The Trust Paradox: Can India Bridge the Gap with Southeast Asia?
For years, New Delhi has pivoted from a “Look East” to an “Act East” policy, flooding the diplomatic channels of Southeast Asia with high-level visits and strategic handshakes. Yet, a striking contradiction has emerged: while the diplomatic activity is at an all-time high, strategic confidence is lagging.
Recent data from the State of Southeast Asia Survey by the ISEAS – Yusof Ishak Institute highlights a “trust deficit.” While India’s overall trust rating marginally exceeds distrust (38.5% vs 34.1%), this optimism vanishes in maritime hubs like Indonesia, Malaysia, Singapore and the Philippines, where distrust outweighs trust.
The ‘Security-First’ Trap: Why Missiles Aren’t Enough
India has found significant success in defense diplomacy. From the sale of BrahMos cruise missiles to the Philippines to joint naval exercises in the South China Sea, New Delhi is positioning itself as a security guarantor in the Indo-Pacific.
However, there is a growing trend suggesting that security cooperation cannot substitute for economic integration. Southeast Asian nations prioritize trade above all else. While they appreciate India’s help in maintaining a “free and open Indo-Pacific,” they are less impressed by the lack of tangible trade outcomes.
The AITIGA Deadlock
The centerpiece of this friction is the ASEAN India Trade in Goods Agreement (AITIGA). The failure to upgrade this FTA has left India lagging behind China, which successfully implemented CAFTA 3.0. The result? A ballooning trade deficit for India, which soared to nearly USD 45 billion in FY2024-2025.
Future trends suggest that unless India moves past its protectionist instincts—specifically in agriculture and dairy—it risks supply chain isolation. The decision to opt out of the Regional Comprehensive Economic Partnership (RCEP) may have protected domestic farmers, but it has cost Indian exporters higher compliance costs and lower competitiveness.
The Perception Problem: From ‘Dead Economy’ to Global Player
Diplomacy is as much about optics as it is about policy. India’s regional standing has been bruised by external narratives and internal diplomatic slips. Comments from US leadership labeling India a “dead economy” or criticizing its “stubborn” trade barriers resonate in Southeast Asia, where markets are generally more open.
the perception of India as a reliable leader is hampered by instability in its own neighborhood, including ongoing tensions with Pakistan and a complex rivalry with China. For ASEAN nations, a partner that cannot stabilize its immediate perimeter is viewed with skepticism when offering strategic leadership in the wider region.
Overcoming the ‘Ease of Doing Business’ Hurdle
According to the Global Investment Risk and Resilience Index by Henley and Partners, India remains in a “high risk” category (ranking 104th). Foreign firms frequently cite arduous land registration, complex paperwork, and high taxes as barriers to entry.
The trend moving forward is clear: to win trust, India must transition from strategic rhetoric to operational ease. This means simplifying the regulatory environment to allow Indian companies—already giants in IT and pharmaceuticals—to expand their footprint within ASEAN countries more aggressively.
Future Outlook: Three Pillars for Success
To turn the tide of distrust, New Delhi’s future strategy will likely need to focus on three critical pivots:
- Economic Pragmatism: Prioritizing the conclusion of the AITIGA upgrade over rigid protectionism.
- Institutional Respect: Moving away from dismissive rhetoric regarding regional blocs and treating ASEAN as a primary partner rather than a secondary strategic tool.
- Domestic Reform: Improving the “Ease of Doing Business” to attract reciprocal investment from Southeast Asian tigers like Vietnam and Indonesia.
For more on regional geopolitics, explore our deep dive into the Act East Policy and its evolution over the last decade.
Frequently Asked Questions
Why is there a trust deficit between India and ASEAN?
The deficit is primarily driven by economic limitations, unresolved trade agreements (AITIGA), and a perception that India is too protectionist compared to its regional peers.
What is the significance of the BrahMos missile sales?
It represents India’s success in “security diplomacy,” showing that while economic trust is low, strategic and defense cooperation is growing, particularly with the Philippines.
How does the RCEP affect India’s position?
By staying out of the RCEP, India avoided a surge of cheap imports but also lost the opportunity to integrate deeply into Southeast Asian supply chains, leading to a perceived lack of economic commitment.
Join the Conversation
Do you think India can overcome its economic hurdles to become the primary partner for Southeast Asia? Or will China’s economic integration remain insurmountable?
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