Land­mark Year for India and ASEAN

FICCI Business Digest - - News - Pankaj R. Pa­tel, Pres­i­dent, FICCI

The year 2017 marks a defin­ing mo­ment for India and ASEAN as the two eco­nomic pow­er­houses com­mem­o­rate 25 event­ful years of India ASEAN di­a­logue part­ner­ship and the ASEAN cel­e­brates 50 years of its ex­is­tence. The re­la­tion­ship has pro­gressed from strength to strength, with the two sides be­com­ing full di­a­logue part­ners in 1996, sum­mit part­ners in 2002 and strate­gic part­ners in 2012. Ac­cord­ingly, Prime Min­is­ter Naren­dra Modi has placed South East Asia at the core of India's Act East Pol­icy ac­com­pa­nied by a re­lent­less drive to cre­ate pow­er­ful plat­forms for deep­en­ing In­di­aASEAN eco­nomic co­op­er­a­tion as the 10-mem­ber bloc evolved from a mech­a­nism to pro­mote re­gional in­te­gra­tion for peace, pros­per­ity and sta­bil­ity to a dy­namic eco­nomic com­mu­nity.

While India's eco­nomic part­ner­ship con­tin­ues to ex­pand with 30 di­a­logue mech­a­nisms be­tween India and ASEAN, in­clud­ing a sum­mit and seven min­is­te­rial meet­ings span­ning sec­tors such as for­eign af­fairs, com­merce, tourism, agri­cul­ture, en­vi­ron­ment and re­new­able en­ergy, FICCI has sub­stan­ti­ated the ef­forts through eight Delhi Di­a­logues, an ini­tia­tive of our apex in­dus­try body with India's Min­istry of Ex­ter­nal Af­fairs and other part­ners in India and the ASEAN aimed at catalysing pol­icy di­a­logues, two edi­tions of the India-ASEAN Busi­ness Fair & Con­clave and the cre­ation of an ASEAN India-Busi­ness Coun­cil.

It is there­fore not sur­pris­ing to see the build-up of huge ex­pec­ta­tions among both the two Asian part­ners to­wards a cat­alytic trans­for­ma­tion in the In­dian-ASEAN re­la­tion­ship dur­ing the year and be­yond. There are, how­ever, two fac­tors sup­port­ing this op­ti­mism.

First, the huge in­ter­est in the ASEAN coun­tries about India as a po­ten­tial busi­ness av­enue. India's re­silient econ­omy, notwith­stand­ing the global head­winds, fast paced eco­nomic and tax re­forms in­clud­ing the ef­forts to im­ple­ment Goods and Ser­vices Tax, in­creased pub­lic in­vest­ment in in­fra­struc­ture, open­ing up of de­fence, avi­a­tion and pharma sec­tors to for­eign di­rect in­vest­ment, have po­si­tioned India as a poster boy of global growth and the ASEAN economies are keen to get a share of the pie.

Sec­ond is that the ASEAN is rapidly gain­ing cur­rency in India's roadmap of de­vel­op­ment and growth as an emerg­ing hub of global busi­ness and in­no­va­tive de­vel­op­ment with a young work­force, ris­ing in­comes, im­prov­ing in­fra­struc­ture and large for­eign in­vest­ments. The ASEAN economies have emerged as ma­jor global hubs for man­u­fac­tur­ing and trade and amidst slug­gish global growth stand out as oa­sis of growth in­di­cated by the on­go­ing ne­go­ti­a­tions for a Re­gional Com­pre­hen­sive Eco­nomic Part­ner­ship which once fi­nal­ized, will emerge as the largest re­gional trad­ing ar­range­ment. For In­dian com­pa­nies this means a bo­nanza in terms of ac­cess to the wider mar­kets of South East Asian re­gion with a mid­dle-in­come catch­ment of more than 600 mil­lion peo­ple and chan­nels of in­vest­ment in ASEAN mem­ber states.

To reap the div­i­dends of this amaz­ing play­out of op­por­tu­ni­ties, India and ASEAN need to ex­pe­dite ef­forts to­wards boost­ing trade and in­vest­ments. Though the ASEAN is India's 4th largest trad­ing part­ner ac­count­ing for 10.2 per cent of India's to­tal trade and in­vest­ment flows are also ro­bust both ways, the po­ten­tial is far more. Coun­tries like Thai­land have taken mea­sures to make the reg­u­la­tory en­vi­ron­ment more at­trac­tive with an aim to main­tain Thai­land's po­si­tion as the most pre­ferred in­vest­ment des­ti­na­tion cre­at­ing an op­por­tune mo­ment for India to push ahead with in­vest­ments in the re­gion.

One sure bet in terms of at­tract­ing more bi­lat­eral in­vest­ments is man­u­fac­tur­ing, with ASEAN mem­ber states eye­ing op­por­tu­ni­ties in the Makein-India ini­tia­tive and the India go­ing all out to be an in­te­gral part of the global sup­ply chain with eas­ing of busi­ness reg­u­la­tions and pro­cesses. The Modi Gov­ern­ment's pro­posal for a

Project De­vel­op­ment Fund to de­velop man­u­fac­tur­ing hubs in CLMV coun­tries fits in well with both de­signs.

An­other game-changer could be in­fra­struc­ture which is wit­ness­ing ex­plo­sive growth and po­ten­tial in both India and the ASEAN re­gion. India would like to see a greater in­ter­est among ASEAN states in its Smart Ci­ties mis­sion with fo­cus on ur­ban de­vel­op­ment, green tech­nolo­gies, real es­tate, san­i­ta­tion and trans­port sys­tems. Sim­i­larly, In­dian com­pa­nies could look at in­vest­ing in in­fra­struc­ture projects in ASEAN economies like Thai­land where the in­fra­struc­ture boom across roads, ports and eco­nomic cor­ri­dors should prompt In­dian play­ers to grab the op­por­tu­nity to be­come lo­cally in­te­grated and in­ter­na­tion­ally con­nected. En­hanc­ing con­nec­tiv­ity in all its di­men­sions - phys­i­cal, dig­i­tal, eco­nomic, in­sti­tu­tional and cul­tural - is at the heart of India's strate­gic part­ner­ship with ASEAN and the av­enues are mush­room­ing. The im­ple­men­ta­tion of the Mas­ter Plan on ASEAN Con­nec­tiv­ity 2025 sup­ported by India mer­its quick ac­tion as does an early con­clu­sion of the Agree­ment on Mar­itime Trans­port be­tween ASEAN and India and con­ven­ing of the first Meet­ing of the ASEAN-India Work­ing Group on Re­gional Air Ser­vices Ar­range­ment.

The In­dian Gov­ern­ment's an­nounce­ment of a US$1 bil­lion Line of Credit for un­der­tak­ing projects to en­hance phys­i­cal and dig­i­tal con­nec­tiv­ity in the ASEAN can serve as a timely in­cen­tive.

In the area of in­no­va­tion, gov­ern­ments and in­dus­try in India and the ASEAN could col­lab­o­rate on iden­ti­fy­ing im­pact­ful tech­nolo­gies from both ar­eas for ap­pro­pri­ate mar­kets. A pro­gramme de­vel­oped by FICCI and the Gov­ern­ment of India to train in­no­va­tors by men­tor­ing them on prod­uct com­mer­cial­iza­tion, mar­ket readi­ness, busi­ness mod­els, com­pet­i­tive po­si­tion­ing and rev­enue mech­a­nisms could lead to com­mer­cial­i­sa­tion of at least 20 tech­nolo­gies ev­ery year be­tween India and ASEAN and help gen­er­ate skills and en­tre­pre­neur­ial ef­fi­cien­cies. India and the ASEAN need to lever­age on this.

Even as the dy­nam­ics of the India-ASEAN en­gage­ment open up a wide agenda of co­op­er­a­tion for the gov­ern­ments and busi­nesses to take the re­gional re­la­tion­ship to the next level, FICCI is also ex­pand­ing its ac­tiv­i­ties to take our in­dus­try part­ner­ships to the next level and fa­cil­i­tate con­crete link­ages be­tween the stake­hold­ers of India and ASEAN in the pri­or­ity sec­tor of economies. The ini­tia­tives be­ing taken by FICCI jointly with the Min­istry of Ex­ter­nal Af­fairs, Gov­ern­ment of India, ASEAN gov­ern­ments, think-tanks and other part­ners range from the India ASEAN Busi­ness Sum­mit to be held in India as an­nounced by Prime Min­is­ter Naren­dra Modi to the first India-ASEAN Start up Awards which are aimed at en­cour­ag­ing in­no­va­tive en­trepreneur­ship to the first ever ASEAN India Biztech expo and con­fer­ence in Malaysia to bridge op­por­tu­ni­ties in busi­ness and tech­nol­ogy world.

The other pro­grammes in­clude the IXth Delhi Di­a­logue. an an­nual con­fer­ence of po­lit­i­cal and eco­nomic lead­ers, of­fi­cials, aca­demics and opin­ion-mak­ers of India and ASEAN coun­tries to in­ten­sify all-round in­ter­ac­tion be­tween the two re­gions, the India-ASEAN Women Busi­ness Fo­rum to recog­nise the in­creas­ing con­tri­bu­tion of women lead­ers and the sig­nif­i­cant roles they play in the eco­nomic and trade re­la­tion of India and ASEAN coun­tries and the first India ASEAN youth Sum­mit and Awards to rec­og­nize the hopes, as­pi­ra­tions and dreams of the younger gen­er­a­tion as well as their zeal to ex­cel and make a dif­fer­ence .

The bright side to the chal­lenge of skill de­vel­op­ment is that the gov­ern­ment rec­og­nizes India's favourable de­mo­graphic div­i­dend and is shoul­der­ing the re­spon­si­bil­ity of pro­vid­ing em­ploy­ment to mil­lions of youth in a big way.

No doubt the India-ASEAN Strate­gic Part­ner­ship has worked well to our mu­tual ben­e­fit but we are now po­si­tioned strongly to pool in our syn­er­gies to­wards shap­ing an eco­nomic and se­cu­rity ar­chi­tec­ture in the Asia-Pa­cific re­gion which is open, in­clu­sive, bal­anced and eq­ui­table. That will mark the true cel­e­bra­tion of our re­la­tion­ship of 25 years.

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