With all these factors in operation, it took New Delhi some time to recognize that India’s economic interests are best served by greater integration with Southeast and East Asia, whose countries are natural trading partners with whom links had flourished millennia ago. This is why ‘Look East’ took so long in coming into existence. But ‘Look East’ goes well beyond economics. As Prime Minister Manmohan Singh has declared, the ‘Look East’ policy is much more than an external economic policy; it reflects a changed understanding of India’s role in the world economy and signals a significant strategic shift in India’s vision of international affairs. It is instructive that no Indian political party — and several have had turns at government since Narasimha Rao — has questioned either the underpinnings or the manifestations of the ‘Look East’ policy.
One factor helping drive the policy was undoubtedly China’s early interest in the region. During the Cold War, Southeast Asia saw itself threatened by the risk of communist expansion, but once China opened up its economy to the outside world and became a major trading power, the prospects of military adventurism receded. Nonetheless, China’s growing economic and military might cast a shadow over a region that had traditionally been wary of Beijing. India’s interest in engaging more deeply with them offered the nations of Southeast Asia the prospect of a democratic and non-threatening counterbalance. For years India had been bogged down in its own neighbourhood, and dismissed by most — especially by Beijing — as at best a subcontinental power. ‘Look East’ began with trade but soon expanded to include diplomatic dialogue and strategic and military cooperation. It helped that both sides of the equation enjoyed a shared colonial experience, cultural affinities going back to antiquity and, despite the estrangement of the Cold War years, a striking lack of historical resentments to come between them.
The India — ASEAN free trade agreement on goods, adopted in August 2009 in the face of critical domestic opposition from farmers in India, is perhaps the most striking evidence of the strategic priority accorded by New Delhi to commercial relations with the region. Part of the Framework Agreement on Comprehensive Cooperation signed with ASEAN in 2003, the FTA was India’s first multilateral trade agreement outside GATT/WTO. Indian bureaucrats had wanted to delay signing an FTA on goods until ASEAN members had agreed to conclude an FTA on services and investment, but they were overruled by Prime Minister Manmohan Singh, who was trying to use the FTA to send a political, and not just economic, signal to the region. (These negotiations are making slow progress, since India’s overwhelming advantage in the services sector causes some anxiety in Southeast Asia.) Nonetheless, in 2009 only 2.5 per cent of ASEAN’s trade was with India, compared to 11.6 per cent with China. In the three years since the FTA was signed, trade with ASEAN has gone up by 30 per cent.
In addition, a host of bilateral agreements has been signed with individual countries: FTAs with Sri Lanka and Thailand, comprehensive economic partnership agreements with Singapore, South Korea, Malaysia and Japan, and an early harvest scheme with Thailand, as well as strong commercial, cultural and military ties with individual ASEAN members, notably the Philippines, Singapore, Vietnam and Cambodia. Relations have been strengthened (and upgraded to ‘strategic partnerships’) with Japan and South Korea, seen previously as too close to Washington to be of interest to non-aligned New Delhi, and even with Taiwan, a country which India had traditionally kept at arm’s length out of skittish deference to Beijing’s sensibilities. With Japan, there has been a flurry of high-level exchanges, with every one of the country’s succession of prime ministers making a beeline for New Delhi early in his term. Tokyo tends to see the utility of building up India as an alternative Asian centre of attraction, if not quite a counterweight, to Beijing. India, not China, is now the top recipient nation of yen credits. Japan and South Korea clearly began to take India more seriously after the India — ASEAN relationship improved and India began engaging with the region’s leaders at summit level.
Japanese FDI in India is continuing to grow and has crossed $5.5 billion; Japan is also a generous purveyor of official development assistance, albeit in the form of loans, not grants, which are focused on infrastructure development (particularly power and transportation). One of the most important current Indo-Japanese projects is the Delhi— Mumbai industrial corridor, calling for an estimated total investment of $90 billion, which will transform a vast stretch of territory between the nation’s administrative and commercial capitals, involve a dedicated container freight rail line from the capital to India’s western seaports, vastly improved transport links and the creation of greenfield townships along its route. India and Japan elevated their relationship to a ‘strategic and global partnership’ in August 2007. The regular bilateral naval exercises already alluded to reflect the fact that more than 50 per cent of India’s trade and more than 80 per cent of Japan’s oil imports transit through the Strait of Malacca, giving both countries a significant stake in the security of the Indian Ocean. The exercises also reflect wariness about the likely need for understanding between the two countries in the event that China’s major military expansion begins to acquire unfriendly overtones.
Also in East Asia, South Korea has developed an increasingly important relationship with India, its entrepreneurial multinational corporations having made striking inroads into the Indian market. South Korean brands dominate India’s advertising billboards, and have cornered impressive shares of the market for cars and consumer goods. The steel company POSCO even launched a $12-billion project in Orissa, but this has fallen afoul of political and bureaucratic resistance by local tribals and Delhi environmentalists, so that the project’s long wait for approvals and clearances has been dragging on since 2005. An active India — Republic of Korea foreign policy and security dialogue has been established, and the prospects for defence cooperation appear bright, especially since India and South Korea decided to enhance their relationship to a strategic partnership in 2010.
These changed relationships offer a striking contrast to the days in the late 1950s when the Thai prime minister complained to an Indian journalist of New Delhi’s characterization of his country as a ‘Coca-Cola economy’, and Nehru’s foreign policy ideologue, V.K. Krishna Menon, when approached by Japan’s UN Ambassador Matsushima seeking collaboration, ‘shooed me [Matsushima] off, remarking that the policies of India and Japan were so different that collaboration was out of the question’. India kept ASEAN at arm’s length since its inception, seeing the organization as a surrogate for American interests during the Vietnam War. Its own increasing proximity to the Soviet Union, crystallized in the Treaty of Friendship and Cooperation signed as war clouds with a US-backed Pakistan loomed in 1971, did not help enhance its image in Southeast Asian eyes. The decision of the Indira Gandhi government to recognize the Vietnamese-backed Heng Samrin regime in Cambodia prompted further alienation between ASEAN capitals and New Delhi. India even rejected an invitation to become an ASEAN dialogue partner in 1980. But these difficulties were temporal and not structural ones. The estrangement ended swiftly when New Delhi wanted it to, in 1991.