India’s Act East Policy: Study of Its Prospects in Northeast Region of India and Multiangular Implications in Relations with China


By ANIRUDDHA BABAR | February 1, 2019

ABOUT THE WRITER: Aniruddha Babar is an Asst. Professor, Tetso College, Department of Political Science, Dimapur, Nagaland

The main reason of the development and implementation of "Act East" Policy is to enhance the economic and social conditions in Northeast Region of India, as well as to enhance the trading relations of India with Southeast Asian countries. The development and enhancement of this policy suggests that India had sensed the shift in the power from the 'west' to 'east', which was necessitated by the changing geo-political conditions and trends in the Asia-Pacific region. The primary aim of the policy is to revive the political ties, receive regional security cooperation and developing trading relations for integration with Southeast Asia. Therefore, the significance of the Northeast region had increased due to its cultural and historic ties as well as geographical proximity with Southeast Asia. Therefore, this article will discuss the implications and influences of the Act East Policy in the Northeast region of India and its implication on relationship with China.

Oneof the most long-term vision of India has been seen through its "Look EastPolicy" it evolved in the early period of 1990s This policy was specificallylaunched in the year 1991 in the end of the Cold War and also following thecollapse of Soviet Union. In the era of the increasing globalisation,privatisation and liberalisation that are highly significant for promotion ofexports and important, there was still a major requirement in India for thediversification if the trade destinations. Historically India had significantand close trade relations with the countries like USA, UK, Canada, Japan,Russia and OPEC countries. However, after the Cold War the South East Asianeconomies grew across the period of few decades, which lead India to feel thesignificance of diversifying its trade directions towards the Eastern part specificallyEast Asia and South East Asia. India had identified that there is significantpotential in the markets of East Asia and South East Asia and thus, Indiastarted focusing on developing close economic ties with the Eastern countries.

Look East policy is considered as the vigorous economic policy, which primarily focused on ASEAN and East Asian countries. After being firstly introduced by then Prime Minister of India, Mr. Narasimha Rao, this policy has been supported and identified as important by all subsequent government in India. Considering the significance of this policy, as it led to a paradigm shift in the international economic ties, it became a significant part of economic reform agenda of India. Under the regime of current Prime Minister of India, Mr. Narendra Modi, The Look East policy was named or termed as "Act East" Policy during the East Asia Summit in Myanmar in November 2014. Though the clear features of the Act East policy were not clearly outlined by the government, yet it is believed that Act East is not only the continuation of the Look East policy, but also displays a significant transformation in the Indian foreign policies.

The main objectives of the Act East Policy are to promote and develop economic cooperation with the East Asian countries, to develop strong cultural ties and to develop strategic relationship with the countries situated in the Asia-Pacific region. Another objective and the priority outline in the Act East policy is to enhance and diversify the economy in the North East part of India (Set as the priority of the Act East policy in order to enhance the social and economic development of North East Asia). Therefore, Act East policy has been developed as an interface between the Northeast India and ASEAN countries. Therefore, this Indian foreign policy had also included some of the significant projects, such as "Kaladan Multi-modal Transit Transport Project, the India Myanmar-Thailand Trilateral Highway Project, Rhi-Tiddim Road Project, Border Haats, etc".

Through this policy, India has been actively engaged with ASEAN, as well as with the ASEAN Regional Forum (ARF) and East Asia Summit (EAS). India is also significantly engaged with regional forums, such as Asia Cooperation Dialogue (ACD), BIMSTEC, Indian Ocean Rim Association (IORA) and Mekong Ganga Cooperation (MGC). Other objectives of the Act East policy of India is to achieve close cooperation in combating terrorism that has significantly threatened the Northeast past of India, collaborating for the purpose of maintaining peace and security, as well as stability in the region and also promoting maritime security. Therefore, the policy is considered as multi-faceted and multi-pronged, as it has allowed India to develop strategic relations with many countries and also allowed to forge political and develop economic bonds. The connection and association of India with the South East Asia is very ancient, due to the influence of religion, culture, language and civilisation. The researchers have identified many historical evidences that suggest flourishing cultural and economic ties between India and countries situated in Southeast Asia.

However, the Act East policy of India is not free from some major challenges and concerns. The first challenge is the significant cost of investment and development. Most of the South East Asian countries are dependent on the external funds for making the major proportion of their budget, which can make it difficult for them to invest in various projects lead through Act East policy. Another significant challenge is the geo-strategic interest of India and China in the Southeast Asia could result in creating conflict, as well as the aggressive, economic, financial policies of China, and its aggressive technological innovations could become some of the significant challenges. However, the projects included under the Act East policy has significantly improve the economic activity in the Northeast India and has also opened the economic corridor for the region.

The Northeast region of India mainly comprises of the eight states (provinces) and these states are "Arunachal Pradesh, Assam, Manipur, Mizoram, Meghalaya, Nagaland, Sikkim and Tripura.". Northeast region of India has been of significant strategic importance for the country. The major reasons of this strategic importance are that Northeast is considered as culturally rich, as well as gifted with significant amount of natural and mineral resources. This region also has the close cultural ties with various Southeast Asian countries, as the various communities in the Northeast India had migrated from Tibet, Southwest China and several other countries. The waves of migration of the people in Northeast region (now considered as indigenous people) continued till early 20th century. Therefore, the strategic significance of the region increased because of the natural bridge that the region provides between India and Southeast Asia. Therefore, the geographical proximity with the Southeast Asia opened the ways for economic integration with neighbouring countries.

Governmentof India considered the northeast region of India as the gateway to Asia. ThePrime Minister of country have conducted many tours in the states of Assam,Manipur, Nagaland and Tripura and developed a new term for characterising theregion. This term was Natural Economic Zone (NEZ) and decided to develop theregion through economic corridors to South East Asia.  Under the Act East policy many of the newprojects were announced in the Northeast region, such programs and projectsincluded the scholarships for students, agriculture colleges (as agriculture isthe main economic activity in the region), development of sports universities,upgrading the digital and power connectivity in the region and new railwaylines. The first train from Guwahati to Meghalaya was also a significantdevelopment, as it laid the foundation for the first railway line to Mizoramand had been significant in inaugurating the Power plant in Tripura.

Government of India has also allocated the initial budget of US$ 10 billion for the northeast region. This budget has been allocated mainly for improving and developing the infrastructure and connectivity. This can be understood with an example of linking the region with Southeast Asia by developing the roads from Imphal to Mandalay in Myanmar. Another aspect of the development that has been initiated in the northeast region under the support of the Act East policy was highlighted in the Association of Southeast Asian Nations (ASEAN)-India Summit on November 12, 2014. This development was, enhancing the regional connectivity for the purpose of economic prosperity though Kaladan-Multi Modal Transit Transport Facility. This transport facility has been aimed towards establishing the connectivity between the Indian ports on the Eastern side and the Sittwe port situated in Myanmar. This was aimed to be developed through riverine transport corridor as well as the development of the roads in Mizoram has been envisioned towards providing the alternate trade route to the northeast region.

Realising the significance of the northeast region of India, some of the other projects have also been developed are "Moreh –Tamu–Kalewa Road, India-Myanmar-Thailand Trilateral Highway, Myanmar-India Bangladesh gas and/or oil pipeline, Tamanthi Hydroelectricity project and optical fibre network between Northeast India and Southeast Asia". The states like Mizoram, Nagaland and Arunachal Pradesh provide a significant landscape for the development, as well as the common culture and ethnicity factors, the enhancement of the railway and roads are highly significant for enhancing the economic trade activities. However, the major challenge that could be detrimental to the development of northeast, is the increasing threat of armed ethnic insurgencies. The studies have also identified a significant threat and challenge in Manipur. Such as the lack of the basic infrastructure, the illegal trade has increased in Manipur. This problem has also resulted in creating social problem in Myanmar. The studies have identified that drug trafficking in the states of Manipur, Mizoram, Nagaland and Arunachal Pradesh is the major problem causing destruction in the social environment and local dynamics in Myanmar. Another issue identified in the development of northeast region under the Act East policy is the lack of local support. The Act East policy has sometimes lacked the promotion of the unique local ways of doing trade.  The trade that has been envisioned under the policy is on very high grounds, which is difficult for the ill-equipped ethnic society. Almost all the states of the regions suffer from the militant violence and such violence is coming through the international routes that have connected the region with Southeast Asian countries. According to the analysis of all such evidences, it is difficult to attribute the Act East policy with the tag of 'good' or 'bad', as the government is still in the phase of improving the conditions and trying to reduce the negative impact of policy.

India and China both have a strategic interest in the Asia Pacific region due to various reasons. India developed the Act East policy for increasing its engagement in the Asia Pacific region and China has been closely watching the India's presence in the region. In the recent years, China has displayed a significant economic growth and its expensive economy has mainly drawn the countries from Southeast Asia into its own economic orbit. The growing power of China in the Southeast Asia has been a significant reason of concern for India. One of the most significant reason or the motive behind the Act East policy is to become the regional power in order to resist the increasing and emerging strategic influence of China in Southeast Asia.

Oneof the significant examples of increasing influence of China in the region isits trade relations with Myanmar. The trade relations of Myanmar with India andChina had grown since 1989, but the trade relations and economic benefits withChina has rapidly increased. Also, the trade relations of China with Bangladeshhave significantly exceeded than India's with a significant margin. Apart fromthe economic sphere, financial and military assistance of China to thecountries in Southeast Asia have been significant that can further impact thetrade relations of India with the Southeast Asian countries. Although, Indiahas been focusing on improving and increasing its Bilateral and multilateralrelations with Southeast Asia and Bangladesh and creating a huge bilateral andmultilateral markets. However, a significant concern is the growing abilitiesof China in the field of technology and such aggressive innovation oftechnology in China has gained the competitive advantage for China in theregion.

However,one significant advantage that India can gain through Act East policy is thatIndia provides huge opportunity for investments and also provides low labourcost. However, the labour cost and the hourly wages in China has increased onaverage of 12% annually. The development of the railways and roads under theAct East policy in India can help in enhancing its trade relations withSoutheast Asian countries. Therefore, though there are main aspects of growthfor India, it still requires to enhance its economic and political relationswith China. Increasing cooperation with China can significantly help inresolving many security and stability related issues in the Northeast region ofIndia.

Thepurpose of this article was to identify the evidences that inform that how ActEast Policy of India influences the social and economic environment inNortheast region of India and what could be the implications of this policy onrelationship with China. This research provides many evidences that inform ActEast policy of India has significant potential to improve the economiccondition in the Northeast region and can also improve trade relations withChina. However, the policy still has some negative implications that could beremoved through understanding the ethnic issues, political aspirations of localpopulation, addressing the needs of ethnic society and by countering theincreasing influence of China.

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