Association of South East Asian Nations (ASEAN) comprising 10 nations, if treated as a

single entity, would rank as the third largest economy in Asia and seventh largest in the
world. ASEAN is on the brink of major economic and demographic change. ASEAN’s
international trade has almost tripled over the last decade. Foreign-direct investment (FDI)
has been flowing into the region, with multinationals hoping to capitalize on its rapidly
expanding middle class and strategic location at the intersection of China, Japan and India.
Over the past decade, trade and investment relations between India and ASEAN have
continued to improve.

ASEAN MEMBER COUNTRIES

Source: ASEAN Secretariat

The importance of India’s current relationship with ASEAN and its future potential for
mutually beneficial growth will require greater political, economic, and diplomatic
engagement with ASEAN. ASEAN’s geostrategic importance stems from many factors,
including the strategic location of member countries, the large shares of global trade that
pass through regional waters. Indo ASEAN economic engagement should not be viewed
from a purely merchandise trade perspective, but from the future potential of trade in
services and investment flows. Trade is not a negative sum game it brings with it benefits of
lower input prices, greater competition and virtuous cycle of rising productivity and growth.
India's relationship with ASEAN is a key pillar of our foreign policy and the foundation of our Act
East Policy. The up-gradation of the relationship into a Strategic Partnership in 2012 was a natural
progression to the ground covered since India became a Sectoral Partner of the ASEAN in 1992,
Dialogue Partner in 1996 and Summit Level Partner in 2002. There are, in total, 30 Dialogue
Mechanisms between India and ASEAN, cutting across various sectors.

ASEAN-INDIA PARTNERSHIP
India's trade with 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19
ASEAN

EXPORT (Bn. USD) 33.01 33.13 31.81 25.15 30.96 34.20 37.47

%Growth -10.17 0.38 -3.99 -20.8 23.09 10.46 9.56

IMPORT (Bn. USD) 42.87 41.28 44.71 39.91 40.61 47.13 59.32

%Growth 1.68 -3.71 8.33 -10.9 0.88 16.04 25.86

TOTAL(Bn. USD) 75.87 74.41 76.53 65.06 71.57 81.33 96.79

TRADE BALANCE -9.86 -8.14 -12.9 -14.75 -9.65 -12.93 -21.85

ASEAN-India dialogue relations emerged into a sectorial dialogue partnership in 1992 and
gradually grew into a full dialogue partnership in December 1995. The bilateral relations,
who saw an expansion of trade investment, exhibit the intensity of economic engagements
between India and ASEAN. The year 2017 has marked the 25th year of dialogue
partnership and 15th year of Summit level partnership between ASEAN and India. India and
ASEAN have been cooperating with each other, over the years, by way of implementation
of various projects in the fields of agriculture, science & technology, space, environment &
climate change, human resource development, capacity building, new and renewable
energy, tourism, people-to-people contacts and connectivity, among others.

India’s Bilateral Trade and Investment with ASEAN

The trade and investment linkages between India and ASEAN witnessed rapid expansion
owing to the increasing intensity of economic engagements between India and ASEAN.
Consequently, India stands as ASEAN’s 11th largest trading partner in the year 2018.
Alongside trade, India’s investments in the ASEAN region have also received a boost in
recent years. ASEAN countries are receiving strong investment interest from India mainly
due to their high-growth markets, low wage labour and natural resource reserves. FDI flows
to India have primarily been in real estate sector, which has a share of 27.9 percent in
India’s total FDI inflows from ASEAN, followed by coal, oil and natural gas sector, while a
major portion of India’s outward FDI to ASEAN is directed towards coal, oil and natural gas
sector and metals sector, followed by services sectors such as software and IT services,
financial services as well as business services.

REGION WISE INDIA’S EXPORTS WITH ASEAN

The trade figures in respect of ASEAN region for the year 2018-2019 is as under:

S.No. Country U.S. million $

1. BRUNEI 56.19
2. CAMBODIA 195.98
3. INDONESIA 5,275.60
4. LAO PD RP 39.38
5. MALAYSIA 6,436.30
6. MYANMAR 1,205.60
7. PHILIPPINES 1,743.64
8. SINGAPORE 11,572.27
9. THAILAND 4,441.40
10. VIETNAM SOC REP 6,507.38
  Total 37,473.72
India's Total 330,078.09
%Share 11.3530

2018-2019
14000
12000
10000
8000
6000 2018-2019
4000
2000
0
I ES E
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A IA RP IA AR OR
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P
U O NES D A YS M P IN P LAN C
BR M
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The trade figures in respect of ASEAN region for the year 2019-2020 (April- August) is as
under:
 S.No Country USD Million
1. BRUNEI 19.31
2. CAMBODIA 76.35
3. INDONESIA 1,621.91
4. LAO PD RP 11.17
5. MALAYSIA 2,563.04
6. MYANMAR 356.50
7. PHILIPPINES 631.68
8. SINGAPORE 4,828.09
9. THAILAND 1,771.72
10. VIETNAM SOC REP 2,044.04
  Total 13,923.81
India's Total 133,261.60
%Share 10.4485

REGION WISE INDIA’S IMPORTS WITH ASEAN

The trade figures in respect of ASEAN region for the year 2018-2019 is as under:
S.No. Country USD million
1. BRUNEI 591.10
2. CAMBODIA 42.63
3. INDONESIA 15,849.67
4. LAO PD RP 1.04
5. MALAYSIA 10,818.60
6. MYANMAR 521.49
7. PHILIPPINES 581.10
8. SINGAPORE 16,281.64
9. THAILAND 7,441.81
10. VIETNAM SOC REP 7,192.23
  Total 59,321.32
India's Total 514,078.41
%Share 11.5394

The trade figures in respect of ASEAN region for the year 2019-2020 (April- August) is as
under:

S.No. Country 2019-2020(Apr-Aug(P)

1. BRUNEI 218.92
2. CAMBODIA 21.03
3. INDONESIA 5,996.06
4. LAO PD RP 1.67
5. MALAYSIA 4,535.66
6. MYANMAR 153.85
7. PHILIPPINES 245.90
8. SINGAPORE 6,461.33
9. THAILAND 3,205.80
10. VIETNAM SOC REP 3,630.55
  Total 24,470.78
India's Total 209,127.49
%Share 11.7014

2019-2020(Apr-Aug(P)
7000
6000
5000
4000
3000
2019-2020(Apr-Aug(P))
2000
1000
0
I S E
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BR B
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Investment Opportunities for India in ASEAN

ASEAN is marked as a key growth hot spot in the world today. With its 10 diverse markets,
of which a number are progressing to be developed nations and some are in the developing
stage, there are wide business and investment opportunities. ASEAN is implementing
ASEAN Investment Area (AIA), which is an outcome of ASEAN Comprehensive Investment
Agreement (ACIA) and is also implementing the ASEAN Investment Guarantee (AIG)
scheme. There are proposals to improve ASEAN-India investment environment. With these
measures in place, FDI between ASEAN and India is expected to improve in the near
future.

Flows of Inward Foreign Direct Investment (FDI) by Host Country and

Source Country (in million US$)

HOST COUNTRY- INDIA

SOURCE COUNTRY- ASEAN

YEAR VALUE
2013 1 731.17
2014 1 163.50
2015 1 473.43
2016 -198.08
2017 -107.51
2018 1 734.96

Flows of Inward Foreign Direct Investment (FDI) by Host Country and

Source Country 2018 (in million US$)

COUNTRIES VALUE

SINGAPORE 1264.30
CAMBODIA 4.71

THAILAND 23.72
INDONESIA 196.22

LAO PDR 1.20

MALAYSIA 168.44

MYANMAR 2.10
PHILLIPPINES 0.75
VIETNAM 73.53
Bilateral Investment Flows between India and ASEAN
India is showing itself to be a choice investment option, particularly for institutional
investors in Singapore and ASEAN who are eyeing overseas market for yield and
diversification. India has undertaken sweeping liberalisation of FDI including raising
investment limits, streamlining government approvals, simplifying investment
conditions and opening up new sectors (defence, insurance and retail) to FDI.
Moreover, “Make in India” campaign launched in September,2014, is aimed at
attracting companies to use India as a global design and manufacturing hub, is
helping to promote investment commitments. The new Foreign Portfolio Investor
(FPI) regulations, introduced in June 2014, simplify inbound investment into India’s
securities markets, resulting in streamlined investment routes, speedier registration
and a quicker time to market, ultimately attracting a broader pool of foreign investors.
By allowing a wider investor base access to India, the scheme also has the effect of
enhancing liquidity in the broader market.

Investment and Trade Opportunities between India & the ASEAN

The evolving structures of the global economy, political changes in ASEAN states
and the shifting dynamics of the regional power balance have implications for
regional processes, including how ASEAN and India plan their partnership for the
next decade. ASEAN has been an important axis of regional economic cooperation
and FTA in East Asia. The deepening of ASEAN intra-regional economic cooperation
and the establishment of AEC will be important for not only ASEAN but also India
and Indian companies.
The strong dynamics of ASEAN will serve as magnet to investment in the current low
yield global environment. Stable current accounts, low government debt levels,
benign inflation, diversified trade partner dependence and decent real returns make
ASEAN an attractive choice for investment diversification. Over the longer-term,
mega-infrastructure projects such as the Singapore to Kuala Lumpur High Speed
Rail, Thailand’s development of its countrywide rail network, and projects under
China’s “One Belt, One Road” scheme will further propel ASEAN’s growing role in
the global economy. Barring another round of commodities price collapse, global risk
events or an aggressive pace of Fed hikes, ASEAN is a strong option for a long-term
diversification investment in a global portfolio, and is, thus, an EM asset class worth
watching.
ASEAN’s diversity presents a range of opportunities for Indian business-from
Singapore’s sophisticated service based economy to “frontier” markets in Laos,
Cambodia and Myanmar, the fast modernizing economy of Vietnam and significant
consumer centres such as Indonesia. As a region, ASEAN accounts for close to 7 %
of the global trade. Intra ASEAN trade accounts for 24 % of ASEAN’s total trade.
While our trading relationships with the U.S., EU and China tend to attract headlines,
it is important to remember that India’s trade links with the ASEAN are significant.
Collectively ASEAN is the second largest trading partner for India than any single
country other than China. ASEAN’s combined population of close to 620 million is
larger than that of either the EU or North America. Around 80 million ASEAN
households are part of the rising middle class defined by Mckinsey as a consuming
class-those with household incomes of more than U.S. $ 7,500 in 2005 purchasing
power parity terms. ASEAN’s working population is expected to reach 500 million by
2020. This will offer significant opportunities for Indian education and training
providers.

Conclusion
ASEAN demonstrates that countries with different cultures, traditions, languages,
political systems and levels of economic development can act in concert to expand
their collective potential. ASEAN’s economic potential is undoubtedly impressive. If
treated as a single entity, the ASEAN would rank as the third largest economy in
Asia and seventh largest in the world (after the US, China, Japan, Germany, the UK
and France) based on 2014 figures in current Dollar terms. ASEAN is on the brink of
major economic and demographic change. A tectonic shift in market structure is
taking place from sub scale and fragmented to scale and greater coherence. Yet
challenges do exist – in particular peace, security and the sustainable use of natural
resources. Moreover, ASEAN’s international trade has almost tripled over the last
decade. And foreign-direct investment has been flowing into the region, with
multinationals hoping to capitalize on its rapidly expanding middle class and strategic
location at the intersection of China, Japan and India.
Indian businesses must recognize the opportunities presented by the ASEAN’s
growth and economic integration. It will be important for Indian Businesses to
understand their strength in the ASEAN market and to tailor their strategies
accordingly. We need to think of ASEAN as a whole with distinctive regions to get a
clear sense of perspective keeping in view the following: a) Attractive opportunities
require a local business presence. This requires initial and ongoing investment, and
well established organizational competencies. b) Invest in relationships. This is the
key to the door for most ASEAN markets, but takes time to develop. c) Aim to
operate in a “harmonious” supply chain in which participants at all stages share
benefit out of the venture. This is the key to enduring business relationships.
The importance of India’s current relationship with ASEAN and its future potential for
mutually beneficial growth will require greater political, economic, and diplomatic
engagement with ASEAN. ASEAN’s geostrategic importance stems from many
factors, including the strategic location of member countries, the large shares of
global trade that pass through regional waters (E-W Centre).

References
• ASEAN Economic Community (AEC) A potential game changer for ASEAN
countries,June,2013,Deutsche Bank
• Vinayak HV, Fraser Thompson, and Oliver Tonby (May,2014): Understanding
ASEAN: Seven things you need to know
http://www.mckinsey.com/industries/public-sector/our-insights/understanding-
asean-seven-thingsyou-need-to-know
• http://emerging-markets-research.hktdc.com/business-
news/article/Asia/ASEAN-Market-Profile/mp/ en/1/1X000000/1X09WKZD.htm
• ASEAN ASEAN Integration Report 2015
http://www.asean.org/storage/images/2015/November/media-summary-
ABIS/ASEAN%20 Integration%20Report%202015.pdf
• ASEAN Investment Report 2015 Infrastructure Investment and Connectivity
http://www.asean.org/storage/images/2015/November/asean-investment-
report/ASEAN%20 Investment%20Report%202015.pdf
• ASEAN International Merchandise Trade Statistics Yearbook 2014
http://www.asean.org/storage/images/2015/March1/asean_publication/Previe
w%20IMTS%2012-03- 2015%202.pdf
• ASEAN Community in Figures - Special Edition 2014: A Closer Look at Trade
Performance and Dependency, and Investment
http://www.asean.org/storage/images/resources/2014/Oct/ACIF%20Special
%20Edition%202014_ web.pdf • A Blueprint for Growth ASEAN Economic
Community 2015: Progress and Key Achievements
http://www.asean.org/storage/images/2015/November/media-summary-
ABIS/AEC%202015%20

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 https://data.aseanstats.org/

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