Perception Gaps
As India readies itself for the arrival of Indonesian President Prabowo Subianto for the country’s Republic Day celebrations, its position in Southeast Asian power dynamics going into 2025 is still ambiguous at best. The State of Southeast Asia 2024 Survey, conducted by the ASEAN Studies Centre at ISEAS-Yusof Ishak Institute in Singapore, finds India less strategically significant in regional opinion than New Delhi’s aspirations and what Indian popular perceptions might have expected. The Survey Report highlights a substantial absence of confidence in India among Southeast Asian nations, with 44.7% of survey respondents saying India lacks the capacity and political will for global leadership and is distracted by internal and sub-continental turmoil.
Likewise, another barometer of regional sentiment comes from the Lowy Institute’s Asia Power Index 2024 Edition, which identifies India as the third most powerful country in Asia, but still scoring below its rankings in 2018 and 2019. India’s ranking is particularly low in maintaining and developing regional trade relations and investment ties, as well as engaging with regional defense networks and global defense partnerships. This stands in contrast to India’s improved ranking in building diplomatic relationships and future resource capability. This successful indicator on the diplomatic front is likely to be a reflection of India’s commitment over the last thirty years to increasing engagement with the region through its Look East and Act East policies and its focus on establishing “comprehensive strategic partnerships” with Southeast Asian nations.
Both the ISEAS report and the Lowy Asia Power Index point out that India exerts less influence in the region than expected given its resources and capabilities. Some analysts have argued that India’s long standing Act East policy is not taken seriously by many Southeast Asian countries due to India’s lack of a more ‘overt’ presence in the region, raising skepticism regarding India’s role. India struggles with prioritizing strategic partnerships with ASEAN states while also balancing its commitment to the Quadrilateral Security Dialogue (Quad). What the survey suggests is that India has ended up punching below its weight in both ASEAN and Quad- not an enviable spot for a regional rising power.
Act East, ASEAN and Quad: A Balancing Act
The Act East policy of the current Indian government is a rebranded version of the previous Look East policy of the 1990s, in order to present India’s eastward engagement as more assertive, accelerated and dedicated to ensuring a free and secure Indo-Pacific. India has emphasized that ASEAN stands at the core of its Act East policy, however, increasingly, so does the Quad. No matter how they are pitched, the imagery of India’s Act East policy is inclusive and economic, in contrast to the more strategic and exclusive Quad.
According to the ISEAS Report, there is a decline in the perception of the Quad being complementary to ASEAN’s efforts; instead it is seen as threatening ASEAN’s centrality as well as provoking Beijing. India has stressed its support for ASEAN’s centrality and its efforts towards the creation of regional security architecture, while also positing that being a part of the Quad will aid this goal and push its Act East agenda. Given the Quad’s renewed activity since 2017 and India’s more narrow and high level engagement with Quad partners, it’s not surprising that there could be a perception that India plays a part in potentially sidelining ASEAN, a union seen as the region’s key diplomatic platform.
However, even when it comes to the Quad, it can be argued that recent developments raise concerns regarding India’s future as a serious security partner in Indo-Pacific. For example, the informal establishment of the ‘Squad’ is a new security grouping consisting of Australia, Japan, the Philippines, and the United States. India’s exclusion raises questions on the future of the Quad, which is no stranger to falling into inactivity (as it did from 2009-2017).
It would seem that India cannot take its perceived diplomatic success as a guarantee of substantive relations with ASEAN and the Quad. While being a crucial member of the Quad, India needs to find room to further engage with ASEAN on a greater organizational level as well as on a bilateral basis with individual member states. One way for India to balance ASEAN and the Quad is to consider ASEAN’s own approach and preferences on the common issues that both groupings seek to address. The South China Sea question as well as India’s regional economic engagement have relevance in this regard.
India in the South China Sea
India’s position on the South China Sea dispute has grown more assertive in nature, despite its official claim of neutrality. It has often referenced the ‘West Philippine Sea,’ implying the country’s recognition of the Philippines’ claim. This claim is further supported by its acknowledgement of the 2016 International Court of Justice ruling in favor of the Philippines over China.
India’s involvement in the South China Sea has continued to grow, particularly on defense. In May 2019, the Indian Navy held joint exercises with the U.S., Japanese, and Philippine navies in the South China Sea, followed up in 2021 with more exercises in the region with the navies of Vietnam, the Philippines, Malaysia, Australia, and Indonesia. Additionally, India has stepped up its military sales and assistance to the Philippines and Vietnam, reaching a deal to export 100 BrahMos supersonic anti-ship missiles to the Philippines in January 2022, and delivering the first batch in 2024. Additionally, Indonesia is slated to be an upcoming customer to receive the BrahMos missiles, and is also expected to request India’s support to maintain the Sukhoi30 fighter jets of the Indonesian Air Force.
Although India ranks low on the Lowy Asia Power Index metric of regional defense networks, its activity with the ASEAN nations directly embroiled in the South China Sea issue showcases the potential for expanding Indian presence in the region. Of course, ASEAN as a group has been long divided on the South China Sea issue, with its disunity making it unable to collectively do more than ‘name and shame’ China for any aggressive actions taken in the region. Additionally, China’s economic influence over ASEAN member states allows it to exert pressure on them, to prevent the organization from reaching any impactful consensus by threatening their economic interests. By increasing defense cooperation and also hastening its regional trade and investment connections, India could better position itself as a key player in the dispute and involve itself in this aspect of influencing the regional balance of power.
The Act East Policy’s Economic Direction
As highlighted by the Lowy Asia Power Index, India’s economic engagement with Southeast Asian countries is found lacking, particularly in recent years. This is evidenced by recent developments such as its withdrawal from Regional Comprehensive Economic Partnership (RCEP) in December 2019, as well as individual cases of falling bilateral economic engagement, such as the case of Malaysia. Although an Enhanced Strategic Partnership was established in 2015 and the 2011 Malaysia-India Comprehensive Economic Cooperation Agreement (MICECA) was established, India is no longer among Malaysia’s top 10 trading partners, and the share of Malaysia-India trade to total Malaysian trade has now fallen to below 3% per year.
Additionally, India’s trade with ASEAN member states is not robust and lags well behind China as the chart below shows.
With a positive trade balance in its favor, statistics reported till the third quarter of 2024 show that China’s goods trade volume with ASEAN since 2020 has been at least 6 times more than India’s, and on a consistent rise, while India’s goods trade with ASEAN member states has stagnated in recent years. China has also invested heavily in ASEAN, particularly in infrastructure projects intended to further boost trade. This is amplified by agreements such as RCEP and the ASEAN-China Free Trade Agreement (ACFTA), which draws ASEAN into dependency on Chinese imports, particularly manufactured goods. Several ASEAN nations have announced plans to investigate Chinese dumping and impose trade barriers and legislation to protect themselves from the dependency generated by cheap imported goods.
India, on the other hand, has been experiencing a widening trade deficit with ASEAN, despite the implementation of the ASEAN-India Trade in Goods Agreement (AITIGA) in 2010. While India’s exports to ASEAN for the 2022-2023 fiscal year were at $44 billion, the $87.5 billion import surge eroded export gains, a trend that continued into the 2023-2024 fiscal year.
The trade figures tell a story that is similar to the Malaysia case and the Lowy Asia Power Index: India needs to bolster its regional trade relations for its Act East policy to bear fruit. By regularly revising trade agreements with Southeast Asian countries, India can also ensure that it benefits from staying up to date with current trends in trade and innovation, while also resolving challenges and barriers to enhancing trade relations.
Is There Hope?
At present, India appears to be overestimating its role in Southeast Asia, conflating its diplomatic successes in the region with overall influence, something in which economic relationships and trade hold crucial importance. As the South China Sea dispute shows, China’s economic dominance over ASEAN nations allows it to exert control over the positions of members not directly involved in the dispute, preventing the union from adopting a cohesive stance on the issue.
For the Act East policy to generate tangible results, India needs to be able to handle being an active member of the Quad while simultaneously fostering stronger ties with ASEAN. It will not be an easy task. This would involve elevating trade with ASEAN nations by enhancing bilateral investments and revising trade agreements for up-to-date effectiveness. India would benefit greatly from accelerating its regional defense networks, particularly with ASEAN member states that are actively seeking to avoid or decrease dependency on China. By easing its trade deficit with ASEAN, more strongly supporting ASEAN centrality while also being an active member of the Quad and engaging with Southeast Asian nations on a case-by-case basis, India can pursue the assertive Act East policy and enhance its influence in its critical extended neighborhood that it aims for, but is still quite a distance from achieving.
By Deepa M. Ollapally, Research Professor of International Affairs and Director, Rising Powers Initiative (RPI) and Riddhi Likhe, Research Assistant, RPI and MA Candidate in International Affairs, Elliott School of International Affairs.
This Policy Brief is part of RPI’s newly launched Series on Indian Influence in the Indo-Pacific.
