Recalibrating India’s Act East Outlook 10 Feb 2026

Recalibrating India’s Act East Outlook: Strategic Hesitation or Structural Inertia?

India's Act East policy, now over a decade old, suffers from a critical malaise: an overemphasis on optics and bilateral engagements while under-delivering on multilateral regional integration, particularly with ASEAN. Despite lofty rhetoric, the policy lacks coherence in translating geopolitical ambitions into actionable regional outcomes. This failure reveals deeper structural weaknesses in India’s approach to regionalism and trade diplomacy.

The Institutional Landscape: Promises Underwhelmed by Performance

Introduced in 2014, the Act East Policy replaced the Look East Policy and emphasized enhanced economic and strategic ties in East and Southeast Asia. Key instruments have included the India-ASEAN Free Trade Agreement (FTA), connectivity projects like the Kaladan Multimodal Transit Transport Project, and defence-level cooperation with partner states. Administratively, India deployed mechanisms like the MEA’s regional desks and inter-ministerial consultative systems for smoother implementation.

However, the policy operates within a fragmented institutional framework, with the Ministry of External Affairs often at odds with Commerce and Finance Ministries. Inadequate allocation of financial resources further undermines implementation. The budget allocation under the ASEAN-India Cooperation Fund was a meagre $45 million for 2024-2025—a glaring contrast to China’s Belt and Road Initiative, which has seen $30 billion in annual regional investments.

Building the Argument: Evidence of Institutional and Policy Shortcomings

The most glaring shortcoming lies in the execution of India-ASEAN connectivity projects. The Kaladan project, designed to link Myanmar's Sittwe port to India's northeastern states, was slated for completion by 2018. Two years after this deadline, it remains unfinished due to bureaucratic red tape, land acquisition hurdles, and inconsistent funding. The Comptroller and Auditor General’s (CAG) 2025 report underscores how delays caused cost overruns amounting to ₹2,200 crore.

Moreover, India’s trade deficit with ASEAN has steadily grown, from $21 billion in 2019-20 to $28 billion in 2024-25. Contrary to the government’s narrative about leveraging mutual trade advantages, data from the Directorate General of Foreign Trade (DGFT) highlights limited capacity utilization under the India-ASEAN FTA. Sectors like agriculture and textiles have seen negligible benefits due to tariff-related disagreements.

On strategic fronts, defence-level engagements such as joint naval exercises (SIMBEX, MILAN) have increased visibility, but they have scarcely affected regional security frameworks like the ASEAN Defence Ministers Meeting (ADMM). India’s absence in ASEAN-led norms creation—particularly its lukewarm posture toward South China Sea disputes—has reduced India’s relevance in multilateral dialogues.

At the heart of this underperformance is the structural disconnect between India’s foreign policy vision and its bureaucratic delivery model. The Draft Promotion of Regional Trade Act (ongoing Parliamentary consultations in 2025) sought to institutionalize trade facilitation in the Northeast to complement Act East aspirations, but similar legislation remains stuck in gestational stages due to political consensus deficits.

Engaging the Counter-Narrative: Is Policy Saturation to Blame?

A defense of the Act East inertia argues that India’s foreign policy attention is diffused due to competing priorities. From the Quad to BRICS and renewed focus on the Global South, managing parallel tracks leaves limited bandwidth for ASEAN-specific commitments. Proponents see this as a strategic compromise rather than policy failure.

While this is partly valid, the operational bottlenecks in the Act East framework are rooted less in bandwidth limitations and more in systemic weaknesses like poor inter-ministerial coordination and deficient regional infrastructure investments. India can certainly pivot resources toward ASEAN-centric initiatives if there is political will, but reliance on generalized narratives of "prioritization fatigue" oversimplifies deeper failings.

Learning from Japan’s Regional Diplomacy

Japan’s ‘Free and Open Indo-Pacific’ strategy offers a sharp contrast to India's Act East approach, particularly in sustaining regional multilateral contributions. Japan has actively bankrolled infrastructure diplomacy through its Official Development Assistance (ODA), directing over $15 billion toward ASEAN projects since 2015. Structural trade collaborations, such as the Regional Comprehensive Economic Partnership (RCEP), further exemplify Tokyo’s proactive influence.

Japan's emphasis on seamless institutional frameworks—such as interagency councils for Indo-Pacific collaboration—highlights what India lacks. India, constrained by federal pushback and uneven state cooperation, fails to replicate Japan’s efficiency in aligning domestic agencies with global objectives.

Assessment: Between Structural Weakness and Policy Choice

India’s Act East Policy is at a crossroads where incremental tweaks will no longer suffice. Institutional reforms—such as a centralized Act East Authority with stronger constitutional backings—are imperative to align regional efforts. Fiscal outlays for connectivity projects must match declarative intentions, and trade negotiations with ASEAN should press for a recalibrated FTA that mitigates current deficits.

The next logical step must involve greater subnational integration, empowering Northeast states as economic gateways. Lessons from Japan suggest the need for coherent policymaking and infrastructural investment rather than piecemeal adjustments. Without this recalibration, the Act East Policy risks fading into irrelevance, especially as competing influences from Beijing continue to eclipse New Delhi’s role.

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