While Asia drove the world economy in the 19th century, it has come full circle more than a hundred years later, with India's geopolitical compass too pointing eastward. So when Singapore's Premier Lee Hsien Loong arrives in Delhi on June 29, India will sign what will be its biggest Comprehensive Economic Cooperation Agreement (CECA), another milestone in its East Asian odyssey. A precursor to a slew of economic agreements in the region, the accord points to the arc of advantage spreading from the Himalayas to the Pacific Ocean and driven by Prime Minister Manmohan Singh's vision of an Asian Economic Community.
| PICTURE SPEAK |
|STRATEGIC CHAT: Manmohan (right) with Singapore Premier Lee |
"The agreement will provide an opportunity to use Singapore as a channel for investments in India and will also send a strong signal to the ASEAN countries and the rest of the world," says Rajiv Sikri, secretary, East, Ministry of External Affairs. CECA is indeed just a stop on India's East Asia route. The integration with the economy of Singapore, which has for long been Asia's hub for the western mncs, will not only indicate to the global czars that India is acquiring a new avatar but will also pave the way for its integration with the economies of other ASEAN countries and Singapore's economic partners like the US, China and Japan.
According to South Block officials, India's growing interest in East Asia stems from its economic potential. India's trade with East Asia-its biggest trading partner-is nearly 35 per cent of its global trade. India, whose bilateral trade with 10 ASEAN countries alone is $13 billion, is now aiming for $30 billion by 2007. The areas of economic cooperation are immense: while India's prowess in it and biotechnology is at a premium, cheap components in electronics and auto parts would bring in new technology at a much lesser cost.
The CECA is a big leap over the traditional free-trade agreement (FTA). It is also the maiden bilateral economic integration agreement in services. This would mean that Indian professionals would have easier access to Singapore. Another first would be that some Singapore-based banks would be treated at par with nationalised banks in India and vice versa. Besides, the goods manufactured in Singapore will be available to Indian consumers at much lower prices. While the pact would entail mutual recognition of degrees, it would also ensure a liberal visa regime. "CECA will bring Singapore and India closer as our economies will become more integrated," says a senior Singapore diplomat. "India can be an engine for regional growth and are happy to be India's Hong Kong."
The pact is a quantum jump from the FTA India signed with Thailand in 2003 and stems from Delhi's strategy for East Asia. "The agreement and the interest shown by East Asia point to the fact that these countries want to plug into India's economic growth and opportunities," says Sikri. The diplomatic rush from the region proves it. Not only have civilian flights increased following India's announcement of the open-sky policy for better connectivity with ASEAN countries, but the air corridor is jammed with VVIP requests. Due to a busy calendar, Delhi had to reschedule the visits of Australian Prime Minister John Howard and those of the presidents of Indonesia and Philippines. More than half-a-dozen East Asian leaders, including Chinese Premier Wen Jiabao, Japanese Premier Junichiro Koizumi, Malaysian Premier Badawi and presidents of South Korea, Myanmar and foreign ministers of almost all ASEAN countries have already visited Delhi, even as India juggles to accommodate more. India has also received an invite to attend the first East Asian Summit in Kuala Lumpur, Malaysia, this year.
The East Asian engagement is transcending a range of issues. So while India is talking with China, it is also building economic ties with Taiwan. And even as the South Korean foreign minister heads for Delhi to power economic ties, an Indian delegation has returned from Pyong Yang with an assurance that North Korea will snap its nuclear links with Pakistan. Besides an FTA with ASEAN, India is talking with half-a-dozen nations to sign FTAs. It would also use groupings like BIMSTEC, Bangkok Agreement and Mekong Ganga Cooperation to push its East Asia agenda. It is not economics alone that is powering India's East Asian flight, but also the history of cultural links and areas of convergence such as the fight against terrorism and commitment to multilateralism.
Analysts believe the synergy between India and East Asia would make it a formidable combine. "East Asia is the emerging centre of gravity for the global economy with the bulk of growth happening here. It is a win-win situation for both sides: India gets access to a large fast-moving market and East Asia gets hooked with a growth driver like India," says Nagesh Kumar, director-general, Research and Information System for Developing Countries.
For Manmohan, the "Look East" focus comes naturally because it was the P.V. Narasimha Rao-led Congress government that had laid the foundation for the policy in 1991. As part of a calibrated strategy, India became a sectoral dialogue partner of the ASEAN in 1992, got the membership of its security grouping, ASEAN Regional Forum, in 1996, and graduated to a summit level partnership in 2002. In 2003, it signed a framework FTA in Bali which has yielded results now.
The road for CECA, however, has been bumpy. Mooted in 2002, it was only after Manmohan's intervention at the Bandung Conference in Indonesia in April this year that the roadblocks for CECA were cleared. As for other similar accords in the offing, Manmohan will have to balance India's interests and the sensitivities of domestic players while ensuring a speedier ride for the diplomatic freeways. While critics caution that India should handle its FTA fetish with care, the pivotal issue is that if India wants to make its mark as a world power, the integration with economic powers of East Asia will do much more for brand India than any pr blitz by South Block. The biggest challenge, however, will be to implement these accords. If India fails to do so, the window of opportunity may be lost.