Arm in arm

In­dia is now proac­tively en­gag­ing with ASEAN coun­tries, hop­ing to deepen friend­ship and make its north­east­ern re­gion an eco­nomic hub

Governance Now - - CONTENTS - Shankar Ku­mar

In­dia is proac­tively en­gag­ing with ASEAN coun­tries, hop­ing to deepen friend­ship and make its north­east re­gion an eco­nomic hub

Acon­fi­dent New Delhi’s ef­forts to con­sol­i­date its ties with asean will see a new mean­ing and sig­nif­i­cance when it con­ducts a com­mem­o­ra­tive sum­mit with the group on Jan­uary 25 and makes all 10 heads of state of the South­east asian coun­tries chief guests for its repub­lic Day func­tion the next day.

This will be the third ma­jor diplo­matic event of its kind in In­dia af­ter the oc­to­ber 2015 africa sum­mit and the oc­to­ber 2016 BRICS sum­mit. South Block sources say New Delhi will use the sum­mit to de­clare a plan to con­nect asean with the am­bi­tious asia-africa growth cor­ri­dor, an ini­tia­tive in which Ja­pan, china’s pow­er­ful geopo­lit­i­cal ri­val in asia, will ini­tially in­vest $30 bil­lion while In­dia will put in $10 bil­lion.

“If you see the world map, you will re­alise that from lao PDR to myan­mar to Bangladesh to Kolkata to Kanyaku­mari to mau­ri­tius and then to mozam­bique, there is a seam­less flow of sea wa­ter. We want to use it for the smooth flow of trade and com­merce in goods [from South­east asia] to africa and for

that the north­east re­gion will be a ma­jor cen­tre of ac­tiv­ity,” Sachin chaturvedi, direc­tor gen­eral of min­istry of ex­ter­nal af­fairs-funded re­search and In­for­ma­tion Sys­tem for De­vel­op­ing coun­tries (RIS), told Gov­er­nance Now.

asian De­vel­op­ment Bank, asian In­fra­struc­ture In­vest­ment Bank (AIIB) and other mul­ti­lat­eral agen­cies like the World Bank are also be­ing ap­proached for the fund­ing of port and other in­fras­truc­tural projects in the north­east, myan­mar and Bangladesh.

Dur­ing June 23-28, In­dia will host a gov­ern­ing coun­cil meet­ing of AIIB in mum­bai in which the fi­nance min­is­ters from 84 coun­tries are ex­pected to par­tic­i­pate and dis­cuss an In­dia-led pro­posal on the de­vel­op­ment of coastal econ­omy in the In­dian ocean re­gion and need for fund­ing on­go­ing in­fra­struc­ture projects. Sig­nif­i­cantly, Ja­pan is play­ing a cru­cial role in In­dia’s con­nect with South­east asian coun­tries and africa.

“They [Ja­pan] are en­gaged in sev­eral de­vel­op­men­tal projects in In­dia. They are also closely con­nected with myan­mar, Thai­land and Bangladesh. They are in­volved in asia-africa growth cor­ri­dor; they are in­volved with our asean part­ners. They are part of Indo-pa­cific pros­per­ous re­gion; they are im­por­tant for us for their var­i­ous other on­go­ing projects. So Ja­pan’s par­tic­i­pa­tion is multi-pronged gain for us,” says chaturvedi.

Dur­ing the Jan­uary sum­mit, prime min­is­ter Naren­dra modi and the asean coun­tries’ lead­ers will not only dis­cuss is­sues re­lated to road, mar­itime and air con­nec­tiv­ity, spe­cial eco­nomic zones, in­dus­trial cor­ri­dors and in­tro­duc­tion of shared cul­tural pasts of In­dia and South­east asian na­tions in school syl­labus in con­so­nance with the ‘Shared Val­ues, com­mon Destiny’ theme of the con­clave, they will also see that a for­ward move is made for the speedy im­ple­men­ta­tion of is­sues dis­cussed in the meet. What, how­ever, ex­cites In­dia is that its en­gage­ment with asean has be­come rai­son d’être to make the coun­try’s north­east re­gion a hub of eco­nomic and peo­ple-to-peo­ple con­nect ac­tiv­i­ties be­tween the two sides.

The on­go­ing In­dia-myan­mar-thai­land high­way project, ex­pected to be com­pleted by 2020, is seen by ex­perts as the high­light of those ac­tiv­i­ties. The tri­lat­eral high­way will be fur­ther ex­tended to Viet­nam. ac­cord­ing to the RIS direc­tor gen­eral, there are plans to de­velop spe­cial eco­nomic zones along the tri­lat­eral high­way, a 1,360-km long stretch which starts from moreh in ma­nipur and ends in mae Sot in Thai­land. In­ter­est­ingly, the SEZ is­sue was thor­oughly dis­cussed at the In­dia-asean think-tanks meet in Jakarta on Jan­uary 6-7.

The meet, in­au­gu­rated by ex­ter­nal af­fairs min­is­ter Sushma Swaraj, also be­came the plat­form for dis­cus­sion on con­nect­ing through sea link myan­mar’s Sit­twe Port with Bangladesh’s chit­tagong port and odisha’s Pa­radeep port, cur­rently be­ing de­vel­oped as deep sea port along with 10 other In­dian ports un­der the am­bi­tious ‘Sa­gar­mala’ project.

of­fi­cials privy to the pro­ceed­ings at the In­dia-asean think-tanks meet say that once th­ese ports be­come op­er­a­tional, they will not only lever­age In­dia’s eco­nomic in­flu­ence in South­east asia, but also bring pros­per­ity to the coun­try’s north­east. “We are also propos­ing a ded­i­cated de­vel­op­ment cor­ri­dor from ma­nipur to myan­mar to take care of ex­port pro­mo­tions from In­dia and myan­mar,” says a se­nior gov­ern­ment of­fi­cial.

How­ever, be­fore turn­ing the north­east­ern states into a launch pad for In­dia’s de­vel­op­men­tal and eco­nomic

en­gage­ment with asean and africa, the re­gion needs to have its own pro­duc­tion base. at present the re­source mo­bil­i­sa­tion in each state of north­east is not more than 9 per­cent. This wor­ries pol­i­cy­mak­ers. “How you will cre­ate an en­tre­pre­neur­ial base if the tax col­lec­tion is very small there? If you de­pend on cen­tral grants for 80 to 90 per­cent of your re­quire­ments, the local econ­omy can’t grow. more en­tre­pre­neur­ial ac­tiv­ity, more busi­ness trans­ac­tions and more local pro­duc­tion are es­sen­tial if the econ­omy has to grow,” says the of­fi­cial.

Yet the good news for the north­east is that the cen­tre is speed­ing up road, rail and air con­nec­tiv­ity ini­tia­tives in the re­gion. Dur­ing his visit to mi­zo­ram on De­cem­ber 16, modi told a gath­er­ing that all state cap­i­tals of the re­gion will be brought on the rail map.

“We are com­mit­ted to bring all the state cap­i­tals of the north­east re­gion on the map. The gov­ern­ment of In­dia is ex­e­cut­ing 15 new rail line projects of 1,385 km length, at a cost of over ₹47,000 crore,” said modi who cel­e­brated three years of his gov­ern­ment by in­au­gu­rat­ing In­dia’s long­est Dho­lasadiya bridge, span­ning 9.3 km across the mighty Brahma­pu­tra in as­sam on may 26, 2017.

The min­istry of road trans­port and high­ways has al­ready an­nounced pump­ing in ₹1.45 lakh crore for build­ing roads in arunachal Pradesh, as­sam, Na­ga­land, ma­nipur, mi­zo­ram, megha­laya and Tripura. The gov­ern­ment aims to com­plete all road build­ing projects in the north­east by 2019.

If FICCI of­fi­cial gun­veena chadha is to be be­lieved, the air con­nec­tiv­ity pro­gramme from the north­east to asean is also gath­er­ing mo­men­tum. malaysia’s airasia air­line, al­ready op­er­at­ing from dif­fer­ent In­dian cities, is also plan­ning a di­rect flight from guwa­hati to Kuala lumpur and other world des­ti­na­tions, while Viet­nam and Thai­land are also plan­ning to op­er­ate their flights from as­sam’s cap­i­tal.

ex­perts feel that if so­cial in­fras­truc­tural in­sti­tu­tions like qual­ity ed­u­ca­tional in­sti­tutes and hos­pi­tals are strength­ened in the re­gion, it would prove to be the ic­ing on the cake for the local peo­ple. as per an es­ti­mate, about 700 to 800 stu­dents go to china each year for med­i­cal ed­u­ca­tion. It speaks vol­umes of out­flow of money from the re­gion on med­i­cal ed­u­ca­tion. But then there is equally a crit­i­cal lack of health­care fa­cil­i­ties in the re­gion.

“In the case of ma­nipur about ₹1,500 crore is flow­ing out of the state in terms of med­i­cal treat­ment or in the form of out­flow of stu­dents. If we ex­trap­o­late that for all the eight states in the re­gion, we may get a star­tling fig­ure. Health and ed­u­ca­tion are in­ter­twined and feed each other for achiev­ing hu­man re­source de­vel­op­ment in the re­gion,” states a note pre­pared by RIS on ‘De­vel­op­ment of North eastern re­gion of In­dia and act east Pol­icy’.

on June 22, 2017, ma­nipur in part­ner­ship with the con­fed­er­a­tion of In­dian In­dus­try (CII) held a con­fer­ence on pro­mo­tion of health­care sys­tems and med­i­cal tourism. The par­tic­i­pants called for in­vest­ments to set up med­i­cal col­leges and hos­pi­tals in as­sam, megha­laya, ma­nipur, Sikkim and other north­east­ern states. It is felt that once health­care in­fra­struc­ture gets de­vel­oped in the north­east and bot­tle­necks in con­nec­tiv­ity are re­duced then peo­ple from coun­tries like myan­mar, Bangladesh, Bhutan and Nepal, which lack suf­fi­cient qual­ity med­i­cal fa­cil­i­ties, will flock the re­gion for treat­ment and hence help the de­vel­op­men­tal plan of the area. In view of this, it has been pro­posed to set up a joint co­or­di­na­tion com­mit­tee in­volv­ing of­fi­cials from the min­istries of health, home af­fairs, ex­ter­nal af­fairs, civil aviation and Doner (de­vel­op­ment of north­east­ern re­gion).

a spe­cial ses­sion will be held on the north­east dur­ing the In­dia-asean sum­mit where par­tic­i­pants will also dwell on strength­en­ing cul­tural con­nec­tiv­ity be­tween the two sides. For­ma­tion of Bud­dhist cir­cuits criss­cross­ing In­dia, myan­mar, Thai­land, lao PDR, Viet­nam and cam­bo­dia will get due at­ten­tion in the meet, but a con­sid­er­able fo­cus will be given to bring In­dia and asean coun­tries’ shared cul­tural pasts in the school syl­labus of the two sides.

“Now an as­sertive for­eign pol­icy is be­ing pur­sued and against that back­ground we are com­ing out with sev­eral

pro­pos­als on our cul­tural con­nec­tiv­ity pro­gramme,” says an of­fi­cial re­quest­ing anonymity.

Such ex­er­cises are aimed at bol­ster­ing In­dia’s soft-power diplo­macy, yet what pinches New Delhi the most is the bur­geon­ing trade deficit with asean.

Trade deficit which was $4.98 bil­lion in 2010-11 bal­looned to $9.56 bil­lion in 2016-17. In­dia signed a free trade agree­ment (FTA) with asean for goods in 2009 and for ser­vices and in­vest­ment in 2012. The FTA in goods was im­ple­mented in Jan­uary 1, 2010. But in­stead of turn­ing out to be a pos­i­tive fac­tor in trade and com­merce be­tween the two sides, the FTA with asean has be­come a sea of woes for pol­i­cy­mak­ers and per­haps this is why New Delhi is hes­i­tant to go ahead with the re­gional com­pre­hen­sive eco­nomic part­ner­ship (rcep), a trade bloc in which china, Ja­pan, South Korea, aus­tralia and New Zealand are also par­tic­i­pants.

Since may 2013, the rcep work­ing group has held 20 rounds of ne­go­ti­a­tions on trade in goods and ser­vices, in ad­di­tion to nearly a half dozen com­merce-min­is­ter level meet­ings. Yet no con­crete pic­ture has emerged out of those ex­er­cises.

In­stead In­dia, as per highly placed sources, is be­ing pres­surised by the part­ners of rcep to re­move tar­iffs on 90 per­cent of the goods and bring­ing it down to zero. “It would be a recipe for dis­as­ter if we bind our­selves to such a pro­posal. We are al­ready fac­ing huge deficit in trade with asean af­ter we signed FTA with it. There­fore, we will not do any­thing that will kill our farm pro­duc­tiv­ity, dairy prod­ucts and oth­ers,” a source said.

In­ter­est­ingly, while asean and its as­so­ciates want In­dia to re­move tar­iff on trade in goods, New Delhi wants asean and its as­so­ciates to rat­ify trade in ser­vices so that the coun­try’s IT pro­fes­sion­als and other skilled per­sons work in those coun­tries. The is­sue will be dis­cussed dur­ing a three-day In­di­aasean busi­ness sum­mit dur­ing Jan­uary 22-24 in New Delhi.

ear­lier New Delhi wanted to go with a three-tier tar­iff re­duc­tion plan on goods im­ported from asean and its five as­so­ciates. Now In­dia is ready to go with a sin­gle-tar­iff plan un­der which it aims to re­duce tar­iff on 65 per­cent of im­ported goods from rcep coun­tries while com­pletely rul­ing out any move to re­duce the tar­iff to zero per­cent. Be­sides, In­dia has made it clear that it has no prob­lem in terms of in­vest­ment if it is made un­der the ‘make in In­dia’ ini­tia­tive. In­dia’s con­cern is that if it goes by the rcep coun­tries’ de­mand, chi­nese goods will start get­ting dumped into In­dian markets through asean routes. all in­di­ca­tions show that the work­ing group’s ne­go­ti­a­tions on goods and ser­vices would con­tinue and the mat­ter is not go­ing to be re­solved soon.

In spite of such prob­lems, the In­dia-asean sum­mit is likely to be very im­por­tant for New Delhi as it will take a call on in­creased peo­ple-to-peo­ple, cul­tural and aca­demic con­nec­tiv­ity be­tween In­dia and asean to stymie china’s in­flu­ence in the re­gion. For the first time, more than two lead­ers will be chief guests on In­dia’s repub­lic Day. In­dia in­vited more than one leader as the chief guest dur­ing the repub­lic Day cel­e­bra­tions only thrice. uk chan­cel­lor of ex­che­quer ra But­ler and Ja­panese chief jus­tice Ko­taro Tanka were the chief guests on Jan­uary 26 in 1956, while Soviet union leader alexei Kosy­gin and Yu­goslav leader mar­shal Josip Broz Tito were chief guests in 1968. Then in 1974, Tito once again was the chief guest along with Sri lankan prime min­is­ter Sir­i­mavo Ban­daranaike. Hence, the pres­ence of all asean lead­ers as chief guests at the of­fi­cial repub­lic Day func­tion will high­light the im­por­tance In­dia at­taches to the group un­der its ‘act east’ pol­icy.

Be­fore turn­ing the north­east­ern states into a launch pad for In­dia’s de­vel­op­men­tal and eco­nomic en­gage­ment with ASEAN and Africa, the north­east­ern re­gion needs to have its own pro­duc­tion struc­ture.

“From Lao PDR to Myan­mar to Bangladesh to Kolkata to Kanyaku­mari to Mau­ri­tius and then to Mozam­bique, there is a seam­less flow of sea wa­ter. We want to use it for the smooth flow of trade and com­merce in goods to Africa and for that the north­east re­gion will be a ma­jor cen­tre of ac­tiv­ity.” Sachin Chaturvedi Direc­tor gen­eral, Re­search and In­for­ma­tion Sys­tem for De­vel­op­ing Coun­tries (RIS)

Sushma Swaraj in­au­gu­rat­ing the IN­DIA-ASEAN think tank meet in Jakarta

Im­age Courtesy: as­tore in­ter­na­tional (

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