Setting the field: Australia-India engagement in Southeast Asia
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Setting the field: Australia-India engagement in Southeast Asia

Setting the field: Australia-India engagement in Southeast Asia

Danielle Rajendram


12 January 2014

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Executive Summary

2014 proved to be a significant year for Australia-India ties. The year saw Tony Abbott visit India for the first time as Prime Minister, and as the first foreign leader to be welcomed by the new government. Prime Minister Modi reciprocated with a full bilateral visit to Australia following the G20 Leaders’ Summit in November, the first of any Indian Prime Minister since Rajiv Gandhi in 1986. The last year also saw the conclusion of the long-awaited civil nuclear cooperation agreement, and the inauguration of a Framework for Security Cooperation.

It is clear that Australia and India are now both beginning to recognise the considerable economic and strategic potential that a closer bilateral relationship could bring. In his speech to Australian Parliament, the first of any Indian Prime Minister, Modi outlined his view of Australia ‘as a major partner in every area of our national priority’, noting that Australia will no longer be at the periphery but at the centre of India’s vision.

India’s increased emphasis on Australia ties back into the Modi government’s decision to upgrade its longstanding Look East policy to ‘Act East’. Since its inception in the early 90s, Look East has gone a long way towards deepening India’s economic, institutional and strategic ties with the Asia-Pacific. China is already India’s top trading partner with a value of US$65 billion in 2013-2014, and at approximately US$74 billion, trade with ASEAN as a whole is even larger. Although Modi must demonstrate that Act East is more than just a rebranding, the upgraded policy signals India’s intention to play a more serious role in the region.

Since the second phase of Look East was initiated just over a decade ago, it has acquired a greater strategic emphasis with a significant naval dimension. The Indian Navy has been particularly crucial in deepening security ties with ASEAN states, through joint patrols, bilateral exercises, multilateral engagement, humanitarian assistance and disaster relief. While India’s Andaman and Nicobar Command presents a natural base for India to project power through the Malacca Strait into the waters of East Asia, the Indian Navy has also begun a significant rebalancing of its fleet from its Western to Eastern Naval Command. And with almost 55 percent of India’s trade transiting through the Malacca Straits, India has a strong interest being able to project naval power into the region if necessary.

However in recent years, India’s outreach to East and Southeast Asian has been driven by its concerns about China’s growing presence in the Indian Ocean, and increased assertiveness along their disputed border. China’s provocative behaviour on maritime territorial disputes in the East China Sea and South China Sea has also reinforced the relevance of a more serious Indian involvement in the region for its Southeast and East Asian partners, which are reaching out to India to serve as a potential strategic counterweight.

Under Modi, India has continued the external balancing policy of previous governments. However, India’s outreach to key states in the region has accelerated since his election, with a focus on practical partnerships with Japan, Vietnam, ASEAN, and Australia. Each of these offers unique benefits in advancing India’s Asia-Pacific strategy. Japan is the lynchpin of this strategy, and offers opportunities by virtue of its status as the most advanced Asian naval power in the region, and a potential source of considerable investment and technological assistance. Vietnam’s geostrategic position in Indochina and the South China Sea makes it a natural partner for India to balance against China in its own neighbourhood. As the central regional institution, ASEAN has long been at the heart of India’s eastward shift in focus. And Australia continues to offer assistance as a source of natural resources, capacity development for India’s burgeoning youth, and as a partner for naval cooperation.

Although a relationship that has long suffered from inattention, the seriousness with which the Modi government has approached its ties with Australia will continue to add maturity to the relationship. 2015 will see the beginning of bilateral naval exercises between the two, and the Framework for Security Cooperation allow Australia and India to build on their existing strategic partnership agreement to further strengthen security ties. Prime Minister Abbott has also stated his intention to conclude a free trade agreement with India by the end of 2015. If this is achieved, it will be enormously significant for Australia and India’s economic relationship, which had declined by almost 20 percent at the end of the last financial year.

There are as number of opportunities for Australia to support India’s eastward shift. Closer cooperation on maritime security holds particular promise for the two Indian Ocean democracies. That India is taking relations with the United States, Australia’s closest ally, more seriously also bodes well for the prospect of closer security ties. Should the Indian government be able to maintain the momentum of Act East, there is potential to add substance to India’s strategic role in the Asia-Pacific. If carefully managed, especially with relation to Chinese sensitivities, cautious Indian engagement could act as a stabilising force in the region. More importantly, successfully enhancing its role in East and Southeast Asia could signal the beginning of India’s transformation into a significant actor across the entire Indo-Pacific region.