Foreign Policy Watch: India-ASEAN

[oped of the day] Opportunities for India in the Asian Century


From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : Asian Century


India is at an inflection point. Its recent period of significant growth was faster than the global average. 

Slowdown in growth

Indian growth has stalled in the face of global headwinds against trade, volatile commodity markets, stagnant private investment, weaker domestic consumption, and constrained government spending.

Asian potential

    • Asia is becoming the world’s powerhouse and economic center. 
    • Economic contribution – research from the McKinsey Global Institute finds that Asia could generate more than half of the world’s GDP by 2040.
    • Cross-border flows – they are increasingly shifting towards the region, which is rapidly integrating. With 60% of goods traded, 56% of greenfield foreign direct investment (FDI) and 74% of journeys by Asian air travelers taking place within the region.

Asian connectivity

    • There are 4 distinct sub-Asias which are diverse groups of economies with characteristics that complement each other and are fast becoming increasingly interconnected.
    • In the new era of regionalization, Asia is taking a lead. 
    • Historic account – Historically, India—and other countries in ‘Frontier Asia’ (Bangladesh, Sri Lanka, Kazakhstan, Uzbekistan, etc)—have had relatively low levels of integration when compared with the rest of the region. Only around 31% of their flows are intra-regional. 
    • What lies ahead – how they now respond to the shifting flows and the opportunities they present will be the key in defining and delivering its next chapter of growth. 

What India offers

    • Services – account for 53% of India’s GDP
    • Young labor force – younger than China’s median age by around ten years
    • New markets for the rest of the region
    • Growth – despite the downturn, GDP in India is expected to grow at well above 5% for the coming period.

Adding Asia focus – opportunity # 1: Manufacturing

    • Advanced Asian countries shift gears – countries like China move up the economic development ladder and phase out manufacturing in favor of a shift to R&D and knowledge-intensive manufacturing. There is room for India to become a larger sourcing base for global supply chains.
    • Example of mobile phones – the global sourcing value of mobile handsets is over $500 billion in scale. India could aspire for a 15-20% share of this footprint. 

What needs to be done for #1

    • Improving infrastructure – Investments are needed to improve the logistical backbone supporting manufacturing. 
    • R&D – Incentives are needed to encourage future investments in R&D.
    • Innovation – Large-scale innovation hubs need to be developed to move to manufacture to the next phase and help to capture the demand opportunity.
    • Recent corporate tax cut – The recent move towards an attractive corporate taxation regime could provide the much-needed ignition to attract more investment for Make in India.

Opportunity # 2: Capital

    • For development – India can benefit from the flows of capital and investment powering development.
    • Advanced Asia – which comprises Japan, South Korea, Singapore and China have been huge contributors to the development of ‘Emerging Asia’ – small highly interconnected economies like Indonesia, Malaysia, the Philippines, Thailand, Vietnam, etc.
    • Example – China accounts for 42% of total Asian outbound FDI in 2013-17 and 43% and 61% of Emerging Asia’s imports and exports respectively.

To do for #2

    • Attract investments – while India is beginning to attract investment from firms across Asia, more needs to be done to realize the potential opportunity of investment flows from other countries.

Opportunity # 3 : Innovation

    • Hub of innovation – East Asia has emerged as a leading hub that rivals the leading innovation hubs globally.
    • Technologies – It has already gained pole position in driving innovation relating to key disruption themes such as electric mobility, 5G telecom, and renewable energy. 
    • Patents – Nearly 65% of global patents stemmed from Asia between 2015 and 2017, derived from the 50 fastest-rising innovation cities in Asia.
    • This gives an opportunity for Indian firms to be a part of this Asia-wide innovation arc.

Opportunity # 4: Growth

    • Rapidly growing Asia – is catapulting its major cities into leading consumption centers.
    • The market for India – This offers a market opportunity for Indian businesses ranging from IT services, tourism services, generic pharmaceuticals, automotive components, agrochemicals, and so forth. 
    • Reduce trade deficit – Just with China alone, India runs an over $50 billion of trade deficit. This could be narrowed down by targeting these export opportunities. The research found that about 420 cities in emerging markets could generate 45% of global growth, many of them residing in Asia.


The Asian century is truly underway. As globalization gives way to regionalism, Asia takes a leading position. India could look to many of the opportunities arising out of the region’s rapid integration and shifting networks and flows to help drive its next chapter of growth.

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