“India’s Commitment to Strengthening Ties with ASEAN: A Recipe for Enhanced Trade and Investment”

The Hon’ble Prime Minister of India, Shri Narendra Modi’s recent visit to Singapore and Brunei marked a significant step towards strengthening strategic partnerships and boosting economic ties with the ASEAN region. With these countries being integral parts of ASEAN, which accounts for approximately 29% of India’s merchandise trade with the bloc, they hold bilateral and regional importance.

India’s “Look East” policy, initiated in 1991, set the stage for enhanced engagement with East Asian nations. The following year, India became a sectoral dialogue partner of ASEAN, a geopolitical and economic organization. Negotiations for a goods trade agreement between India and ASEAN commenced in 2004 and culminated in 2009 with the India-ASEAN Free Trade Agreement (AIFTA), effective from 2010.

The Singapore visit was a pivotal moment as it elevated the decades-long cooperation to a comprehensive strategic partnership. Discussions encompassed a wide range of topics, including education, AI, fintech, and science and technology. Emphasis was placed on accelerating green corridor projects and improving connectivity to foster interpersonal and economic ties. The significance of the long-standing bilateral defense collaboration between the two countries was also highlighted.

India and Singapore solidified their relationship by signing four agreements in the realms of digital cooperation, education and skills development, health and medicine, and semiconductor ecosystem cooperation. These agreements will propel bilateral cooperation in critical areas such as digital public infrastructure, cybersecurity, 5G, and emerging technologies. The two countries have also enjoyed robust bilateral trade, with a total value of USD 35.6 billion in FY 2023-24.

India’s trade relations with the ASEAN region as a whole are equally impressive, reaching USD 120 billion in 2023-24. Singapore, Indonesia, Malaysia, Thailand, and Vietnam are the top five trading partners within the region. With the Indian government’s renewed focus on ASEAN, this trade trajectory is poised for substantial improvement.

India’s Trade with ASEAN Countries in 2023-24

The visit to Brunei held special significance as it was the first-ever bilateral visit by an Indian Prime Minister. This historic trip coincided with the 40th anniversary of diplomatic relations between the two nations. India and Brunei share a friendly bond characterized by mutual respect and understanding. Their historical, cultural, and traditional ties span a millennium. Bilateral trade has flourished, reaching USD 286 million in FY 2023-24, with USD 67 million in exports and USD 218 million in imports.

During the Brunei leg of the trip, discussions encompassed a broad spectrum of topics, such as defense, connectivity, trade, energy, health, education, and tourism. Both leaders emphasized leveraging their respective strengths in technology, finance, manufacturing, and processing, while also exploring complementarities. They acknowledged the criticality of food security and agreed to bolster cooperation in agriculture and the food supply chain through knowledge sharing and the exchange of best practices.

Mutual collaboration for shared benefit was a key theme, and the leaders agreed on the importance of close interaction through existing bilateral mechanisms. They decided to continue holding regular meetings, exchanges, and dialogues on bilateral and multilateral issues of mutual interest, including Foreign Office Consultations and Joint Working Group meetings.

India has also witnessed strengthened ties with other East Asian countries, including Malaysia and Vietnam. The Hon’ble Prime Ministers of Vietnam, Pham Minh Chinh, and Malaysia, Dato’ Seri Anwar bin Ibrahim, paid a three-day state visit to India in July-August 2024, charting a course for enhanced multi-sectoral cooperation. India and Malaysia share deep historical connections, with the Federation of Malaya (Malaysia’s predecessor state) establishing diplomatic relations in 1957. Today, Malaysia is home to the third-largest Indian diaspora globally, with approximately 2.7 million Persons of Indian Origin (PIOs), comprising 6.8% of Malaysia’s population.

Bilateral trade between India and Malaysia has been steadily growing, reaching USD 20 billion in FY 2023-24. This upward trend underscores the deepening ties and the potential for further economic collaboration. India and Malaysia’s partnership is further bolstered by growing bilateral investments, with Malaysia ranking as the 31st largest investor in India, contributing USD 1.2 billion in FDI inflows from April 2000 to March 2024. Over 150 Indian companies have a presence in Malaysia, investing in over 250 manufacturing projects worth more than USD 2.6 billion.

In conclusion, the renewed cooperation between India and ASEAN countries signals a strengthening of bilateral trade and investment relations. The enhanced trade and investments between India and ASEAN will create synergies for socioeconomic development, ultimately contributing to the economic well-being and prosperity of both regions.