India’s ‘Look East’ Policy Begins with Myanmar

By Tridivesh Singh Maini

November 08, 2014

Modi’s visit highlights Myanmar as a first step in countering China. 

On November 11, Indian Prime Minister Narendra Modi begins a 10-day tour of Myanmar, Australia and Fiji – his longest overseas trip to date. All eyes will be on the East Asia Summit in Myanmar, as well as the G-20 Summit in Australia. Modi will also be the first Indian prime minister to visit Australia in 28 years. But first stop in Myanmar should not be overlooked; it isimportant for a number of reasons.

First of all, Myanmar is India’s link to Southeast Asia, and thus a crucial component of its “Look East Policy,” now also called “Act East” by the current government. Over the past two decades successive governments have made assiduous efforts to reach out to Myanmar, realizing its strategic importance, especially in the context of India’s regional ties. While the late Prime Minister Rajiv Gandhi visited the country in 1987, the real opening up toward Myanmar took place in the early 1990s during the government of Prime Minister Narasimha Rao. As the architect of India’s Look East Policy, Rao realized that India needed to adopt a more pragmatic approach towards Myanmar.

Economic relations between both countries were thus initiated, and a trade agreement signed in 1994 gave a strong initial stimulus to the relationship. Modi’s immediate predecessor, Manmohan Singh, visited Myanmar in 2012 accompanied by a 25-member business delegation. It was a reasonably successful trip, with the signing of 12 MOUs, including a $500 million line of credit, a development deal to establish the Indo-Myanmar border huts, an increase in bilateral airline services, and assistance for setting up centers for research in information technology and agriculture.

Still, there is ample scope to develop India’s economic and other ties with Myanmar. A number of projects have been commenced, the most important of which – the Kaladan Multi-Modal transport project, which will connect Calcutta with Sittwe port, and the India-Myanmar-Thailand trilateral highway – are still ongoing. Infrastructure at border posts like Moreh-Tamu, which is in dire need of repair, and the bus service between Imphal and Mandalay, which was supposed to begin in October, are still on the drawing board.

Second, while India has been helping Myanmar build institutional capacity and develop areas such as information technology, this often gets overshadowed by assistance from other countries – especially China, with cumulative foreign direct investment in Myanmar reaching $14 billion in June 2014. Some of the major projects initiated by China include the Myitsone dam, Tarpein hydroelectric project, Kyaukphyu-Kunming oil pipeline, Letpadaungtaung copper mine, and the Tagaung nickel mine. Chinese trade with Myanmar was $6 billion in 2013, while Indian-Myanmar trade was touching $2 billion. Indian investment was more than $270 million as of August 2013, yet it is nowhere near China’s investment.

The assistance granted by China tends to be purely commercial in nature, and the terms and conditions of its loans are much more stringent, while Indian assistance is more liberal. Of late there has also been some resentment against the Chinese, evidenced by Myanmar’s refusal to accept a loan of $2 billion for a highway connecting Kyaukphyu with Ruili following local protests. Connectivity with Kyaukhphu is important for China, since it will help create an alternative to the Straits of Malacca for oil transportation. The Chinese are looking to transport oil from Africa and the Persian Gulf through Myanmar to China rather than using the circuitous sea route through the Malacca Straits.

Apart from its strategic and economic importance, Myanmar is also important to India because it is a member of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperative (BIMSTEC), along with Bangladesh, Bhutan, Sri Lanka, Thailand and Nepal. Interestingly, both Myanmar and India are also part of the BCIM (Bangladesh-China-India-Myanmar Forum for Regional Cooperation).

Will Modi take on China directly?

As in Bhutan and Nepal, the Indian prime minister is expected to focus on strengthening connectivity while also providing assistance in institutional development. He could send a clear message that while India may not match China’s economic prowess, it certainly has a major advantage in the context of strong institutions. Apart from conventional assistance and developing government and educational institutions, Modi should focus on Indian assistance for monuments that reflect the shared history of both countries. As he did in Nepal, there should also be a focus on integrating India’s northeastern states with Myanmar like China has done with Yunnan.

Third, since taking office Modi has sent clear signals that he wants to reach out to Indians settled overseas. Unfortunately, Indians in Myanmar have been neglected by the government. The total number of PIOs (persons of Indian origin) according to the 1983 census was in excess of 400,000, many of whom are stateless. There are PIOs of numerous ethnicities from states including Bihar, Bengal, Tamil Nadu, Uttar Pradesh and Punjab. It is time for the Indian government to assist those who are stateless, with the relevant state governments also helping to re-establish ties.

Finally, it would also make sense to find synergies with other countries that have a strong presence in Myanmar, including Japan and Thailand. Japan, in particular, has increased its presence in Myanmar recently, and Japan’s approach is similar to India’s in terms of the conditions for assistance it imposes. With India-Japan ties growing and the latter planning to invest in India’s northeast, Tokyo could provide connectivity assistance to India between its northeast and Myanmar. Synergies can also be found with countries like Singapore that have a growing presence in Myanmar. This will help ensure that no single country has a dominant influence.

Modi has equipped himself well in the sphere of diplomacy, and his emphasis on connectivity and the building of shared values with neighbors has resonance in Myanmar’s case. It remains to be seen whether he can sell India’s strengths effectively and infuse the economic and strategic bilateral relationship with a much-needed dose of dynamism.

Tridivesh Singh Maini is a Senior Research Associate with The Jindal School of International Affairs, Sonepat.

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