India sees sun rising in eastern economies

India sees sun rising in eastern economies

Penny MacRae, Agence France-Presse/New Delhi

When Prime Minister Manmohan Singh flagged off a car rally this week that will race through Southeast Asia, he was hoping to send a clear economic and political message to India's eastern neighbors.

"This car rally is intended to rediscover the essential 'oneness' that binds India with its Asian neighbors," Singh told crowds cheering the drivers on their way from Guwahati in India's northeastern tip.

The India-sponsored event along paved, dirt and gravel roads has been timed to reach Vientiane in Laos just as leaders of the 10-member Association of Southeast Asian Nations (ASEAN) gather for a summit at the end of the month.

India, Asia's fourth-largest economy and growing powerhouse along with booming China, has been aggressively courting its eastern neighbors and the rally is aimed at spotlighting its transport links with the region.

"We're trying to build hardcore economic linkages upon old civilisational links," foreign ministry spokesman Navtej Sarna told AFP.

The nation of more than one billion people foresees vastly increased trade and investment with the ASEAN zone of 540 million people in such areas as infrastructure, energy development, manufacturing and tourism.

Two-way trade with ASEAN -- grouping Brunei, Vietnam, Indonesia, Thailand, Laos, Malaysia, Philippines, Singapore, Myanmar and Cambodia -- is US$13 billion, a 450 percent leap in a decade, and is targeted at $30 billion by 2007.

India's economy for more than four decades after independence was inward-looking.

But in the 1990s it ditched its mantra of self-sufficiency and launched a 'Look East' drive. India found its move reciprocated and is now an ASEAN summit partner along with China, Japan and South Korea.

ASEAN leaders are expected to call for better economic and political ties with India at the Nov. 29-30 summit although no big announcements are expected.

"ASEAN is a very important growth area for the global economy and fits in beautifully with India's 'Look East' policy," said N. Srinivasan, director-general of the Confederation of Indian Industries (CII).

The benefits are two-way. India's average tariffs have tumbled from an average 300 percent since 1991 to around 25 percent and are set to fall further, providing chances for ASEAN to move into Indian markets.

India also hopes its 'Look East' drive will give a big economic push to its revolt-hit northeast which it sees as the geographic gateway to ASEAN.

The region is rich in natural resources from oil to tea and bamboo but is racked by poverty, unemployment and separatist militants angry over what they say is economic neglect by New Delhi.

Already in its drive to integrate with its eastern neighbors, India has signed a free trade pact with Thailand, is well on its way to signing one with Singapore and hopes to have an accord in place with ASEAN by 2011. China also is aiming for a free trade pact.

Eventually, New Delhi envisages an integrated market arcing from the Himalayas to the Pacific embracing ASEAN plus Japan, South Korea, India and China or JACIK -- Asia's biggest economies -- and rivaling the European Union.

"This car rally through the region brings into sharp focus the physical contiguity between India and ASEAN," the CII's Srinivasan said.

There are ambitious plans to link India and Vietnam by a rail link passing through Myanmark, Laos, Thailand and Cambodia, and for highways through Thailand, Laos, Myanmar, Cambodia and Vietnam.

Any talk of rivalry with China, with which it fought a brief, bitter border war in 1962, appears passe: India's new buzzword is "complementarity."

China is seen as having an edge in such areas as electrical goods, textiles and engineering while India is developing fast in telecommunications, software and other fields. Both sides see potential for greater commodity trade, technology exchange and resource development.

"You see a strong bilateral relationship with India-China. Bilateral trade is growing 30 percent annually," Srinivasan said in an interview.