Look east, at last

India’s foreign policy—which has mostly been a litany of floundering initiatives as a result of putting all its eggs in one basket—finally managed to bag itself some brownie points following the successful conclusion of the ASEAN-India Free Trade Agreement (AIFTA).

The agreement, which will be signed during the forthcoming ASEAN Summit in Bangkok and comes into effect from January 1, 2009, marks the first major success for India’s Look East Policy initiated by the then Prime Minister (the late) P.V. Narasimha Rao in 1992. That AIFTA comes over four decades after India was offered a full membership of the ASEAN Bloc even before it was formally formed, will, hopefully, mark another milestone in the MEA’s efforts to think not only long-term, but also strategically. It took us a decade to gain the status of a summit-level partner with ASEAN after starting out as an ASEAN sectoral dialogue partner in 1992. AIFTA is expected to boost India-ASEAN trade by $10 billion (Rs 43,000 crore) by next year, up from the current (2007-08) level of over $38 billion (Rs 1,63,400 crore), though the balance of trade is currently tilted in ASEAN’s favour.

Yes, there are strategic issues and interests at stake, too—prime among them being to counter China’s influence in the region, but that, by no means, has been the driving force behind AIFTA.

Indeed, ASEAN does not particularly look upon New Delhi as a counter to Beijing, though for individual countries, a dominant China is not in their strategic interest. This is where India can play its cards to its advantage. China’s own FTA with ASEAN, which concluded in 2004, has seen bilateral trade gallop to $171 billion (Rs 7,35,300 crore). The prospects for India’s trade with ASEAN are also pretty darn exciting— trade between the two has grown at an average of 28 per cent over the last two years and the region, with a combined GDP of $2,381 billion (Rs 102.38 lakh crore), is home to about 1.7 billion people.

While India will seek to dip into ASEAN’s expertise in electronic equipment, heavy engineering, product development and marketing, New Delhi will be looking to hawk its skills in IT, light engineering, pharmaceuticals and process development. Will this free trade agreement open the floodgates for other such clones? Well, that depends on whether the policy framers in the concerned ministries are able to shed their old baggage and think afresh on India’s strategic interests.