of the growing trends towards regionalism and feared that it will be marginalized from the dynamics pushing the global economy. The economic reforms, coupled with the integrative forces of globalization; frustration with the process of integration within South Asia and the renewed concern about the antecedent and powerful China and its impact on India’s security, as well as India’s unease at Beijing’s growing assertiveness in the Asia-Pacific region made India to rethink the basic parameters of its foreign policy. In this changed international system in the aftermath of the cold war, the success stories of the East Asian Tiger economies and the radical shift in India’s economic and strategic circumstances caused New Delhi to pay more attention to the rapidly growing economies of Southeast and East Asia.

In the initial stage the focus of the Look East policy was much on ASEAN. India’s conscious efforts to forge closer economic ties with ASEAN member states pay dividends; bilateral relations between India and ASEAN improve rapidly. India become a sectoral dialogue partner in March 1993 in the three areas, namely, trade, investment and tourism, a full dialogue partnership in 1995, member of the ASEAN Regional Forum (ARF) in July 1996 and finally to a Summit Level Partnership in 2002. The first phase of India’s Look East policy was ASEAN-centered and focused primarily on trade and investment linkages. The second phase, which began in 2003, is more comprehensive in its coverage, extending from Australia to East Asia, with ASEAN as its core. The new phase marks a shift in focus from trade to wider economic and security cooperation, political partnerships, physical connectivity through road and rail links. India-ASEAN cooperation now covers a wide field, including trade and investment, science & technology, tourism, human resource development, transportation and infrastructure, and health and pharmaceuticals. India signed ‘Long Term Cooperative Partnership for Peace and Prosperity’ with ASEAN, which is the corner-stone of India’s Look East policy. India prefers to use the Comprehensive Economic Cooperation Agreement as a template for Free Trade Agreements (FTAs), because of its comprehensive coverage of goods and services trade as well as investment. When negotiating FTAs, India takes the position that service trade is as important as trade in goods. India’s trade negotiators believe the country’s economic strength lies in its services sector. Trade between India and ASEAN countries is expanding significantly.

As part of the endeavor to strengthen India’s linkages with the East and Southeast Asian region and reinforce the Look East policy, a sub-regional grouping, called BIST-EC, comprising Bangladesh, India, Sri Lanka and Thailand was established in 1997. With the addition of Myanmar and, in 2004, of Bhutan and Nepal, the grouping came to be known as BIMSTEC or the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation. This forum has identified six sectors for focused cooperation: trade and investment, technology, transport and communications, energy, tourism, and fisheries. When India initiated BIMSTEC in 1997, it received strong support from Thailand, which also saw it as a political and economic forum to bridge Southeast Asia and South Asia. India promotes BIMSTEC to establish economic links with peninsula member countries of ASEAN to boost the development of its seven Northeastern states.

India is also part of the Mekong Ganga Cooperation (MCG) Project, which also includes Myanmar, Thailand, Laos, Cambodia and Vietnam. It came into being on November 10, 2000 where the representatives of the six member states met at Vientiane and came up with a set of guidelines known as the ‘Vientiane Declaration’. The declaration outlined the areas for institutional interaction based on assessment of the capabilities of its member states. In order to give a well-structured outlook to the initiative, a concept paper was worked out which delineated the agenda for cooperative efforts, where the project is primarily aimed at the development of three main areas for cooperation tourism and culture, infrastructure and Information Technology as envisaged by the Vientiane Declaration. The MGC is an extension of India’s Look East policy and also a reminder of its constant cultural interaction with the mainland South-East Asian countries. After nearly 16 years, the Look East policy has yielded many benefits and supported India’s economic transformation and growth, including closer and strategic contacts between India and Southeast Asian countries, an impressive increase in the quantum of bilateral trade and increased people-to-people interaction. With outward looking policies India’s foreign trade, which was below $40 billion in the early 1990s, has risen dramatically to US$ 140 billion by 2003. Foreign trade as a ratio of Indian GDP has risen from 12% in early 90s to more than 23% by 2003, pointing to increasing openness of the economy. There has also been substantial progress in India’s trade with other developing countries and with Asia, with the initiation of the ‘˜Look East’ policy. The share of developing counties has doubled to about 30% of India’s trade, while Asia’s share has doubled to 24.2%. In other words, about a quarter of India foreign trade now comes from its Asian neighbors.

However, a need is felt to focus the benefits of these cooperations more sharply on the Northeastern region, which is a natural bridge between India and Southeast Asia. A new paradigm of development whereby foreign policy initiatives blend seamlessly into the national economic development is felt and there is need to make these structures work for the Northeastern region. While colonial rulers built railways and roads mostly to take tea, coal, oil and other resources out of Assam, the disruption of old trade routes remained, to use Sanjib Baruah’s word, ‘colonialism’s most enduring negative legacy’. In its efforts to bail out Northeast India from the region’s difficulties as a result of the loss of connectivity and market access following the partition of 1947 and recognition of region’s geographical proximity with East and Southeast Asia and, India focus the benefits of this cooperation more sharply on the Northeastern region. After a century and half the opportunity has now arisen to undo the effects of colonial geopolitics. There has been much talk about the potential of the Look East policy in transforming the region. In this foreign policy vision Northeast India is often described as the gateway to Southeast Asia. According to Rajiv Sikri, Secretary East of the Ministry of External Affairs, the Look East policy ‘envisages the Northeast region not as the periphery of India, but as the centre of a thriving and integrated economic space linking two dynamic regions with a network of highways, railways, pipelines, transmission lines crisscrossing the region.’ Thus, the is an effort to open the region that involved opening doors and windows in intellectual, cultural, political matters as well as in the economic arena.

The very first outcome of India’s conscious efforts is the Indo-Myanmar Trade Agreement signed on January 31, 1994 for the establishment of trade on the basis of equality and mutual benefit. The agreement specified that trade should be conducted through the designated custom posts, viz, (a) Moreh in India (Manipur State) and Tamu in Myanmar, (b) Champhai in India (Mizoram State) and Hri in Myanmar and (c) other places that may be notified by mutual agreement between the two countries. The border trade at Moreh (India) and Tamu (Myanmar) was opened on 12th April, 1995. The agreement initially provided for cross border trade in twenty two products, mostly agricultural/primary commodities produced in the trading countries (not the third country products that dominate the informal border trade as will be discussed later). In 2001 a few more items were added to the list of tradable items. In practice, the agreement actually does not go much beyond according a formal sanction to exchanges traditionally going on between the local populations in the border areas of the two countries. Despite this potential, the trade through the Manipur-Myanmar route has remained small and insignificant, amounting to a few crores per year and with little impact on the regional economy.

The Preferential Trade Areas, on the other hand, have failed to foster trade as shown by the Indo-Bangladesh and Indo-Myanmar experience. The slow progress in economic ties with these countries is due to the military and security establishment playing a major role in shaping India’s foreign policy to these two countries. Trade with both these countries has been stagnant and there seem to be differences with Bangladesh over transit arrangements that India seeks for its links to the Northeast, about the existence of training camps for insurgents in their territory. Similarly, trade with Tibet and Yunnan provinces of China have been almost absent except, the existing trade at Nathula in Sikkim, though India and China have agreed to initiate border trade through the Himalayan pass between Tibet and Sikkim.

There is much talked about opening new trade route or reviving the ancient land trade route through Northeast lead to economic development of this area. Before meaningful trade activities can be undertaken agriculture has to improve both in terms of production and in terms of productivity. Processing industries have to be set up to manufacture quality goods which can be offered in international markets at acceptable prices. The entire infrastructure of roads, railways, communication and air transport will have to be completely revamped. Similarly hotels, restaurants and resorts will have to be built for sophisticated tourists. If that cannot be achieved Look East policy will not benefit Northeast. In that case the Look East policy will only provide a bridge between the rest of India and Southeast Asia of which Northeast will forever remain an ‘underbelly’. These types of results probably were not envisaged when the policy was devised. Economic development of Northeast is, therefore, an important requirement.

To achieve the policy’s objectives, India is negotiating bilateral free trade agreements (FTAs) with East Asian economic powers. India has entered into a number of pacts, agreements and FTAs with Thailand and Singapore; there are plans to create a free-trade area with Brunei, Indonesia and Malaysia by 2011 and with the remaining ASEAN countries – the Philippines, Cambodia, Laos, Myanmar and Vietnam – by 2016. India’s trade with countries bordering the Northeast has seen the most dramatic expansion, with the share going up more the five times from 1.7% in 1992-93 to 8% in 2003-04. This dramatic expansion of trade with India’s eastern neighbors has had little or no impact on the Northeast. Most of this trade expansion has taken place through the seaports. It would not be incorrect to argue that the Northeast has once again been marginalized. India is looking east, but not through its contagious Northeastern borders. For the Northeast to gain from FTAs with the economies of the east, the key variables are transit arrangements, proliferation of trade routes and custom check post, easy visa regime making it possible for traders, businessmen and transport operators to move in and out of the region. For this to be possible requires substantial investments in infrastructure, construction of highways and bridges, re-establishment of rail links and communication facilities which is largely absent. The Shukla Committee on ‘˜Transforming the Northeast’, estimated such investment to exceed Rs 25,000 crores.

As a result of this initiative, India has concluded a number of bilateral and multilateral projects, aimed at enhancing connectivity between the Northeast and Southeast Asia. In this regard India built the 165-km long Indo-Myanmar Friendship Road connecting Tamu and Kalaymyo-Kalewa. The other important ongoing and potential infrastructure projects are India-Myanmar-Thailand Trilateral Highway, Trans Asian Highway, India-Myanmar rail linkages, Kaladan Multimodal project, the Stilwell road, Myanmar-India-Bangladesh gas and/or oil pipeline, Tamanthi Hydroelectricity project and optical fiber network between Northeast India and Southeast Asia. India and Myanmar recently agreed on the Kaladan Multi-Modal Transit Transport Facility, which envisages connectivity between Indian ports on the eastern seaboard and Sittwe Port in Myanmar and then through riverine transport and by road to Mizoram, thereby providing an alternate route for transport of goods to Northeast India. Efforts are also underway to improve infrastructure, particularly road links, at the second India-Myanmar border trade point at Rhi-Zowkhathar in Mizoram sector by upgradation of the Rhi-Tidim and Rhi-Falam road segments in Myanmar. Apart from developing road links, efforts are underway to have a rail link from Jiribam in Assam to Hanoi in Vietnam passing through Myanmar. However, the process of enhancing connectivity between India’s Northeast and Southeast Asia is not a cakewalk because there are also geographical, technical, political and security challenges that limit the process of infrastructure development.

To take maximum benefit from the policy, the Northeastern region should develop industrially. The new North East Industrial Policy 2007 has practically made the whole region a special economic zone. The industry departments of various states of the region have only benefited the ‘˜subsidy eaters’ uptill now. Otherwise, no policy initiative, no opportunity is going to benefit the Northeastern region.

The then Indian Prime Minister Atal Bihari Vajpayee proposed holding of an India-ASEAN car rally at the ASEAN-India summit in Bali 2003 to draw dramatic attention to India’s geographical proximity with ASEAN countries. The ASEAN-India car rally became a reality in 22nd November 2004 which was flagged off in Guwahati. In his speech Manmohan Singh referred to India’s Northeast as a gateway to ‘Asian Century’. Through these efforts the government of India is showing its keenness in developing the Northeast. But still the government lacks commitment in its various efforts.

It is the vision and concentrated efforts in various thrust areas after micro studies and appropriate project formulation which can bring Northeast to a standard in which it will be able to stand the challenge of the Look East policy and will also be able to fully participate in the new milieu. The macro studies have been already done. Considerable work of identification of agriculture, horticulture, floriculture and industrial products have also been carried out. But the real work has to start in the field. Only then Northeast can hope to be a part of the bridge connecting India and south and Southeast Asia.

In contrast to the lukewarm effort for economic integration, the Look East policy concessions and aid are meant to persuade the neighboring countries to expel insurgent groups seeking shelter in these countries. Frequent visits by the Indian generals and counter insurgency experts are meant to pressure these countries to cooperate with the Indian state to crush these movements. In some cases, joint operations with the Myanmar army have been launched to flush such groups. India has also provided arms and ammunition to aid such effort by neighboring states.

Till date there is almost no role for the states of Northeast India in the Look East policy ‘“ except as a site for events such as the ASEAN-India car rally. This, for instance, is in sharp contrast with the role that the province of Yunnan plays in the Chinese pursuit of closer relationship with its neighbors in South and Southeast Asia. It was in Yunnan’s capital Kunming where experts, scholars and business people from China, India, Myanmar and Bangladesh got together to initiate the BCIM Forum. Yunnan’s provincial government plays a far more active role in attracting foreign investments to the province than Northeast Indian states. It plays a role in institutions of the Greater Mekong sub-region. But there is little room for India’s Northeastern states in the Mekong Ganga Cooperation forum or in BIMSTEC. The difference is quite ironic given that China’s political system is centralized and authoritarian while ours is democratic and federal.

In contrast to China’s strategy of developing its backward regions through greater economic ties with ASEAN, India’s policy of strengthening its ties with eastern neighbors has been limited to counter insurgency efforts. India is watching with trepidation the increasing Chinese investments in trade-related infrastructure like new highways linking Kunming (Yunnan) with northern Myanmar and

Thailand. India too has offered to link its rail network with Bangladesh and build highways to Thailand through Bangladesh and Myanmar. It is still contemplating opening up land route for large-scale trade with the Yunnan province through the Stilwell Road. But all these efforts are dwarfed by its obsession with counter insurgency and need to consolidate its military hold on an unstable region.

Thus, the success of the policy depends on the commitment of the government to implement the policy and to give role for the Northeastern states in this policy.

(Courtesy: India’s Look East Policy)

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