New Delhi is fond of grand diplomatic gestures. Prime Minister Narendra Modi’s high-profile visits to Jakarta underscore a persistent geopolitical ambition: positioning India as the indispensable counterweight to Chinese dominance in Southeast Asia. While former diplomats routinely laud these trips as historic triumphs that reimagine regional ties, the view from the ground reveals a different story. The truth is that India’s Act East policy remains choked by bureaucratic inertia, lagging trade volumes, and a widening infrastructure gap that words alone cannot bridge. To truly secure its place in the ASEAN calculus, India must move past symbolic state visits and address the structural economic failures that keep it on the periphery of Southeast Asian commerce.
The Chasm Between Rhetoric and Trade
Diplomatic communiqués love the word alignment. For decades, Indian foreign policy officials have spoken of a shared maritime destiny with Indonesia and the broader ASEAN bloc. Yet, looking at the hard economic data exposes the limits of this narrative.
Trade figures do not bend to political goodwill. While China-ASEAN two-way trade sits comfortably north of $900 billion, India-ASEAN trade struggles to consistently clear the $130 billion mark. That is not a minor gap; it is an existential chasm. Indonesia, the largest economy in Southeast Asia, views India as a vital market for its palm oil and coal, but rarely as a primary partner for high-value manufacturing or technology integration.
The problem stems from New Delhi’s historical protectionism. India’s abrupt exit from the Regional Comprehensive Economic Partnership (RCEP) negotiations in 2019 signaled to Southeast Asian capitals that when the chips are down, domestic political lobbies in India will always trump regional economic integration. By walking away from the world’s largest free-trade bloc, India effectively isolated itself from the supply chains rewriting the economic geography of the region.
The RCEP Hangover
Southeast Asian diplomats are polite, but they are also pragmatic. In private discussions, they voice deep frustration over India’s approach to trade agreements.
New Delhi frequently demands reviews of existing pacts, complaining that lower tariffs have allowed ASEAN goods to flood the Indian market while Indian exporters face non-tariff barriers abroad. While these domestic concerns are valid, the constant push for renegotiation creates an atmosphere of unpredictability. Businesses crave stability. If a manufacturing firm in Jakarta cannot predict Indian tariff structures five years down the line, it will simply look toward supply chains in Vietnam, Malaysia, or Southern China.
The Maritime Security Illusion
If economics is the weak link, security is supposed to be the anchor. India’s strategic thinkers frequently point to the Malacca Strait as the ultimate convergence zone where New Delhi and Jakarta can cooperate to check Beijing’s naval expansion.
The defense relationship has indeed seen incremental gains. We see regular joint naval exercises, coordinated patrols, and agreements allowing Indian access to Indonesia’s strategic Sabang port at the mouth of the Malacca Strait. This looks impressive on a map. Developing a deep-sea port capable of hosting military vessels requires sustained funding, transparent project management, and a level of bureaucratic speed that New Delhi rarely achieves.
Sabang and the Infrastructure Trap
Consider the Sabang port development. The intent is clear: establish an Indian footprint at a critical maritime choke point. However, execution tells a familiar tale. Years after the initial agreement, the commercial and strategic viability of the port remains largely on paper.
Contrast this with China’s Belt and Road Initiative. Despite valid concerns regarding debt traps and sovereignty, Beijing delivers infrastructure at a blistering pace. When Indonesia wanted a high-speed rail link between Jakarta and Bandung, China built it. India’s offers of lines of credit and developmental assistance frequently get bogged down in years of administrative scrutiny, environmental clearances, and political transitions.
The Connectivity Deficit
You cannot influence a region you cannot reach. For all the talk of historical ties dating back to the Chola Empire, modern physical connectivity between India and Southeast Asia remains remarkably poor.
The Trilateral Highway, meant to connect India's northeast with Myanmar and Thailand, is a monument to missed deadlines. Conceived over two decades ago, the project remains incomplete, plagued by ethnic conflict in Myanmar, difficult terrain, and funding bottlenecks. A road that exists only in sections cannot facilitate trade. Without this land corridor, India’s northeastern states remain landlocked, cut off from the economic dynamism of the Mekong subregion.
Air and maritime shipping routes are similarly deficient. Direct flights between major Indian hubs and Southeast Asian capitals are often less frequent and more expensive than those routing through Middle Eastern or East Asian hubs. Shipping containers traveling from Chennai to Manila frequently must transship through Singapore or Colombo, adding time and cost to every transaction.
The Soft Power Limits
India relies heavily on its cultural capital in Southeast Asia. Ramayana traditions in Java, shared Buddhist heritage in Thailand, and deep-rooted diaspora communities are constantly invoked to demonstrate an unbreakable bond.
Cultural affinity is an excellent icebreaker. It is a terrible substitute for hard power and economic utility. A shared epic does not lower the cost of shipping a ton of steel, nor does it provide an alternative to Chinese-financed digital infrastructure.
The Digital Export Experiment
One area where India has a genuine opportunity to shift the dynamic is in digital public infrastructure. The successful deployment of the Unified Payments Interface (UPI) inside India has caught the attention of Southeast Asian central banks. Singapore and India have already linked their real-time payment systems, allowing citizens to transfer money instantly across borders.
This is the model New Delhi needs to replicate across the region. By exporting its open-source, scalable digital architecture, India can offer ASEAN nations a viable, secure alternative to the proprietary tech ecosystems dominant today. This approach requires minimal physical footprint but yields high strategic returns. It bypasses the traditional infrastructure bottlenecks that stymie Indian foreign policy.
Redefining the Indian Calculus
If India wishes to be taken seriously as a major pole in the Indo-Pacific, its foreign policy elite must shed their defensive mindset. It is no longer enough to turn up at ASEAN summits, deliver speeches on the centrality of the bloc, and return home to a domestic market protected by high tariff walls.
New Delhi must make a choice. It can either embrace economic integration, which means lowering trade barriers and accepting the short-term political pain that comes with foreign competition, or it can accept its status as a secondary player in the economic future of Asia.
The current strategy of trying to match China’s strategic footprint on a shoestring budget while maintaining an isolationist trade policy is unsustainable. Southeast Asian nations are masterful practitioners of hedging. They will happily accept India’s security overtures to avoid becoming overly dependent on China, but they will not starve their economies of capital or trade opportunities just to appease New Delhi’s strategic anxieties.
The window of opportunity is closing. As supply chains diversify away from the Chinese mainland, countries like Vietnam and Indonesia are locking in new trade patterns and manufacturing alliances. India has the geographic proximity, the demographic dividend, and the shared strategic interests to be a part of this historic shift. What it lacks is the administrative will to execute its promises.
Future prime ministerial visits will undoubtedly yield more joint statements, renewed commitments, and photos of smiling leaders shaking hands. Those images will be broadcast widely on domestic news channels to project strength. But until the cargo ships moving across the Bay of Bengal carry Indian components to Indonesian factories in significant volumes, the Act East policy will remain a diplomatic slogan searching for substance.
