Written by Rahul Reddy.
2017 marks the 25th anniversary of ASEAN-India ties. Prime Minister Narendra Modi recently attended the Asia Pacific Economic Cooperation (APEC) summit in Vietnam and the Association for Southeast Asian Nations (ASEAN) summit in the Philippines. U.S. President Trump expended notable political capital to push for India’s future inclusion in the 21-member APEC, referring to the region as ‘Indo-Pacific’ as a thinly-veiled rhetorical shift from ‘Asia-Pacific.’ On the sidelines of these summits, a ‘Quadrilateral’ U.S.-India-Japan-Australia geo-economic nexus also re-emerged.
In New Delhi’s quest for economic and developmental parity with Beijing and a louder voice in global multilateral institutions, the race for Eurasian connectivity is a key strategic lever that India cannot ignore.
Increasingly, New Delhi’s quest for freer trade and enhanced economic growth calls for rapid Eurasian connectivity: the increasing relevance of Southeast Asia as both an import and export hub persists as does the imperative for reliable land routes into Central Asia, Russia and the E.U. to circumvent frozen relations with Islamabad. Among many strategic initiatives that may impact India’s economic prospects in the next decade, four stand out.
Since 2014, Mr. Modi has been touting an ‘Act East’ policy of enhanced economic and security ties with ASEAN, Bangladesh, Japan and Australia. One operationalization of ‘Act East’ has been through the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). Connecting South and Southeast Asian economies, BIMSTEC encompasses 1.5 billion people, 22 percent of the global population, a $2.7 trillion economy and average growth rates of 6.5 percent. It aims to catalyze economic development through cooperation in trade & investment, industry, energy, infrastructure, transportation, agriculture and tourism. China’s Belt and Road Initiative (BRI) has also called for partnership with India.
Recent tensions in Doklam along the Indo-Sino border have stifled such voices for cooperation. Still, India remains geographically key to BRI’s Southeastern corridor, onward to the China-Pakistan Economic Corridor (CPEC). This route would begin in Kunming, China, cutting through Southeast Asia, onward to the Indian port of Kolkata where a maritime corridor would be used to transport freight to Pakistan’s Gwadar Port, linking it to CPEC. The ASEAN bloc’s relentless growth (6.2 percent of global GDP), has also spurred the advent of a Bangladesh-China-India-Myanmar Economic Corridor (BCIM), linking China and India both to one another and to ASEAN. India’s inclusion in such initiatives could revolutionize trade and transport efficiency in the region at large.
New Delhi & Moscow
Today, Russia and India are bound by two key areas of cooperation: energy inflows from Russia to India, including nuclear energy technology and oil exports, and the lucrative defence trade. In June 2017, Russia announced the establishment of an ‘Energy Bridge’ intended to enhance bilateral cooperation in nuclear, hydrocarbons, natural gas and other renewables. Russia has also proposed an Russia-Pakistan-India natural gas pipeline and a $25B Russia-India pipeline that could pass through Central Asia, Iran and Pakistan into western India. The stalled Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline is also attracting renewed interest. These initiatives would showcase maturity on the part of New Delhi, both in discarding geopolitical differences with Islamabad and Beijing and in managing Washington’s expectations to ensure India’s long-term energy and defence imperatives. A recent free trade agreement between India and the EAEU- Russia, Kazakhstan, Belarus, Armenia and Kyrgyzstan- is noteworthy. It is estimated to increase bilateral trade by more than 18 percent, with trade volumes expected to balloon dramatically from $8.8 billion in 2016 to $30 billion by 2025. These are significant steps for India-Eurasia connectivity prospects, institutionalizing India’s economic relations with both Russia and the greater Central Asian economic area.
The North-South Bet
Expected to become operational in March 2018, the International North South Transportation Corridor (INSTC) is a 7,200km rail, road and maritime corridor between India, Iran, Central Asia, Russia and eventually the E.U. The corridor is estimated to reduce costs by 30 percent and freight transport distance by 40 percent. From India’s perspective, the strategic value of the corridor would be to counter China’s BRI by utilizing its key port city, Mumbai, for a northward maritime route to Iran, onward to Azerbaijan, Russia and Europe while facilitating southward connectivity through Mumbai onto Southeast Asia. As with Chabahar, the INSTC will also bypass Islamabad, offering efficient land access into Afghanistan and northward. INSTC will immediately enhance India’s Central Asian connectivity, ease access to energy rich Iran and Russia and make Indian exports to the EU more competitive.
The India-Japan-led Asia Africa Growth Corridor (AAGC) is billed as a ‘visionary’ future initiative to spur connectivity on a continental scale. The blueprint for AAGC, revealed in a vision document released by New Delhi and Tokyo in May 2017, aims to boost growth and create infrastructural inter-connectivity between all Asian regions and between Asia and Africa, with Africa acting as a geographic launching point to further cross-continental corridors. It priorities quality infrastructure, people to people ties, and institutionalized skill development. Such a grand strategy in practice would cement the New Delhi-Tokyo-Australia alliance in Asia as a U.S. friendly counter to a rising Beijing.
A Work in Progress
In New Delhi’s quest for economic and developmental parity with Beijing and a louder voice in global multilateral institutions, the race for Eurasian connectivity is a key strategic lever that India cannot ignore. Its long-term commitment to a grand economic cooperation vision has begun crystallizing. As a volatile domestic political scenario persists with Mr. Modi remaining in position for re-election in 2019 amidst a flailing opposition, India’s economic and infrastructural partnerships across Eurasia should remain in both analysts’ and voters’ sights.
Rahul Reddy is with the Asian Development Bank’s Central Asian Regional Economic Cooperation. His areas of academic interest include geopolitical analysis, urbanization, and transportation infrastructure, particularly in South Asia. Image Credit: by Indian Ministry of External Affairs/Flickr.