India’s Act East Policy

India’s Act East Policy: A critical analysis on Federalism and Paradiplomacy
Doctoral Fellow, Department of Politics and International Studies, Pondicherry University, Puducherry, 605014
Email: [email protected] No-+91-7598141368
Abstract
Provincial governments can be international actors. This phenomenon of subnational governments evolving international relations, often called paradiplomacy, has been visible in western liberalised democracies. In India, federalism has both positives and negatives, and even dangers. The New Economic Policy of 1991 provided various prospects to the state governments to monitor foreign investments. At the same time political paradiplomacy adept by some of the states can affect the national foreign policy negatively. Further, paradiplomacy is likely to pose a threat to the country’s sovereignty and integrity from within and outside forces of cross-border terrorism, insurgency and separatism. Since it renamed ‘Look East’ as ‘Act East’ in 2014, the NDA government has hunted a more “dynamic” and “action-oriented” approach in its relationships with not just ASEAN, but also the wider Asia Pacific, with prominence on Japan. The challenge of Act East policy remains the connectivity between Northeast states with other Indian states on the one hand and North East states and India’s immediate neighbours, mainly Myanmar and Bangladesh. The objective of this paper is to grasp the geo-political constraints of federalism in the context of changing domestic and global situation. This paper also explore how different types of economic policies affecting India- ASEAN relations. Moreover the author of this paper will critically analyse and examine India’s diversifying nature of engagement with Southeast Asian countries.
Key Words: Act East Policy, Paradiplomacy, Federalism, North East India, Look East Policy
Introduction:
Recent years have seen in growing participation of regional governments in the international affairs, a phenomenon sometimes known as paradiplomacy. Globalisation and the rise of transnational regimes, particularly regional trading areas, have eroded the distinction between domestic and foreign affairs and by the same token have distorted the detachment of responsibilities between state and subnational governments. (Aldecoa, Francisco and Keating, 2013) In India, a massive fiscal and balance of payment Crisis of 1991 pushed Indian government to take revolutionary step, i.e. the introduction of economic reforms and structural adjustment. (Chandra, 2008a) One more systematic change is that with demise of the USSR and the end of Cold War, India also have to find new friends and partners. In this context, Southeast Asia was one of the very first regions New Delhi decided to approach. In the process, India initiated the Look East Policy, marked at re-engagement with India’s eastern neighbourhood. (Mezard, 2016a) All these changes stimulated state governments to join directly in India’s foreign affairs by building links with international organisations, other national and subnational governments. State government have also engaged with overseas companies in pursuit of foreign direct investment (FDI). (Watt, 2017a) Aside from federalism, globalisation and regionalism are motivating factors which overdue the rise of states’ paradiplomacy in India. Regional parties headed by charismatic and some cases development-oriented regional leaders have converted into important national players, while the central government can no longer take them for granted. Leaders openly concede that regional parties are not only looking after the problems of their corresponding regions, they are also involved in deciding the national problems. (Jha, 2014) Once those states were dominated by the Union, became affirmed themselves against the super power of the Union Government. They began to bargain with Union Government for their state interest. (Xaxa, 2014) Since Act East policy began a more “dynamic” and “action-oriented” approach in its relationships with ASEAN, the political paradiplomacy adept by some of the states (demands for greater state autonomy) can affect the national foreign policy negatively and is likely to pose a threat to the country’s unity and integrity from within and outside forces of cross-border terrorism, insurgency and separatism. (Hardgrave and Kochanek, 2008) The competitive federalism between Andhra Pradesh and Telangana, and present relation between Centre and the state of Andhra Pradesh is one of the best example in this regard.
Historical Overview
Post-Independent Scenario:
India’s determinations to pursue an independent foreign policy was a highlight of post-1947 politics. A product of its peculiar history and recent past, this policy was marked by a great deal of consistency and continuity. Despite radical changes in the international situation, the wide-ranging parameters which were developed during the freedom struggle and in the early years of independence still retain their legitimacy. As the architect of free India Jawaharlal Nehru grasped that given her great civilisation, India could not but aspire to the right to express in her own voice. The recent hard-won freedom from the colonial yoke would also be worthless unless India plays its rightful role in Asia and the world. (Chandra, 2008b) Thus independent India was realistically imagined to be a maker of world peace and prosperity, if not its foremost creator. (Sukla, 2005) Southeast Asian countries, with the exception of the Philippines which achieved its independence in 1946 and Thailand which retained its independence throughout its history, were under colonial rule. Except for Indonesia, all other countries of Southeast Asia are lesser in size and hardly aware of their prominence in world affairs, despite being capable with rich resources. (Moraji, 2015a)
Free India began demonstrating the strong interest in reviving its networks with Southeast Asia shattered during the colonial period, especially because Indian leaders were conscious that the progress in Southeast Asia would have a bearing on the peace and stability in the region. Meanwhile, the climate of peace was the prerequisite for development, India pursued cooperation with the Southeast Asian countries to establish and enlarge ‘area of peace’. Nehru declared: “We in India have ventured to talk about an area of peace; we have thought one of the major areas of peace might be Southeast Asia.” Sensible India not only supported the cause of independence of the Southeast Asian countries but was also genuinely concerned about their political stability and economic growth. (Moraji, 2015b) However, this vision did not continue after the advent of cold war. In the early 1960s, India got caught in a hostile fight with China over the border, which ended in a military upheaval against Chinese forces in 1962. India’s droopy determinations were such that it gave up its regional ambitions and focussed only on its bordering neighbours in South Asia. (Mezard, 2016b)
India’s approach towards ASEAN:
The emergence of regional and sub-regional cooperation as new slogans in the international arena. This widespread global phenomenon is, first, the outcome of globalisation, for it is incredible to resolve a globalised world with genuine policies that restrict border trade and people-to-people contacts. Second, as the termination of the Cold War has softened interactions and revived long –frozen borders, new prospects for economic cooperation have opened up. Third, the post-decolonisation model of colonial borders that functioned well the newly independent countries during the second half of the twentieth century appears to have endured its utility. The colonial powers often created artificial borders that led to the disturbance of traditional economic, social, cultural and family ties that had progressed over centuries. In the immediate aftermath of colonies gaining liberation, their links with their former imperial masters were invariably stronger than with their own neighbours. These colonial ties have faded and are comparatively less important. For many countries, the challenge is how to pursue optimal and integrated economic and social development, which induce towards sub-regional cooperation, with political pressures like preserving their domestic autonomy, freedom and self-esteem. (Sikri, 2016)
In his book Clash of Civilisation and the Remaking of World Order, Samuel P. Huntington mentioned that regions are geographical and not political or cultural entities. Regions are a basis for cooperation among states only to the extent that geography coincides with culture. ASEAN as one multi-civilizational organisation had been created in 1967 with one Sinic, one Buddhist, one Christian, and two Muslim member states. On the economic front, ASEAN has formed the beginning designed to undertake “economic cooperation rather than integration,” and as a consequence, regionalism has advanced at a “modest space”, and even a free trade area is not anticipated until the twenty first century. (Huntington, 1996) It is worth noting that India was not among those countries which ardently welcomed during the formation of ASEAN. At the same time, it did not join those states, which openly condemned the association. India’s approach was rather indefinite and it abridged from ASEAN’s pro-Western orientation. (Batabyal, 2012) What is more unfortunate is the fact that on precarious junctures New Delhi failed to stand by its core values of foreign policy. India’s Indo-China policy after 1978 was instituted on its understanding of the emerging Sino-Vietnamese dispute, the increasing Sino-Soviet rivalry and the ill-fated policy of ejecting Vietnam by ASEAN, with the support of the United States and China. Though there were the convergence of interests among New Delhi, Kuala Lumpur and Jakarta that it was China, not Vietnam which impersonated the long-term threat to the stability and security of Southeast Asia. (Suryanarayan, Prof V., 2013)
Look East Policy:
Economic paradiplomacy connected with trade and investment in particular, has turned out to be an institutionalised practice across the world- in federal states like the United States, Canada, and Belgium, quasi-federal states like Spain, non-federal states like Japan and even non-democratic states like the Peoples Republic of China. Paradiplomacy be indebted to globalisation for its origin. Likewise, federalism has also a significant contribution to the growth of paradiplomacy. (Pant, Harsh V. and Tewari, Falguni, 2017a)
In India, economic reform with strong macro-economic and structural economic programmes under the New Economic Policy of 1991 led to the terminating of the Industrial Control Regime and, brought many prospects to the state governments to follow different approaches for their growth. This paved the way for the states to seek foreign investments without stirring their efforts through the central government. In this context states could more or less follow their own economic diplomacy- by seeking FDI, stimulating foreign trade, joining in dialogues with foreign investors, and access various opportunities in a globalised world. (Hazarika, 2014) Though India’s Look East policy (initiated by P. V. Narasimha Rao) is strongly embedded in national interests, it has been prompt to adapt to modifications in international relations. India’s interest in ASEAN and its shifting moves are proof of this fact. Delivering a framework of India’s engagement with ASEAN, Mr. Anil Wardha at Symbiosis International University’s Second International Relations Conference said that India became a sectoral dialogue partner with ASEAN in 1992 and this relationship has grown tremendously, resulting in enhanced engagement in a multitude of areas, as well as the evolution of a security and political architecture in the region. India became a full dialogue partner with ASEAN in 1996 and a summit-level partner in 2002, before being elevated in 2012 to the status of the strategic partner. India’s relations with ASEAN have become a milestone in India’s foreign policy and the foundation for India’s “Look East-Act East” Policy. (Wardha, 2014)
India’s Act East Policy: A Critical Analysis on Federalism and Paradiplomacy
Since it renamed ‘Look East’ as ‘Act East’ in 2014, the NDA government has hunted a more “dynamic” and “action-oriented” approach in its relationships with not just ASEAN, but also the wider Asia Pacific, with prominence on Japan. Recently India and ASEAN have crossed twenty five years of dialogue partnership, fifteen years of summit-level interaction, and five years of strategic partnership, through a wide range of activities, both in India and through Indian mission in ASEAN member-states, including a commemorative summit on the theme, ‘Shared Values, Common Destiny”. (ASEAN News Bulletin, September, 2017) India has signed several trade agreements with ASEAN, such as free trade agreement on goods in 2010, free trade agreement on service and investments in 2015. The total trade value between ASEAN and India amounted to USD71.7 billion in 2016-17, increasing at a compound annual growth rate of 4 percent, since 2010-11. By 2022, the trade value is expected to reach USD200 billion. (KPMG, 2017a) A Strong market for digital products and services, large talent pool, rapid infrastructure development and booming start-up technologies are the key drivers for attracting foreign investors into India. The Indian government has been compelling a number of initiatives to improve the infrastructure in the country. In Union budget 2016-17, the Indian government owed USD 1.2 billion for the smart cities initiative, projected to be carried out through Public-Private-Partnership (PPP). These infrastructure development programmes are not only limited to metro cities but also stretched to tier II and tier III cities. Cities such as Nagpur, Vadodara and Indore have large numbers of ongoing projects to advance their infrastructure. Such initiatives are expected to create new prospects for digital companies to invest in the country. (KPMG, 2017b)
Institutional Mechanism and its Modifications:
India’s style of politics-which based on symbols from culture and religion on the one hand and modern political institutions and the market on the other-is both multifarious and erudite, despite its superficial nascent look. (Mitra, 2011) The Constitution of India does not give the state a well-defined role in foreign relations. The union executive has the main responsibility in regard to foreign affairs with a secondary role for parliament. Though parliament has the power to pass any legislation indeed to implement a treaty, the executive can make treaties without parliamentary consent. (Watt, 2017b) Promoting the trade policy, Indian government has initiated various infrastructure development projects both National and International level for better physical connectivity development. The dismantling of Planning Commission and replacement it with Niti Aayog was the first step of PM Narendra Modi. At the first meeting of the Niti Aayog, the PM stated that:
State Chief Ministers gave many insightful views during the meeting. This spirit of co-operative federalism will enhance India’s progress and prosperity. It emphasised the need to expedite growth, investment, job creation, elimination of poverty and moving away from a “one size fits approach. (Maini, 2017a)
The Minister of External Affairs began some formal modifications of institutions, including the creation in October 2014 of a ‘State Division’ department. The objective of the State Division is to “serve as the Ministry’s single avenue for outreach to states” and to coordinate with states and Union Territories (UT) “for further facilitation of their efforts to promote their exports and tourism and attract more overseas investments and expertise.” (Tewari, Falguni, August 2017)
Another major initiative of NDA government is the implementation of Goods and Service Tax. Under the GST regime, export of goods or services and supplies to Special Economic Zones units or SEZ designers have been treated as Zero rated supply i.e. the taxes paid and unutilized input tax credit on the goods or services obtained are to be reimbursed. So post GST brings the ASEAN countries to look India a viable option. (Deshpande, 2017) Similarly, in August 2017, India made a Project Development Fund with an amount of USD77.0 million to improve manufacturing hubs in Cambodia, Laos, Myanmar and Vietnam (CLMV). In addition, EXIM Bank of India also delivered lines of credit value USD750.0 million for projects in power, irrigation and railways, among others to CLMV countries. (KPMG, 2017c)
Paradiplomacy of Indian State with Southeast Asia
Southern states have relished historical trade and maritime contacts with Southeast Asia ever since the time of Chola Kingdom. These connections were further reinforced through the existence of a strong Indian diaspora, as well as efforts by southern Indian states like Tamil Nadu, Andhra Pradesh, and Karnataka to build up links with Southeast Asia, particularly Singapore and Malaysia. (Maini, 2017b)
The case of Tamil Nadu much discourses in the works on subnational diplomacy in India. Neither Karunanidhi nor Jayalalithaa displayed the eagerness for travelling outside India. Wide-ranging demands and pursuits have only discovered one official visits since 1996. This was a visit to Singapore made by Karunanidhi in 1999. The plan of the visit included discussion of Singaporean investment in Tamil Nadu and a consultation with members of the Tamil diaspora. (Watt, 2017c) In 2003, then Chief Minister, Jayalalithaa, called for the strengthening of trade and investment ties between Tamil Nadu and Malaysia, pointing out specifically that Tamil Nadu’s software industries could complement Malaysia’s hardware manufacturing sector and how her province sought Malaysia’s expertise in infrastructure development and in the tourism sector. (Jacob Jabin et. al 2010) There are very good reasons for senior politicians in Kerala to engross in paradiplomacy. Yet the 2006 to 2011 LDF government did seek out some overseas investment with attention being paid to potential investors in the Middle East, Singapore, Malaysia, and Russia. Oommen Chandy, who led the UDF Congress alliance to victory in the 2011 assembly elections, was what we might term a cautious diplomat. In his previous stint as a chief minister, Chandy actively invited FDI and recommenced this role in 2011. He introduced a high profile episode, Emerging Kerala, in September 2012 to attract foreign investors to the states. This was the first major investment conference in the state since the Global Investor Meet organised by former UDF government. (Watt, 2017d) Moreover, Kerala has been exploring the possibility of advancing tourism-related business with ASEAN, as it is evident from the finalisation of plans with Singapore Airlines subsidiary Silk Air by Kerala tourism officials.
Meanwhile, the state of Andhra Pradesh under the charismatic leadership of TDP, Chandrababu Naidu has been dedicatedly building up its links with Southeast Asia. Generally, the state is reaching out to Singapore for the construction of Amaravati, the planned state capital. In May 2017, a Singapore consortium consisting of Ascendas-Singbridge Pvt. Ltd and Sembcorp Development Ltd. signed a Memorandum of Understanding (MoU) with Amaravati Development Cooperation (ADC) for developing a start-up area of almost seven square kilometres. (Maini, 2017c) Economic diplomacy Naidu takes on political implication as it is associated with his protective system. A result of the engagements of inward investment in the late 1990s and early 2000s was a magnified land and tangible estate market all over the place in Hyderabad which profited those with political influences and innovative knowledge of investment locations. Naidu’s external visits seeking investment for the new capital are creating resources for some of his followers and assists with the running of his party. Naidu has used commercial paradiplomacy to reinforce his own position and the governing regime of Andhra Pradesh in a number of ways. (Watt, 2017e)
Recently, eastern Indian states and Southeast Asia also have been consolidating connections. Odisha has long historical ties with Indonesia. Every year in the month of November, “Bali Yatra” is celebrated to honour the voyages of traders from Odisha to Bali, Java, Sumatra and Sri Lanka for trade. The traders used to sail on a big boat called Boita. Alok Ranjan Mishra, in an article for Odisha Review, points out:
The “Boita Bandana” or “See off” ceremony of the merchants in day of Kartika Purnima is observed throughout Odisha. On this day the women folk of Odisha sail small boats made out of cork, coloured paper, and banana bark lit by lamp on all available water…in the same fashion in which the ladies of yore used to send their men on voyages wishing them well. (Watt, 2017f)
Seeking to capitalise this historical link, in November 2016, an Indonesia-Kalinga dialogue was organised. Apart from rekindling historic ties, members spoke of the necessity of greater air connectivity between Odisha and Indonesia, while also strengthening economic linkages through Paradip Port.

Rajasthan, the western Indian state has been pursuing to acquire skill development and tourism from Singapore. During his visit to India in October 2016, Singapore Prime Minister Lee Hsien Loong initiated the Centre of Excellence for Tourism Training at Udaipur’s Sukhadia University in Rajasthan. Singapore has contributed financial assistance for trainers at the centre. (Maini, 2017d)
Critical Analysis
While reasonable interests of the states must be taken into account, it must be valued that foreign policy is not merely the aggregate of the interests of various stake holders. It is through its foreign policy acts that nation is regarded as a sovereign in international relations. There cannot be multiple sovereignties as well as multiple identities in external affairs.

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Foreign policy is also about how a nation acts and behaves as a member of international community. A nation’s behaviour must be in accordance with international norms, traditions and laws. For instance, all countries have to act in accordance with the conventions and agreements it signs. India is participant to a large number of international conventions and treaties. Failure to act in accordance with international law can be cause severe consequences and resonate a country’s image.

Nowadays, a country’s security and success is progressively linked with factors outside its control. Globalisation is also leading to dilution of state sovereignty. Hence, it is essential not to define nation’s interests in very narrow terms. A room for manoeuvre must always be kept.

Lack of Diplomatic skills: States may lack the skills of implementation of responsible foreign policy particularly in the political domain, known the fact that states do not have competent diplomats; regional influence moreover may thwart national foreign policy. The irony is that most of India’s neighbours are unfriendly. Therefore, states’ paradiplomacy is likely to pose a threat to country’s sovereignty and integrity. (Jha, 2014b)
Lack of will power: While locating the Northeast at the central of India’s Act East Policy deserves promise, what will be of critical importance will be the implications these holds for the economic future of the Northeast itself. The promise of trade fostering industrialisation will depend on the region being able to understand its own potential based on its indigenous resource endowments. (Kurain, 2010a)
Ethnic Issue: Act East policy has given prominence to the North-eastern region through economic integration with East and Southeast Asia. The lack of political will on the part of the states to bring to an cordial resolution to the existing ethnic and other issues hinders the effort to integrate Northeast with Southeast Asia. According to Sanjaya Barbora, this could be one reason why democratic movements uttering demands well within the purview of the India Constitution, turns to arms in Northeast. He suggest, a short-term answer to this question is employed in the back-and-forth of militarisation, underdevelopment and the constitutional vision of governance. India’s ‘Act East Policy’ is concerned with the state-centric notion of seeing any development issues from the prism of security paradigm. For instance, Irom Sharmila had to break her 16-year hunger strike against the ‘draconian’ Armed Force (Special Power) Act or AFSPA on 9 August 2016 losing all possible hopes of its removal, to take the political route to continue her struggle. (Touthang, Ngamtinlun)
Identity Politics: Identities politics is another issue of Northeast region which may produce the most serious centre-state clashes. In Northeast India, some states, especially Nagaland and Mizoram, are not only tribe-based, but those tribes are linguistically as well as religiously distinct from the rest of Indians. Their respective vernaculars are the first languages of Nagaland and Mizoram, not Hindi, and both are Christian-majority states. (Varshney, 2013)
Weak Constitutional Position: Constitutionally weak positions of the North-eastern states that have deciphered into weak voices when it derives to effectively joining and influencing foreign policy making on critical issues such as immigration and development. (Kurain, 2010b)
Cross-Border Terrorism and Illegal Arms Trade: Growing radicalisation and cross-border terrorism posed a severe challenge to India’s security. Further the proliferation of illegal arms in Northeast region will lead to more crimes. Union Home Minister Rajnath Singh said arms, narcotics and fake Indian currency notes were being smuggled into India through the international border next to the Northeast. (Indian Express, May 16, 2016)
Inter State Competition: Four decades after the birth of the political movement, and four years after a tumultuous struggle, Telangana came into being. Telangana stood 3rd in the 2017 rankings of states receiving industrial investment proposals. When paradiplomacy is concerned, the Telangana government signed a pair of MoUs with Chinese company. On the other hand Andhra Pradesh signed a MoU with Performance Management and Delivery Unit under the Malaysian Prime Minister’s Office. (Maini, Tridivesh Singh and Lingala Mahitha S.) Both states seem to be engaging in competitive federalism, something that has been encouraged by Prime Minister Narendra Modi.
Coalition Government and Politics of Bargaining: The new role of regional parties has transformed Indian federalism beyond recognition. Once those states were dominated by the Union, became asserted themselves against the super-power of Union Government. They started to bargain with the Union Government for their interest. (Xaxa, 2014b) For example TDP of Andhra Pradesh after 2017-18 union budget. Even giving support from outside, TDP now blackmailing the Union Government and demanding Special Category Status as well as threatening the Centre to move no confidence motion to the Parliament. The other prices of bargain between regional parties and Union Coalition Government includes corruption, protecting of criminals and turning blind eye to illegal infiltration.
Nationalism: Paradiplomatic activities encouraged by nationalism can perpetrate a greater harm on our national interests. As some policy analysts have specified, ‘there are regions and sub-nationalities in the country that have not yet fully accepted the unity of the country. Under such circumstances, it might be rash to grant constituent units such as freedoms. (Jha , 2014c)
Conclusion:
Still, the platforms of paradiplomacy are emerging in India. Regional parties directed by charismatic and in some cases development-oriented regional leaders have become vital national players, while the central leadership can no longer take them for granted. Indeed paradiplomacy in the context of India-ASEAN relations has made some states particularly developed states like Andhra Pradesh and Gujarat economically more fiscal independent. So first, the central government of India should hold it as a means and an opportunity to manage and ultimately undertake some of the major cross-border problems. Second, better coordination between the MEA and local offices by means of regular meetings and bureaucratic interactions is effective in taking the paradiplomacy forward. (Jha, 2014d) Third, India and ASEAN must implement FTA in services and investments. Fourth, India must act proactively in securing a strategic and economic foothold in the vital Asia-Pacific region. (Uddin, Mr. Mohammad Jasim, 2014) Overall, on trade, a careful redesigned strategy alone will protect India’s national interest, enhance its multi-dimensional relationship with ASEAN, and ensure peace and prosperity in East Asia.

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