India and ASEAN: The Future of Act East
India’s relationship with the Association of Southeast Asian Nations (ASEAN) stands at a defining crossroads. What began as a civilisational bond tracing back to the maritime trade routes of the Chola and Srivijaya empires has evolved into one of the twenty-first century’s most dynamic economic and strategic partnerships. As the 47th ASEAN Summit convenes in Kuala Lumpur next week, it encapsulates both opportunities and challenges for India’s Act East Policy — its grand strategy to integrate with the economies of Southeast Asia and assert a stronger presence in the Indo-Pacific.
ASEAN’s importance in India’s external engagement cannot be overstated. With a collective GDP exceeding 4.5 trillion dollars and a population surpassing 700 million, ASEAN is India’s third-largest trading partner after the United States and China. Yet, despite trade volumes crossing 123 billion dollars in 2024-25, a widening deficit-touching nearly 45 billion-casts a shadow over this otherwise robust relationship. The crux of this imbalance lies in the ASEAN-India Free Trade Agreement (AIFTA), operational since 2010. While it succeeded in lowering tariff barriers and spurring trade,
it also tilted the scales in favour of ASEAN members, as India opened much more of its tariff lines compared to the more conservative liberalisation from ASEAN states. As a result, India’s markets became more accessible to ASEAN imports than vice versa, especially in sectors like palm oil, electronics, and chemicals.
India’s exports to ASEAN are notable for their diversity and quality. Engineering goods, automotive components, pharmaceuticals, textiles, and organic chemicals form the cornerstone of India’s export portfolio, tapping into ASEAN’s expanding consumption and infrastructure markets. On the other hand, imports are dominated by products crucial to India’s industrial ecosystem-crude palm oil from Indonesia and Malaysia, electronic hardware from Singapore and Vietnam, organic chemicals, and rubber.
But this complementarity also reveals dependence; ASEAN’s supply-chain integration — with China often at its core — has meant that India’s trade imbalance is increasingly fuelled by goods re-routed through ASEAN members, facilitated by lenient rules of origin under the FTA. Recognising these distortions, New Delhi and ASEAN have launched a comprehensive review of the ASEAN-India Trade in Goods Agreement (AITIGA). India’s demands are clear-tighter rules of origin to prevent third-country dumping, an equitable tariff realignment, and removal of non-tariff barriers that obstruct Indian exports.
For instance, Indian pharmaceutical and agricultural goods still face procedural hurdles and certification restrictions in several ASEAN markets, despite tariff concessions on paper. This review aims not to roll back liberalisation but to make it truly reciprocal, shifting the partnership from one of asymmetrical advantage to that of balanced growth.
Beyond trade in goods, India and ASEAN share deeply intertwined strategic and developmental goals. The Act East Policy, launched in 2014 by Prime Minister Narendra Modi, redefined India’s earlier Look East framework into a more action-oriented plan cantered on four pillars-economic integration, connectivity, security collaboration, and cultural diplomacy. ASEAN, at the geographic and economic fulcrum of the Indo-Pacific, occupies the strategic core of this policy.
Through ASEAN-led mechanisms like the East Asia Summit and the ASEAN Regional Forum, India projects its vision of a rules-based Indo-Pacific under the SAGAR doctrine-Security and Growth for All in the Region. This synergy aligns neatly with India’s Vision 2047, which envisions a 30 trillion-dollar economy built upon innovation, sustainable development, and regional integration.
Connectivity, however, remains the Achilles’ heel of this partnership. Despite ambitious designs, projects linking India’s Northeast to Southeast Asia have faced delays. The India-Myanmar-Thailand Trilateral Highway and the Kaladan Multi-Modal Transit Transport Project are emblematic of these challenges. The former, stretching from Moreh in Manipur to Mae Sot in Thailand, will create an unbroken overland route between South and Southeast Asia, while the latter will connect Kolkata’s port to Mizoram via Myanmar’s Sittwe port.
These projects, once completed, will drastically reduce transit times, boost trade accessibility for India’s landlocked Northeast, and better integrate India with ASEAN’s production networks. Plans are also afoot to extend these corridors to Cambodia, Laos, and Vietnam, giving material expression to India’s vision of a Mekong-India Economic Corridor. Maritime and air connectivity initiatives are advancing simultaneously, including negotiations for an ASEAN-India Maritime Transport Cooperation Agreement that would institutionalise direct shipping links.Such infrastructure efforts hold both symbolic and strategic significance.
They not only anchor ASEAN within India’s trade grid but also strengthen India’s role as a bridge between South and Southeast Asia-a pivot crucial to supply-chain diversification in a post-pandemic world increasingly wary of over-dependence on any single manufacturing hub. Accelerating these projects could transform India’s Northeast into an economic gateway, embedding it within one of the world’s most dynamic trade regions.
The synergies between India and ASEAN extend well beyond infrastructure. ASEAN’s rapidly expanding digital economy-projected to surpass 600 billion dollars by 2030-offers a fertile landscape for Indian fintech, e-commerce, and cybersecurity enterprises. Collaboration in renewable energy presents another avenue: India’s leadership in solar power and green hydrogen aligns with ASEAN’s decarbonization goals, opening doors to joint ventures and technology transfers. Similarly, growing concerns over food and health security make Indian agricultural technologies, processed foods, and generic pharmaceuticals indispensable to ASEAN’s development agenda. These complementarities underscore an essential truth: India and ASEAN should not be competitors but co-architects of an interconnected Indo-Pacific economy.
Adding an interesting diplomatic dimension to this summit is the Indian Prime Minister Narendra Modi’s decision to participate virtually, while former US President Donald Trump will attend in person. This approach essentially forecloses a high-profile Modi-Trump meeting on the sidelines of the summit, a meeting eagerly anticipated given the ongoing negotiations for an ambitious India-US Bilateral Trade Agreement (BTA) and joint initiatives to deepen bilateral trade to $500 billion by 2030.
Though the India-US relationship remains warm, rooted in strategic partnerships and democratic affinities, the absence of direct dialogue at this multilateral event may delay crucial trade discussions and strategic alignments. The postponement, whether unfortunate or strategic, means that India-US relations might temporarily lose some momentum in trade deal finalization, though overall diplomatic engagement continues through other channels.
The 2025 ASEAN Summit thus arrives at a time of both opportunity and reckoning for India. Its Act East Policy has brought tangible gains in integrating with one of the world’s most dynamic regions. Yet, economic imbalances, infrastructural bottlenecks, and geopolitical complexities require calibrated diplomatic and trade instruments. The review of the India-ASEAN FTA reflects India’s readiness to demand reciprocity and sustainability for its industries while preserving the spirit of regional cooperation.
In conclusion, India-ASEAN relations stand poised on the threshold of renewal. The partnership, propelled by the Act East Policy and intertwined with India’s Vision 2047, encapsulates far more than trade figures or summit declarations. It is a testament to an enduring philosophy that shared geography and history can be harnessed to shape a shared future.
Former Additional Secretary, Department of Commerce
