India is really looking towards the East now

Pranay Gupte The Straits Times Asia News Network Singapore

"We always said, 'Look East', but then we would go West," Jairam Ramesh was saying in his small ground-floor office here over the weekend. "Now India wants to go East and also have the East come to us."

That means, for example, India is proposing economically integrating parts of its 3.2 million sq km of land with countries like Singapore.

In particular, the resource-rich but economically struggling Seven Sisters -- the north-eastern states of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura -- "need to develop with the cooperation of Southeast Asia, to which they are geographically close", Ramesh told The Straits Times.

"These states have biodiversity, hydropower, oil, gas and coal -- but they are waiting for integration into Southeast Asia's economy.

"Indeed, there's no reason why the Seven Sisters cannot remain politically united with India but also economically integrated into Southeast Asia's flourishing economies," he said.

"We want investment in manufacturing and in developing agro- business. Special export zones and eco-tourism are other areas for development."

Prime Minister Manmohan Singh represents Assam, so "there's a natural affinity there".

For foreign investors, these regions of India -- and others as well, of course -- offer political stability, cheap labor, educated workers proficient in English, and an already large but still growing consumer market (50 million people). Foreign companies get major tax holidays, and there is no tax on exports.

Then, specifically, there is India's relationship with Singapore.

"India would like to... become a back office for the multinationals based in Singapore," Ramesh said. "It's India's wish to be aligned with Singapore's economy so that we are engaged as service providers. And since Singapore already has a free-trade agreement with the United States, Indian companies could look at Singapore as an entry point for entering the big U.S. market. After all, the prospects of an India-U.S. free-trade agreement are pretty remote right now."

Who is Ramesh and why should it matter what he says about India and Southeast Asia?

The 50-year-old Tamil Brahmin heads the economic department of the Indian National Congress, which leads the ruling 13-party coalition of the United Progressive Alliance. He is among the three or four people who plotted the stunning defeat of the ruling National Democratic Alliance, led by the Hindu-nationalist Bharatiya Janata Party (BJP), in last month's general election. He is also a key adviser to numerous governments of India's 29 states and seven federal territories.

But perhaps most significantly, Ramesh is particularly close to two people: Prime Minister Manmohan Singh, and Mrs Sonia Gandhi, the head of the Congress Party. To put it another way, when Ramesh speaks -- and he does so with remarkable clarity and eloquence -- he is really enunciating what is on the minds of those two extremely powerful people.

"We're certainly more Southeast Asia-centric than the previous government," Ramesh said. "And we're certainly less obsessed with the United States than the BJP."

That is not to say the new government is about to jettison its predecessor's entire foreign policy. But Ramesh leaves little doubt the Singh government will give more priority to strengthening political and economic relations with Singapore and Southeast Asia.

In fact, he expressed India's particular gratitude to Prime Minister Goh Chok Tong for sponsoring its Asia-Pacific Economic Cooperation forum membership attempt, although India eventually failed to gain entry. Ramesh called Goh "India's steadfast friend".

He conceded that India had missed several opportunities to strengthen economic ties with Southeast Asia; for example, in 1965 and 1967 it declined opportunities to join Asean, decisions he termed "big mistakes, because we lost out on opportunities to be part of the tremendous economic growth of the region".

He said a framework of a free-trade pact between India and Asean was "in the pipeline".

"These may be small steps for Southeast Asia, but they are giant steps for India," Ramesh said.

"There's no question that in the past, our attitude towards the Southeast Asia and East Asia region was condescending and culturally and linguistically arrogant," he said.

"I think that part of the resentment many Southeast Asians have towards India stems from this earlier arrogance on our part," Ramesh said.

"But that's changed now," he declared. "We've moved a very long way in building better ties with Southeast Asia. Singapore has heavily invested in our telecom industry; the Malaysians are helping build highways. South Korea's LG and Hyundai are doing remarkably well in India. Trade and investment generally are growing.

"But it's only the tip of the iceberg. We are confident about much better times ahead."