Twenty years after India launched its Look East policy, and 10 years after it began a high-level engagement with the Association of Southeast Asian Nations (ASEAN), the relationship has travelled far. Having stayed outside the regional grouping for long, the elevation of New Delhi's ties with the ASEAN to a strategic partnership is a remarkable achievement. India is only the fourth country after China, Japan and South Korea to enter a strategic partnership with the ASEAN. The bottomline, however, has always been, and will continue to be, economic and trade cooperation. Almost three years ago, India implemented its first Free Trade Agreement (FTA) in goods with the ASEAN. The ASEAN-India Commemorative Summit this week in Delhi saw the finalisation of negotiations for the FTA on services and investment, which, once ratified and implemented, will facilitate closer economic integration of India and the bloc.
With a combined market of nearly 1.8 billion people and a combined GDP of $3.8 trillion, the ASEAN-India Free Trade Area (FTA) and the ambitious Regional Comprehensive Economic Partnership (RCEP) — which would also include China, Japan, Korea, Australia and New Zealand — will redefine the global economic architecture. As it happens, the bilateral trade volume between India and the ASEAN surpassed the $70 bn target for 2012 with $80 bn in 2011. The new target of $100 bn by 2015 looks eminently achievable. The services and investments FTA will not only propel Asia into a robust manufacturing, services and investment club, it will also benefit India's services sector immensely, which accounts for almost 60 per cent of the GDP. This FTA will also protect investments to prevent a GMR-Male situation. Having said that, however, India's challenges have just got bigger, as the increase in tariff-free lines, for example, will demand more comprehensive reforms from India.