India vs ASEAN: Strengthening Economic and Strategic Ties

India’s relationship with Southeast Asia is one of the most significant chapters in its modern foreign policy. What began as a cautious effort to reconnect with neighbours in the early 1990s has grown into a multi-layered partnership spanning trade, defence, and maritime security. At the heart of this engagement sits the Association of Southeast Asian Nations (ASEAN), a ten-member bloc that has become a cornerstone of how India positions itself in the Indo-Pacific. Understanding this relationship means tracing how economic ambition, strategic calculation, and shared regional concerns have pulled the two sides closer, even as real frictions remain.

From Look East to Act East 🔗

The story starts with economic reform. When India opened up its economy in 1991, it also began rethinking its foreign relations. The Look East Policy was launched alongside the liberalisation reforms, with its origins often traced to a 1994 lecture by then Prime Minister P. V. Narasimha Rao in Singapore. The aim was simple but important: reconnect with the fast-growing economies of East and Southeast Asia after decades of relative distance during the Cold War.

Institutional ties followed quickly. India became a Sectoral Dialogue Partner of ASEAN in 1992, a full Dialogue Partner in 1996, a Summit-level partner in 2002, and a Strategic Partner in 2012. Each step deepened the engagement, but the Look East Policy was often criticised as reactive and lacking long-term depth.

The shift to ‘Act East’ 🔗

In 2014, Prime Minister Narendra Modi upgraded the policy and renamed it the Act East Policy. The change in wording signalled a change in approach. The new policy moved India from merely “looking” toward the region to actively participating in its affairs. It rests on what analysts call the four Cs: Culture, Commerce, Connectivity, and Capacity Building. ASEAN sits firmly at the core of this framework.

The Act East Policy is not just diplomatic rhetoric. It is rooted in practical cooperation across trade, regional security, and infrastructure. Connectivity projects like the India-Myanmar-Thailand Trilateral Highway and the Kaladan Multi-Modal Transit Transport Project, which links Kolkata to Sittwe Port in Myanmar, are meant to physically tie India’s northeast to Southeast Asia.

Key milestones in the partnership 🔗

Several landmark agreements have given structure to India-ASEAN ties. These milestones matter because they turned goodwill into concrete commitments.

The 2004 Partnership for Peace, Progress and Shared Prosperity 🔗

At the third ASEAN-India Summit in Vientiane, Laos, the two sides adopted the ASEAN-India Partnership for Peace, Progress and Shared Prosperity on 30 November 2004. This document set out a comprehensive roadmap for cooperation. It was grounded in respect for sovereignty, territorial integrity, and non-interference, drawing on principles familiar to Indian foreign policy.

The partnership was not a one-off declaration. It has been implemented through successive five-year Plans of Action, building cooperation across political, security, economic, scientific, social, and cultural areas. This gave the relationship continuity well beyond a single summit.

The ASEAN-India Free Trade Area 🔗

The economic centrepiece came with the ASEAN-India Trade in Goods Agreement (AITIGA), signed in 2009 and effective from 2010. The agreement created one of the world’s largest free trade areas. Under it, both sides agreed to progressively reduce and eliminate duties covering a large share of traded goods. A services and investment agreement followed in 2014, broadening the economic relationship.

Trade: the engine and the friction point 🔗

Trade is where the partnership is both strongest and most contested. ASEAN has become one of India’s most important commercial partners. The numbers tell the story: bilateral trade reached USD 122.67 billion in 2023-24, accounting for about 11% of India’s global trade. ASEAN is consistently ranked among India’s top trading partners, alongside the United States, China, the UAE, and the European Union.

The scale is impressive. ASEAN brings together a market of roughly 650 million people and a combined GDP of around USD 3.2 trillion. Add India’s own large market, and the free trade area covers well over 1.8 billion people.

The trade deficit problem 🔗

Here lies the central tension. Trade has grown rapidly, but it has grown lopsidedly. India runs a large and widening deficit with ASEAN. Since AITIGA came into force, Indian imports from ASEAN surged far faster than exports, with imports rising by around 186% between FY11 and FY23 while exports grew far more modestly. India’s trade deficit with the bloc widened to over USD 43 billion in 2022-23, up sharply from around USD 5 billion in 2010-11.

India also worries about how the agreement is used in practice. New Delhi argues that lax rules of origin allow goods from third countries, particularly China, to enter the Indian market through ASEAN nations at preferential rates. India has called AITIGA a “lopsided” agreement that does not deliver commensurate benefits. Critics also note that just five ASEAN members account for over 90% of India’s trade with the bloc, suggesting the gains are highly concentrated.

Reviewing the agreement 🔗

Because of these concerns, both sides launched a formal review of AITIGA. The goal is to modernise the agreement, tighten rules of origin, address non-tariff barriers, and make trade more balanced. The review has moved through multiple rounds of negotiation, with a target to conclude it as a litmus test for the broader relationship. Progress has been slow, partly because India wants a swift conclusion while ASEAN prefers a slower, consensus-driven approach. Resolving this will require India to address its own supply-side weaknesses as much as it presses ASEAN for better terms.

Strategic and maritime cooperation 🔗

Trade may be the foundation, but security has become an increasingly important pillar. The relationship has shifted from a primarily economic and cultural orientation toward stronger defence and strategic engagement.

A shared interest in the Indo-Pacific 🔗

India and ASEAN both want a free, open, inclusive, and rules-based Indo-Pacific. India articulated this vision clearly at the 2018 Shangri-La Dialogue, placing ASEAN centrality at its heart. The concept of “ASEAN centrality” means that the regional bloc, rather than any single major power, should remain at the centre of the region’s security architecture. This matters because the Indo-Pacific has become an arena of intensifying competition, especially between the United States and China.

The backdrop of US-China rivalry, including trade tensions and China’s growing assertiveness, has made ASEAN’s role more significant. Smaller Southeast Asian states are wary of being forced to choose sides. India offers an attractive alternative partner: a large economy with a stable political posture and no record of territorial coercion in the region.

The South China Sea question 🔗

Maritime security is the sharpest expression of these concerns. Several ASEAN members, including the Philippines, Vietnam, Malaysia, Brunei, and Indonesia, have disputes with China in the South China Sea. India has consistently supported adherence to international maritime law, specifically the United Nations Convention on the Law of the Sea (UNCLOS), and called for freedom of navigation and peaceful dispute resolution.

India has backed words with action. The inaugural India-ASEAN maritime exercise took place in May 2023, followed by Indian warship deployments to the South China Sea. Defence cooperation with individual members has deepened too, including the BrahMos missile deal with the Philippines and joint naval activity. These moves reflect India’s growing maritime confidence and its commitment to a rules-based order.

Why the maritime dimension matters 🔗

The stakes are practical, not just symbolic. The bulk of global trade moves by sea, and the South China Sea and the Strait of Malacca are critical chokepoints. India’s own economic lifeline runs through these waters, with the overwhelming majority of its trade by volume transiting maritime routes. A stable, rules-governed Indo-Pacific is therefore a direct national interest, not an abstract preference.

Challenges and the road ahead 🔗

The partnership is strong, but it faces real obstacles. The trade imbalance remains the most pressing economic issue and risks souring goodwill if the AITIGA review fails to deliver. On the strategic side, ASEAN’s internal diversity complicates matters. The bloc operates by consensus, and its members hold varied positions on how firmly to push back against Chinese pressure. This can make collective action slow and cautious.

India also has to manage its own relationship with China carefully, avoiding the impression that its Indo-Pacific engagement is purely about containment. Many ASEAN states value India precisely because it offers balance rather than confrontation. At the same time, India must address domestic bottlenecks that limit its competitiveness if it wants to fully benefit from regional integration.

Despite these challenges, the trajectory points toward deeper cooperation. The relationship has been elevated to a Comprehensive Strategic Partnership, and engagement now spans digital innovation, supply chain resilience, climate action, counterterrorism, and capacity building. The combination of India’s Act East Policy and ASEAN’s commitment to regional integration will continue to shape the economic and strategic landscape of the Indo-Pacific.

What do you think? Should India prioritise fixing the trade imbalance with ASEAN before deepening strategic ties, or can economics and security advance together? And how far can India support ASEAN on maritime security without straining its own relationship with China?

References

1. https://diplomatist.com/2025/02/13/indias-economic-linkages-with-south-east-asia-the-growing-role-of-state-governments/
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3. https://vajiramandravi.com/current-affairs/act-east-policy/
4. https://asean.org/asean-india-partnership-for-peace-progress-and-shared-prosperity-2/
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7. https://www.policycircle.org/economy/asean-fta-trade-deficit/
8. https://vntr.moit.gov.vn/news/indias-moves-in-the-aitiga-review-negotiations
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10. https://blog.lukmaanias.com/2024/04/25/indias-nuanced-approach-in-the-south-china-sea/
11. https://www.asiapacific.ca/publication/explainer-whats-behind-indias-policy-shift-in-Indian-Ocean-Region