Singapore deputy PM for greater economic integration between India and Asean
- Asean and Australia, China, Japan, New Zealand and South Korea signed RCEP last November. Japan led the drafting of a declaration that left the door open for India to join the world's largest trading bloc later.
India should consider greater economic integration with Southeast Asia, including through the Regional Comprehensive Economic Partnership (RCEP), to unlock the country’s full potential, Singapore’s deputy prime minister Heng Swee Keat said on Wednesday.
Heng, who is also the coordinating minister for economic policies, made the remarks while addressing the opening session of the Confederation of Indian Industry’s virtual annual meeting against the backdrop of concerns among Southeast Asian nations about lack of focus in India’s economic ties with the region.
He noted that the Indian government has itself recognised that “a self-reliant India is not an insular India”, and said the “door remains open” for India to join RCEP when it is ready. At the same time, Heng said, India has an important role to play in contributing to the diversification of the global supply chain and making it more resilient.
Heng made three broad points in his speech – relations between India and Singapore have been propelled by steps such as the signing of the Comprehensive Economic Cooperation Agreement (CECA) in 2005, the potential to collaborate in new areas such as fintech and sustainability, and the importance of collaborating with Southeast Asia.
“The importance of collaboration to unlock India’s vast potential means that India should consider greater economic integration with the region,” he said. While acknowledging that globalisation comes with costs, Heng said if India can address “these downsides well – through reform, transformation and attracting new investments – it will be in a good position to ride the post-Covid wave of globalisation”.
Describing RCEP as an “important regional agreement”, Heng said it comprises the ten Association of Southeast Asian Nations (Asean) members and five major trading partners and is the “largest agreement of its kind in history”. He added, “We fully appreciate why India is unable to join the RCEP at this moment. But the door remains open, and we welcome India to do so when you are ready.”
Asean and Australia, China, Japan, New Zealand and South Korea signed RCEP last November. Japan led the drafting of a declaration that left the door open for India to join the world's largest trading bloc, covering nearly a third of the global economy, at a later stage. Indian officials have said the country didn’t join RCEP because it would have had negative consequences, including China using the trade deal to get unfettered access to the vast Indian market at the cost of micro, small and medium enterprises (MSMEs), farmers and start-ups.
Heng contended that the campaign for a self-reliant India is also about building a “stronger and more cohesive” country and said India must work with partners beyond its shores in a world disrupted by Covid-19.
“India has an important role to play in contributing to the diversification of the global supply chain and making it more resilient,” he said. “Indian companies have the capability, scale and resources to serve more than just its domestic market, huge as it is.”
He said there are tremendous opportunities for India to partner economies in Southeast Asia, with the ASEAN-India Free Trade Area established more than a decade ago helping to almost double two-way trade. “Asean and India have many complementary strengths. We should build on these to restore connectivity, and enhance supply chains in the post-pandemic era,” he said.
Heng, who was Singapore’s chief negotiator for CECA, also said Singapore has been India’s largest source of FDI in recent years, with direct investment growing 50 times to $45 billion. He also highlighted recent cooperation between the two sides on the Covid-19 response, including India keeping the supply chain for essential goods open early in the crisis, and Singapore sending oxygen-related supplies when India experienced its second wave of infections.