Analysis by Péter Goreczky
India and Southeast Asia have been seeking more economic engagement in recent years. The ASEAN–India free trade agreement has resulted in a diversification of trade flows by partner country, but both regions have failed to increase their share substantially in each other’s overall trade volume. Service export may offer new opportunities, but India’s limited integration in regional production networks and the difference in the sectoral competitiveness of the two regions will make it difficult to elevate trade relations to a much higher level. India plays a minor FDI relationship with Southeast Asia that is limited to Singapore, and there are substantial barriers to diversification in that regard. India’s role in regional infrastructure development is minor compared to China or Japan. At the same time, the digital economy and the health industry may provide new opportunities for economic engagement between the two regions. Altogether, strategic cooperation is still to be translated into a breakthrough in the economic relations between India and the ASEAN region.
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