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Across the straits

The declining fortunes of the Asian Tigers and China's aggressiveness have given India's Look East policy a boost. But New Delhi is still to prove itself as an Asia-Pacific power Pramit Pal Chaudhuri writes.

india Updated: May 21, 2011 17:02 IST
Pramit Pal Chaudhuri

India's Look East policy is transforming into a Do East policy. Some genuine economic and strategic heft is being added to what used to be an engagement of trade-and-rhetoric with the Asia-Pacific rim. New push and pull factors are driving this change.

The biggest push factor is the growing investment presence of India's private corporate sector in a swathe of countries ranging from Australia to Japan. The new pull factor is China's increasing willingness to pick fights with its neighbours. India's naval profile is now a matter of interest beyond the Straits of Malacca. India's private corporations and entrepreneurs have become rock stars in Southeast Asia. The Asian Tigers are limping. Maturer Southeast Asian economies like Malaysia and Thailand are seeing China eating into what was once their industrial bread and butter: goods made on their soil for export by foreign multinationals. Their labour costs are too high, their domestic firms too small for them to find a new competitive niche.

To plug this hole they are inviting Indian firms to invest, and encouraging their firms to seek South Asian customers. Malaysian firms have already put $2.5 billion in India. Recently, Malaysian Prime Minister Abdul Razak spoke to The Indus Entrepreneurs and urged its Indian business membership to invest in his country because "there are many fields and industries in which Indian companies, and the entrepreneurs that drive them, are leading the world."

But even a country like Japan, still the world's third-richest nation, is looking at building India's infrastructure and partnering with Indian firms to breathe new life into its economy. The ruling Democratic Party of Japan was less Sinophobic than its predecessors. But it continued the same India policy because of its economic New Growth Strategy, say Japanese officials.

Then there is the pull factor of China.

Beijing has raised the hackles of pretty much everyone the past two years. No one is quite sure why China is suddenly bursting testosterone, but senior Indian officials say a belief that the US in "terminal decline" is probably the most important. The primary consequence has been a growing US willingness to confront China in the Asia-Pacific area. The secondary one has been rallying behind the US of most East Asian nations, especially in Southeast Asia. This was particularly evident at the latest Asian Regional Forum when China found itself isolated on the region's various territorial disputes.

India is a small but growing part of this equation. Japanese scholars pointed out their country's defence agreement with India is, on paper at least, second only to its understanding with the US. The militaries in many Southeast Asian countries are now exploring the idea of India as a military hedge against China.

Though the strategic element in the Look East policy receives much attention, the truth is that most Southeast Asian nations have doubts over India's will and wherewithal to project power outside the Indian Ocean. The meekness of India's response to North Korea's aggression this past week has only strengthened the sense that India as a Pacific player is still a work in progress.

What does India have to do to be seen as a genuine Asia-Pacific player? One, actively pursue the Japan relationship. As Prime Minister Manmohan Singh has noted, this is one of the few relationships that is potentially ‘transformational' in terms of massively multiplying India's capacities. "India and Japan are natural allies," says Asia expert Daniel Twining of the German Marshall Fund, "who complement each other's security and economic needs."

Two, India needs to provide an alternative manufacturing hub to China. At present, the Asia-Pacific economy is dominated by manufacturing supply chains whose centre is China and whose spokes run to Southeast Asia, Japan and South Korea. The final goods destination remains the West. This has been the source of China's enormous trade wealth. Conversely, India is a marginal trader because it's outside this web. One reason India is signing many bilateral free-trading agreements in Asia is to try and move more of these supply chains across its borders.

Three, India needs a military posture in the Asia-Pacific that goes beyond sending the odd warship and holding the odd military exercise. These are symbolically nice but substantially meaningless. India has almost no military infrastructure east of the Andamans. One possible move: piggy-back on the existing resources of the US military in that area.

Finally, India remains overly cautious on the diplomatic front. New Delhi strongly supported bringing in countries like the US into the East Asia Summit — and providing ballast against a rising China. An Australian diplomat commented, "The membership's good now, now we need to get the agenda right." But India seems fuzzy about what comes next. Says a western diplomat, "It's not clear India has understood that the summit could be a security arrangement and not merely an economic body."

New Delhi recognises China's bungling and India's entrepreneurs have helped give its Look East policy a set of jet-powered wings. All that is required for New Delhi to learn is how to follow the pilot manual.