Indonesian President Susilo Bambang Yudhoyono had attended India's Republic Day celebrations in January 2011. A similar visit by Sukarno for India's first Republic Day in 1950 was intended to cement ties among what was then the Non-Aligned Movement of developing countries unwilling to join either side in the Cold War. But in 2011, the visit not just marked another step in India's 'Look East' policy of encouraging greater engagement and integration between India and Southeast Asia. It also signalled two large democracies growing closer as authoritarian China grows more menacing.
The basis of the India-Indonesia partnership dates back to the founding fathers of these two nations -Jawaharlal Nehru and Sukarno - who offered a distinct foreign policy worldview that drew on their shared colonial experiences. In the last decade, both New Delhi and Jakarta's worldview may have changed a bit, but the potential for partnership hasn't. India with its 'Look East' policy substantially enhanced its presence in the region while Indonesia took the lead in bringing one of the world's fastest growing economies closer to Asean. Both India and Indonesia want to seize the opportunities offered by landmark economic growth in Asia.
Economic engagement between the two is growing rapidly, and gained further momentum with the signing of the India-Asean free-trade agreement in 2010. The deal committed New Delhi to cut import tariffs on 80 per cent of the commodities it trades with Asean, with the goal of reversing India's growing marginalisation in the world's most economically dynamic region. India and the ten-member Asean have concluded talks on a free trade agreement (FTA) on services and investment. The FTA is expected to increase bilateral trade to $200 billion by 2022 and lead to talks on the Regional Comprehensive Economic Partnership, which would also include Australia, China, Japan, South Korea, and New Zealand.
Indonesia will figure prominently in India's economic engagement with Southeast Asia. Beyond the regional FTA, India and Indonesia have started negotiations on a comprehensive economic cooperation agreement that would further liberalise trade. Indonesia is an important source of energy and raw materials for India. Bilateral trade between India and Indonesia is set to increase to $45 billion by 2015 from the current level of $16.80 billion. Major Indian companies, including the Birla group, the Tatas, Essar, Jindal Steel and Bajaj Motors, are now operating in Indonesia. Indian investment is spread across banking, mining, oil and gas, iron and steel, aluminum, IT, textiles and telecommunications, among other industries.
India and Indonesia also have been steadily adding enhanced security and political ties as well. The two signed a strategic partnership agreement in 2005 that started an annual strategic dialogue. The next year they ratified a defence cooperation agreement, initially signed in 2001, which focused on areas of defence supplies and technology, as well as on joint projects. This week the two will sign an extradition treaty and also a "mutual legal assistance treaty" for gathering and exchanging information to enforce their laws. They will also seek to renew an earlier statement of understanding on civil nuclear cooperation.
Joint naval exercises and patrols, and regular port calls by their respective navies, have become a regular feature of the India-Indonesia relationship in recent years. India has also become a major source of military hardware for Jakarta.
Such cooperation is a natural result of geography. Indonesia's location, combined with its naval forces, allow it to work effectively with India to ensure security in the sea lanes of communication between Europe, the Middle East and Southeast Asia. Together they control the entry point from the Bay of Bengal in the Indian Ocean to the Straits of Malacca. Similarities in democratic governing systems and broad foreign-policy outlooks have helped dramatically: Viewing India's maritime presence as benign, Indonesia has openly invited India to help littoral states in the region maintain the Straits' security.
All of this is significant because it stands in stark contrast to China's approach to its waters, which has more often than not deteriorated to outright aggression. Unlike China's rise, which is increasingly viewed in the region as a reason for suspicion and alarm, India's poses no such threats. While it is large, its democratic governance leads to greater transparency in its foreign-policy motives, which in turn makes it easier for partners to feel comfortable working with New Delhi. Cooperation with Indonesia offers a clear example of what a greater role for India in Southeast Asia would look like, and as such gives other countries in the region little cause for concern.
New Delhi's ambitious policy in East and Southeast Asia is aimed at significantly increasing its regional profile. Smaller states in the region are now looking to India to act as a balancer in view of China's growing influence, while larger states also see it as an attractive engine for regional growth. It remains to be seen if India can indeed live up to its full potential, as well as to the region's expectations. But with the wooing of Indonesia, India is signaling that it is indeed serious about its presence in Southeast Asia. And that's a welcome development.
The writer teaches at King's College, London