Trends in Foreign Investment Interaction Between India and ASEAN in 1990s

Abstract

The foreign investment during eighties and nineties was instrumental in bringing about rapid economic development of some of the ASEAN countries; on the contrary until 1991 it was almost elusive in the Indian economy. To give impetus to the economic reforms, the Indian Government unveiled the “look-east policy” in early 1992 to revitalise economic ties with Asian countries and initially selected ASEAN region as a launching platform. Despite earnest efforts made since 1992 to forge concrete investment partnerships with ASEAN countries India could gain moderate response and success mainly because ASEAN investors link their investment with the host country's trade regime. Their investments travel to such destinations where they can reap long-term trade benefits. For them, India's trade regime is highly protective and therefore they divert their investment to China, which not only offers a competitive environment but also a hassle-free regulaton; system. India needs to address specific expectations of the ASEAN investors, particularly opening of the trade sector, to become a favourable destination for larger ASEAN investment.