One of the world’s most vibrant regions is almost in India’s backyard and beckons closer ties.
In recent decades, the global standing of Southeast Asia, a region of 11 nations, has been consistently on an upward trajectory. A broader and long-term perspective calls for greater political and economic integration between India and this strategically situated region of 675 million people. India has historical ties with Southeast Asia, built through maritime trade, the spread of Hinduism and Buddhism, and deep cultural affinities. With a nominal per capita income of US$5,017, which is double that of India, and an aggregate GDP of $3.5 trillion—comparable to India’s—the region warrants closer mutual ties on a host of considerations. Together, Southeast Asia and India account for a quarter of the world’s population and 15% of global GDP, making them two of the fastest-growing regions in the world. Their diplomatic orientation also aligns, with both believing in cultivating relationships with multiple countries to promote regional stability.
The southeastern part of the Asian continent has a long history of colonization by European powers and was briefly occupied by Japanese forces during World War II. The region came into its own after the majority of its nations becoming free of the foreign yoke in the postwar years. Despite addressing complex ethnic and domestic challenges, these countries have continued to build their economies through concerted bilateral and multilateral ties, leveraging their strategic location along some of the world’s most heavily used sea routes. In an international environment of heightened geopolitical contestation and a weakening global economic order—resulting in instability, shifting trade patterns, and unpredictable investments—the region has remained remarkably stable. It has avoided becoming entangled in any of the large geopolitical conflicts of the times, nor are its nations involved in today’s major tensions.
With considerable variation in population and density, most Southeast Asian countries enjoy a significant demographic dividend. A majority of their ordinary citizens are optimistic about achieving major improvements in their lives, as noted recently by Singapore’s President Tharman Shanmugaratnam during the 20th anniversary celebration of the Institute of South Asian Studies. The emergence and accentuation of these favourable factors in recent years have prompted the industrialized world to take a more considered view of the region. Many forecast that, largely due to the potential for prosperity and progress in Southeast Asia, the 21st century could indeed be the “Asian Century.”
GROWING AFFINITY AMONGST SOUTHEAST NATIONS
The more affluent Singapore is classified as a developed nation, while Brunei Darussalam, Indonesia, and Malaysia are considered middle-income countries. These nations maintain constructive cooperation with Thailand, the Philippines, and the yet relatively less developed Vietnam, Timor-Leste (Asia’s newest country, formerly East Timor), Laos, and Cambodia. Myanmar, with a significant population of 54 million and a low per capita income of $1,053, remains the outlier, with no immediate prospects for political or economic recovery. A remarkable common aspect among these nations is their early recognition of the benefits of good neighbourliness and collaborative action. As early as 1967, five of these countries convened in Bali, Indonesia, to form the Association of Southeast Asian Nations (ASEAN). By 1999, the remaining five had joined, leaving only Timor-Leste, the small island nation east of Indonesia, outside the group.
Over the years, ASEAN has assumed significant centrality and become the principal regional grouping in Southeast Asia. It operates with a full-fledged secretariat in Jakarta and holds at least two annual summit meetings of member-state heads of government. These summits are followed up by ASEAN officials to ensure meaningful progress. The norms, rules, and values for member adherence have been codified, with the ASEAN Declaration Charter, signed in 2008, outlining accountability and compliance requirements that are legally binding on all members. ASEAN is also registered with the United Nations, which engages with it to mediate both within the region and with other countries.
ASEAN’s stated broader objective is the creation of a community of opportunities for all. To achieve this, it has established focused groups such as “Forging Ahead Together,” which operates with a Community Vision and a Political-Security Community. The ASEAN Economic Community envisions the entire region as a single market and production base, promoting equitable economic development and full integration into the global economy. Its Social-Cultural Community aims to help citizens realize their full potential, while the ASEAN Connectivity Community works on strengthening physical, institutional, and people-to-people connections to foster a more complementary, inclusive, and cohesive community. A specific group focuses on narrowing the development gap between member states through collaborative efforts in infrastructure, human resource development, information, and communications. ASEAN actively promotes the region’s external relations by establishing area-specific forums such as the ASEAN-India Summit, the ASEAN-East Asia Summit, and the ASEAN Regional Forum. Additionally, platforms for foreign, defense, and other ministerial-level discussions have been created to strengthen ties and cooperation.
A notable aspect of the growing cooperation among Southeast Asian nations is their emphasis on developing their own capabilities rather than seeking to crowd out others. This focus is increasingly evident in their efforts to spur innovation as a driver of long-term growth, favouring a competition of capabilities over stifling innovation by eliminating competitors. Besides it, these nations consciously promote collaborative efforts among governments, community groups, NGOs, unions, training institutes, and private firms. Such an inclusive approach fosters transparent thinking and advances long-term interests through political consensus and open economic policies.
Intensifying partnerships with Southeast Asia with an enlightened attitude should stand India in good stead. There is significant scope for enhanced collaboration in areas such as energy, advanced manufacturing (including defense equipment), healthcare provision, connectivity initiatives, digitalization, cyber security, sustainability, and skill development. By focusing on the specific needs of each member nation and building partnerships accordingly, India can strengthen its foreign policy framework, evolving from its “Look East” to “Act East” strategy. India’s recent designation as a full dialogue partner of ASEAN further underscores the expectation for a more active role in developing ties with its member states. This engagement is all the more required as India steps up its role in the new and the recently revived structures like the Quad, which operates under an Indo-Pacific vision.
THE CHINA FACTOR AT WORK
In recent years, China, leveraging its military and economic clout via initiatives like the Belt and Road Initiative (BRI), has succeeded in weakening ASEAN’s cohesiveness. Its divisive tactics have notably borne fruit in Myanmar, Cambodia, and Laos. Under President Duterte, China made significant inroads in the Philippines, although the two countries are now entangled in a territorial dispute. China has also built strong trade and investment relations with other ASEAN nations, particularly Indonesia, Singapore, Vietnam, and Brunei. Its lower manufacturing costs and efficient logistics, especially in transporting goods to nearby Southeast Asian countries, have made Chinese products highly competitive.
These advantages are gradually extending to high-tech sectors as well. Undoubtedly, India must seriously consider such developments and threats as it explores opportunities for deepening and expanding its strategic outreach in the region.
In 2021, fearing the dumping of low-cost Chinese goods, particularly manufactured products, Indian policymakers withdrew at the last moment from signing the 15-nation Regional Comprehensive Economic Partnership (RCEP) agreement. This pact includes the ten ASEAN nations, New Zealand, Australia, South Korea, Japan, and China. The duty reductions and facilitation measures under RCEP have brought China commercially closer to Southeast Asia in a more structured way, while India continues to operate under the older bilateral trade agreements. Additionally, China’s shared ethnic ties with citizens in several Southeast Asian countries have given it an edge . With India aiming to capture a share of the global value chains as China steps back, it may be time for India to reconsider its earlier stance on RCEP with an open mind. Fortunately, most of its members have indicated they would still welcome India joining the trade pact, even if belatedly.
In recent times, several Southeast Asian and Pacific nations have grown increasingly apprehensive over China’s aims to assert control over international waters. It has arbitrarily devised new regulations of passage and its powerful Coast Guard is attempting, as a part of a broader grey zone tactic designed to reinforce its specious territorial claims and expand its influence particularly in the South China Sea. The newly introduced rules justify the boarding and detaining of vessels and allow individuals to enter disputed maritime areas as well as check the overflights above this critical sea- passage .
The nations in the region have become concerned about China’s visible reluctance to adhere to the United Nations Convention on the Law of the Sea (UNCLOS) and the outright rejection of the ruling by the International Court of Justice regarding the sovereignty of the Spratly and other islands in the Philippines Sea . Such stances of expansionism have exacerbated the sense of fear and instability in the region.
CAREFUL STRENGHTENING OF INDIAN TIES
Despite China’s strong presence in Southeast Asia, India can vastly increase its bilateral trade. Singapore is already a key trading partner and a major source of FDI into India. Other economically significant nations in the region are now open to more active participation in the China Plus strategy, providing opportunities for India. With its strength in service-oriented activities, India has certain advantages in joining several global supply chains. Additionally, India’s young population positions it to export a relevant and specifically trained workforce to labor-scarce countries Singapore, Laos, Cambodia, and even Vietnam, which is beginning to experience a worker shortage. The ASEAN region as a whole faces shortages of doctors, paramedics, and teachers. It could benefit from skilled Indian professionals in energy, transportation, IT software, digital applications in advanced manufacturing and fintech besides hospital care and hospitality .The significant Indian diaspora already present in these countries should help the new immigrants settle quickly, ease their transition and enable them to prove their worth to employers early on.
While emphasizing the strengthening of ties with Southeast Asian nations, India must keep in mind of both their commonalities and their heterogeneity. The latter is as critical as the former. In addition to shared history, traditions, and culture, the levels of prosperity and progress vary widely across the region. For instance, Singapore, Indonesia, and Malaysia have achieved significant economic success and manage their internal and external affairs adeptly. They are followed by Vietnam, Thailand, Brunei Darussalam, and the Philippines, though there remains a noticeable gap in development.
India must deal with each of these eleven nations as equals, recognizing their unique identities rather than grouping them together, as was done not too long ago when all ASEAN leaders were invited as Chief Guests for the Republic Day Parade in New Delhi. Additionally, India should be cautious not to label these countries as part of the “Global South,” where the Indian leadership is better placed due to an already recognized degree of acceptance. This approach would give Southeast Asian nations a psychological feeling of equal footing with India, without the impression that they are dealing with a “Big Brother.”
Dr Ajay Dua, a development economist, is a former Union Secretary, Commerce & Industry.
Parts 2 to 4 of the series will focus on specific policy and areas of collaboration with the individual Southeast nations, as well as the region as a whole.