India’s Act East Policy Faces New Heat: ASEAN’s Geopolitical Shift Tests Delhi’s Diplomatic & Trade Agility
India’s Act East Policy faces new challenges amid shifting Southeast Asian geopolitics. China’s rising influence, ASEAN’s internal shifts, and trade gaps test Delhi’s diplomatic strategy.
NewsSutra
In an era marked by volatile regional realignments, India’s once-optimistic Act East Policy is now facing critical tests. What began as a strategic pivot in the early 1990s to strengthen ties with Southeast Asia has encountered new hurdles in 2025 amid intensifying global rivalries, shifting alliances, and a rapidly transforming ASEAN landscape. While the policy was envisioned to deepen India’s economic, cultural, and strategic engagement with Southeast Asia, the changing geopolitical realities in the region have brought new complexities to the table.
From China’s growing assertiveness in the South China Sea to emerging ASEAN protectionism, India's balancing act is becoming increasingly intricate. As Southeast Asia redefines its geopolitical posture, India must recalibrate its diplomatic, economic, and security strategies to maintain relevance and assert influence.
A Brief Look Back: From Look East to Act East
India’s Look East Policy, introduced in the early 1990s, was a diplomatic shift meant to foster stronger relationships with Southeast Asia in the post-Cold War world. This approach transitioned to the more action-driven Act East Policy under Prime Minister Narendra Modi in 2014. The goal was not merely economic outreach, but a strategic engagement involving defense cooperation, infrastructure investments, trade diversification, and soft power diplomacy.
The cornerstone of India’s Act East Policy has been closer cooperation with ASEAN (Association of Southeast Asian Nations), comprising 10 member states including Indonesia, Vietnam, Thailand, and Singapore. ASEAN represents one of India’s largest trading partners and a critical pillar in its Indo-Pacific vision.
However, current developments are putting this strategy to the test.
Rising Geopolitical Pressures in Southeast Asia
The growing influence of China in the ASEAN region has changed the dynamics dramatically. Beijing’s massive infrastructure investments under the Belt and Road Initiative (BRI) and its increasing naval presence in disputed waters are tipping the strategic balance. Several ASEAN nations, once cautious of Chinese ambitions, are now navigating a tightrope between economic dependence and sovereignty concerns.
For India, this presents a paradox. While some ASEAN nations like Vietnam and the Philippines are warming up to Delhi as a counterbalance to China, others are reluctant to choose sides. Thailand and Cambodia, for example, have shown increasing tilt towards Beijing. This fragmentation within ASEAN limits India’s leverage, reducing the policy’s effectiveness.
India’s response—expanding defense ties with Vietnam, conducting naval exercises with Indonesia, and increasing maritime surveillance cooperation—reflects a shift from mere diplomacy to strategic hedging.
Trade, Connectivity, and the RCEP Dilemma
India’s trade relations with ASEAN, though substantial, are fraught with imbalances and missed opportunities. In 2022-23, trade between India and ASEAN crossed $130 billion, with a trade deficit skewed heavily in ASEAN’s favor. India’s decision to walk away from the Regional Comprehensive Economic Partnership (RCEP) in 2020 has also impacted its long-term trade credibility in the region.
While India feared that RCEP would expose its domestic industries to unfair competition from China, the withdrawal created a strategic vacuum that others quickly filled. ASEAN now views India’s absence as a setback to regional economic integration.
To counter this perception, India has been pushing bilateral trade agreements, improving logistics infrastructure, and expanding digital trade linkages. The proposed India-Thailand Economic Cooperation Agreement and a revival of the India-Myanmar-Thailand trilateral highway project are part of this corrective approach. However, on-the-ground progress remains slow, often bogged down by bureaucratic hurdles and inconsistent implementation.
Security Cooperation and the Indo-Pacific Vision
India’s Indo-Pacific strategy, which overlaps significantly with the objectives of the Act East Policy, positions Southeast Asia as a central pillar in maritime and regional security. The Quad alliance—comprising India, the U.S., Japan, and Australia—adds another layer to this regional framework, albeit with limited ASEAN endorsement.
Countries like Singapore and Indonesia appreciate India’s role in ensuring a rules-based Indo-Pacific, but others remain cautious. ASEAN’s own “ASEAN Outlook on the Indo-Pacific” (AOIP) emphasizes neutrality and inclusivity, often diverging from India’s security-driven narrative.
Increased cooperation with Vietnam on naval capacity building, defense exports to Philippines, and training programs with Myanmar’s navy point to growing strategic ties. Yet India has to walk a fine line to ensure it does not appear as merely an extension of larger Quad interests, which some ASEAN members fear might provoke China further.
India’s Cultural and Diaspora Connect: An Underrated Tool
While strategic and economic engagements dominate headlines, India’s soft power and cultural diplomacy remain underutilized assets in Southeast Asia. Countries like Indonesia, Thailand, and Malaysia share deep-rooted historical, linguistic, and religious ties with India. The large Indian diaspora, especially in Singapore and Malaysia, serves as a vital link.
India’s efforts to promote Buddhist circuits, Sanskrit scholarship, and student exchange programs through initiatives like e-ITEC and ASEAN-India Fund have had a positive, albeit limited, impact. Experts argue that ramping up cultural outreach could help bridge trust gaps that economic or military strategies alone cannot.
ASEAN’s Internal Shifts and India’s Diplomatic Tightrope
Southeast Asia’s political landscape is evolving rapidly. Recent elections in Thailand, instability in Myanmar, and the economic rise of Vietnam have led to differing national priorities within ASEAN. This growing asymmetry complicates India’s efforts to engage the region uniformly.
Moreover, with the U.S.-China rivalry intensifying in the Indo-Pacific, ASEAN is witnessing polarization among member states—some leaning towards China for economic support, others favoring U.S. or India for strategic balance. India’s challenge is to stay non-aligned while still being assertive.
The recent India-ASEAN Foreign Ministers' Meeting reflected these concerns, with both sides calling for rule-based order, regional connectivity, and joint efforts on terrorism and cyber security. But beyond statements, meaningful implementation is what will determine the policy’s success.
Recommendations for Reinvigorating the Act East Policy
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Re-Engage with RCEP or Propose Alternatives:
India must consider re-engaging ASEAN on trade with a new mini-lateral framework or sectoral agreements that bypass the broader RCEP stalemate. -
Accelerate Infrastructure and Connectivity Projects:
Projects like the India-Myanmar-Thailand Trilateral Highway must be prioritized with strict deadlines and financial transparency. -
Deepen Maritime Security Collaboration:
Joint patrols, coast guard exchanges, and blue economy initiatives can help build trust and extend India’s maritime footprint responsibly. -
Strengthen People-to-People Ties:
Expanding student visa quotas, cultural centers, and Indian Studies programs in ASEAN universities can solidify long-term goodwill. -
Institutionalize Regional Think Tank Collaboration:
More ASEAN-India academic, climate, and digital policy dialogues can create informed, multi-sectoral platforms for collaboration.
Conclusion: A Test India Cannot Afford to Fail
India’s Act East Policy stands at a defining crossroads. The vision that once promised seamless integration with Southeast Asia must now evolve into a pragmatic, layered, and results-oriented strategy. As ASEAN recalibrates its external partnerships, India cannot rely on past goodwill or shared history alone.
What’s needed is precision diplomacy, policy agility, and executional urgency. Only then can India truly act east—not just in rhetoric but on the ground, in boardrooms, and across blue waters.
