India's Look East Policy

Introduction
Look East Policy refers to Indias initiative to cultivate and strengthen strategic and
economic ties with countries of South East Asia, with the aim of becoming a regional
power.
During the cold war era India had limited diplomatic relations with the SE Asian nations.
As India moved towards economic liberalisation in early 1990s, it realised the potential
and the boundless economic opportunities that the region offered. The need to develop
better ties with these countries was also felt to counter Chinas growing strategic
influence in the region.
The policy was enacted in 1991 and developed during the Prime Minister ship of PV
Narasimha Rao and was further very actively followed up by Vajpayee and Manmohan
Singh led governments.
The new government has adequately displayed its intent to vigourously pursue the
relations with our South and SE Asian neighbours. All SAARC heads of states were
invited during PM Modis swearing in ceremony and he has already visited most of the
important countries in the region in the first 100 days of his being in the PMs chair.

The strengths and grey areas of Indias relationship with our prominent neighbours that
fall within the ambit of our Look East Policy are discussed in the succeeding
paragraphs.
Bhutan
Bhutan happens to be the only all weather friend of India in the region. Except for the
recent issue of bitterness, when India suspended the supply of subsidised LPG and
Petroleum to Bhutan, the relationship has been fairly cordial. In order to ensure, that
Bhutan does not lean towards China, we need to effectively engage Bhutan in trade and
make the relationship meaningful.
Indian Armed Forces is maintains a training mission at Bhutan, Called India Military
Training Team (IMTRAT) to train the Royal Bhutanese Army. Also Border Roads
Organisation of India Army maintains the roads and bridges over a 1500 km stretch,
besides maintaining their Paro Airport in the capital.
Indias total assistance to Bhutan during its Xth Five Year Plan was Rs 5000 crores,
excluding funding for Hydropower projects. Bhutan is presently exporting electricity to
India from its existing hydroelectricity projects with a capacity of 1416 MW. It is
envisaged that this capacity will be raised to 10000 MW by 2020.
Understanding the strategic relevance of Bhutan, PM Modi decided to commence his
itinerary of the region with Bhutan. During his visit to Bhutan on 27 May 2014, he
assured that work on four new Hydropower projects, with total capacity of 2120 MWs by
Indian authorities will commence earliest.
Nepal
Nepal being a Hindu majority country, always shared very friendly relation with India.
Under the provisions of Indo-Nepalese Peace Treaty of 1950, Nepalese people can
work in India without a work permit and can have bank accounts and own property. Six
million Nepalese work in India and 600,000 Indians have made Nepal as their home.
India contributes to 47% of the total foreign investments into Nepal and two third of their
trade, estimated to $ 4.7 billion is with India.
The trade treaty between the two nations was revised in 1996, which catapult the export
from Nepal to India, eleven times, and bi-lateral trade, seven times. There are about
150 diverse Indian ventures operating in Nepal, including, manufacturing, services
(banking, insurance, telecom, Dry Port, education), power sector and tourism industry.
The scope for capacity building of hydropower projects in Nepal is phenomenal. It is
estimated that the present hydropower capacity of Nepal is 40000MW; the same can be
enhanced to 80000MW. In case the potential of hydropower is optimally harnessed,
Nepal will become the richest country of South Asia.

Indias External Affairs Minister Ms Sushma Swaraj visited Kathmandu from 25 to 27

July 2014 to bolster our relationship and to lay down the foundation for the visit of PM
Modi. It was the first joint commission meeting in 23 years. A wide array of subjects,
including security, border issues, economic and infrastructure development, trade, etc,
were brought to the table.
During the visit of PM Modi to Nepal, the following major bilateral issues were raised for
action:
i.

The joint commission reiterated the need to revise the Indo-Nepal Peace Treaty
of 1950, keeping the present day realities and geo-political situation in mind.

ii.

Both sides saw the need to improve intelligence and support to check cross
border nefarious activities and reiterated their commitment of not allowing
terrorist activities from their soil.

iii.

The other areas of concern, emerging due to a very porous border, that were
discussed by the joint commission are illicit smuggling, drugs and arms trafficking
and fake currency.

iv.

The joint commission directed a Nepal - India Boundary Working Group to

immediately commence the field work to identify and project discrepancies.

v.

Directions were also passed to expedite work on the construction of TanakpurMahenranagar link road and Integrated Check Posts to promote connectivity.

vi.

The rail link being constructed between Jogbani-Biratnagar is approximately 68%

ready on the Indian side and only 20% ready on the Nepal side, required
deliberate attention for early completion.

vii.

India agreed to continue to assist Nepal in Agriculture sector by exporting

chemical fertilisers and also by helping to set up a Deemed Agriculture
University.

viii.

In order to reduce Nepalese trade deficit, India agreed to further relax the rules
for more streamlined trade transit and making the custom procedures more trade
friendly.

ix.

Both sides stressed the need to complete the formalities for bringing into force a
Bilateral Investment Protection and Promotion Agreement (BIPPA) which will
safeguard trade dealings.

China is outracing India almost everywhere in the subcontinent in its Infrastructure

Diplomacy. Even in Nepal, China has invested $2.2 billion to link Lhasa to Kathmandu,
which happens to be the worlds costliest rail project. This rail link is expected to be

functional by 2020 and will integrate China-Nepal economies and foster people to
people contact.
If India loses this race of improving connectivity to China, it is then also likely to lose
investments made in Nepalese infrastructure development projects worth billions over
the years. Energy hungry China will also out bid India in hydropower projects, which are
in a ready to be harnessed state.
Myanmar
Myanmar shares a 1600 km border with India including a maritime border in the Bay of
Bengal. It is the gateway to ASEAN and lies at the intersection of India and Chinas
clashing interests for achieving regional dominance. It is also significant from the point
of view of economic transformation of our NE states.
China was the only country that continued to maintain economic and diplomatic
relations with Myanmars Military Junta. The Military Rule in the country lasted from
1988 to 2010. The world community, including India, during this period had severed all
ties with Myanmar.
After Myanmar progressed towards democratic reforms and in the by elections of April
2012, the NLD led by Aung San Suu Kyi had a landslide victory giving strength to the
democratic reforms.
As the democratic reforms gathered momentum relationship between India and
Myanmar improved. President Thein Sein visited India in October 2011 and Indian PM
Manmohan Singh visited Myanmar in May 2012.
During this visit 12 agreements were signed in varied fields of cooperation, including
security and countering insurgency which is a scourge for both the countries.
Myanmar is very rich in natural gas and mineral resources, and after the country has
displayed its earnestness towards democracy, most countries, including USA, have
commenced forging better diplomatic relations with Myanmar
China at present is Myanmars largest trading partner. However, it appears that
Myanmar wants to restrict its economic dependence on China. It is supporting the
cause of ASEAN countries who are voicing their opinion against Chinas unprovoked
interference and expansion of its maritime borders into the South China Sea.
India is stepping up its momentum to improve economic ties with Myanmar. The trade
between the two nations has gone up from 12 million in 80s to 2 billion. A number of
Indian companies have taken the initiative to commence establishing their base in
Myanmar. Some prominent names include, ONGC Videsh, Tata Motors, Century Ply,
Essar energy, Ranbaxy, CIPLA, Apollo, etc.

Top companies are looking for investment in telecom, energy and Aviation sectors.
Seven Indian companies are amongst 59 companies shortlisted by Myanmar for off
shore Gas block allocation.
India has also provided $500 million as credit to Myanmar for a host of infrastructure
development and capacity building projects.
External Affairs Minister, Sushma Swaraj visited Myanmar, in beginning of Aug 2014 to
attend the ASEAN Regional Forum meeting and East Asia Summit. Issues pertaining to
defence, internal security, and trade and consolidating support against Chinas
expansionism were discussed.
Indian PM has been invited by Myanmar to attend the ASEAN meet in November this
year, is a clear indicator that Myanmar wants to reduce Chinas monopoly and engage
with India more meaningfully.
Vietnam
Vietnam is another very important destination for India with respect to trade, energy
security and also to garner support of the anti-China camp. A number of Indian
companies are already securely anchored in Vietnam, with 68 operational projects
generating $1 billion revenue.
The major areas of Indian investment are oil and gas exploration, mineral exploration
and processing, sugar processing, Agro-chemicals, Agro-processing, IT sector, etc. The
single biggest Indian project is that of Tata Powers, $1.8 million worth Thermal Plant at
So Trang.
Similarly, the net worth of the projects being run by Vietnam in India is $2.3 million. The
two sides are looking at bolstering up bilateral trade to $15 billion by 2020.
Energy cooperation is another very vital area of interest to both nations. During the visit
of the Leader of the Communist Party of Vietnam to India in November 2013, Vietnam
agreed to grant seven blocks for oil and gas exploration to India. However, there is an
ongoing tussle between Vietnam and China regarding the claim to these blocks that
falls in the South China Sea.
Keeping maritime security concerns in mind, India has given credit of $100 million to
Vietnam to upgrade and purchase military hardware for maritime security, to this end on
29 October India and Vietnam signed seven agreements during the visit of Vietnamese
PM Nguyen Tan Dung to India.
Agreements include sale of four offshore patrol ships to Vietnam and oil and gas
exploration jointly by ONGC Videsh Limited and Petrovietnam in South China Sea. The
same had been disrupted on a previous occasion two years back as China claims the
disputed Spartly Islands and hence, the territorial rights over the region.

Thailand
Indias Look East policy of 1993 and Thailands Look West policy of 1996 set the stage
for a meaningful bilateral engagement. Besides, Thailand shares ancient cultural ties
with India as Buddhism spread to Thailand from India.
India and Thailand are part of multiple conglomerates like the Indias dialogue
partnership with ASEAN, ASEAN Regional Forum, East Asia Summit, and sub regional
group BIMSTEC (Bangladesh, India, Myanmar, Thailand, Nepal, Sri Lanka and Bhutan)
and trilateral transport linkage; India, Myanmar and Thailand.
In Jan 2012 PM Yingluck was invited as the chief guest for the Republic Day. During the
visit, six important bilateral agreements on security, bilateral cooperation and commerce
were signed.
India and Thailand signed an important Extradition Treaty on 30 May 2013, which
provides for a legal framework for extradition of fugitives.
India and Thailand also agreed to carry out joint patrolling of the coasts to check arms
and drug trafficking.
In order to encourage and facilitate trade, a Free Trade Agreement is being processed.
Also work is on to construct a highway linking India-Myanmar-Thailand; it is expected to
be completed by 2016. The same will result in economic development of our NE States
in a major way.
Indonesia
India and Indonesia share a maritime border across the Andaman and Nicobar Islands.
Trade with Indonesia is presently limited. However, efforts are on to enhance bilateral
trade in the coming years through a Free Trade Agreement that exists with ASEAN of
which Indonesia is a part.
In 2001 a Defence Cooperation Deal was signed between the two countries for training
and the supply of defence equipment to Indonesia. However, it was not pursued and
implemented, ostensibly, for want of funds for defence expenditure.
Since, 2002 India and Indonesia have been conducting coordinated naval patrolling of
the northern entrance of Malacca Strait.
Japan
Japan happens to be the cardinal spoke in the Indias Look East policy. A detailed write
up about the Indo-Japanese relations is given in my earlier blog. Please click this link to

read: http://www.olivegreens.in/our-blog/improving-indo-japanese-ties-for-betterbalance-of-power-in-the-region
Conclusion
The signing of Free Trade Area Agreement with ASEAN in 2009, gave a fillip to trade in
the region. Today the Indo-ASEAN trade stands at $80 billion. With the institutional
framework in place and the Modi governments commitment and focus towards
enhancing trade, it is expected that the trade with ASEAN will cross $100 billion by the
end of next year and the figures will be doubled by 2025.
The envisaged road and rail connectivity to energy giants like, Nepal and Myanmar and
further to Thailand, will improve people to people contact, thus enhancing the sphere of
economic cooperation and interdependence.
The highly underdeveloped NE States of India, which lie at the gateway to a region
offering unlimited economic opportunities, will witness an economic transformation.
Most of the ASEAN countries and Japan are projecting a tough stance towards Chinas
aggressive design of unlawfully encroaching upon land and maritime territories of other
countries. It is being increasingly felt that the monopoly and expansionism of Chinas
military might can only be checked through a collective stand.
In order to limit Indias regional dominance China has adopted a policy of String of
Pearls to isolate and intimidate India by expanding its area of influence around Indian
territorial extremities. Hence, forming a strategic partnership with the anti-China camp
will largely weaken Chinese aggressive posture. This is perhaps the strongest reason
for India to relentlessly pursue its Look East policy.