India’s Engagement with ASEAN: Outreach Does Translate into Positive Perceptions

The State of Southeast Asia 2026 Survey, released by ISEAS – Yusof Ishak Institute, reveals a paradoxical trust deficit towards India. While India’s overall trust rating (38.5 per cent) marginally exceeds its distrust level (34.1 per cent) for the first time since 2019, this is a mirage when it comes to maritime Southeast Asian countries. In key countries such as Indonesia, Malaysia, Singapore, and the Philippines, the level of distrust towards India outweighs trust.

Trust Deficit

The irony of the data is that these maritime countries have been the ones central to India’s diplomatic and strategic outreach in recent years. The divergence between diplomatic activity and strategic confidence suggests that trust is not shaped solely by engagements but also by prevailing perceptions. In Southeast Asia, regional perceptions of India are influenced by a combination of longstanding economic limitations. The negotiations to upgrade the India-ASEAN FTA (known as the ASEAN India Trade in Goods Agreement, or AITIGA) remain unresolved. There are also negative perceptions generated by developments such as the India-Pakistan conflict, the US-India trade spat and US President Donald Trump calling India a ‘dead economy’.

In 2025, India saw increased bilateral cooperation with key maritime Southeast Asian countries. The presidents of Indonesia, the Philippines, and Singapore visited India on separate occasions. They sought to expand bilateral cooperation to include healthcare, maritime security, the digital economy, and cultural exchange. The coast guards of India and Indonesia moved beyond exercises to expand operational engagement, including cross-deck visits and joint training, maritime search and rescue, marine pollution response, and maritime law enforcement. Jakarta has also shown interest in collaborating with New Delhi on defence technology, including the BrahMos cruise missile. In 2025, for the first time, India and the Philippines conducted a joint naval exercise in the South China Sea (SCS). Philippine President Ferdinand Marcos Jr. hinted at acquiring more BrahMos missiles from India in the near future. Singapore and India adopted the roadmap for the Comprehensive Strategic Partnership, focusing on trade, technology, security and supporting the development of India’s semiconductor industry.

Despite these diplomatic and strategic engagements, however, India has struggled to build trust among these countries, as reflected in the Survey.

Economic cooperation constitutes the top-most priority for Southeast Asian countries, and this is where India lags the most. New Delhi’s absence from major regional trade frameworks, such as the Regional Comprehensive Economic Partnership (RCEP), has created a risk of supply chain isolation for India. While opting out of the agreement has protected India’s sensitive domestic sectors — agriculture, dairy and small-scale manufacturing — from a potential surge in competitive imports, its exporters face higher costs and stricter compliance requirements. This has been reflected in India’s ranking in “championing global trade”, which has decreased from 3.3 per cent to 2.3 per cent.

The divergence between diplomatic activity and strategic confidence suggests that trust in international relations is not shaped solely by engagements but also by prevailing perceptions.

The India-US trade spat and Trump’s subsequent negative comments in 2025 have also affected New Delhi’s ranking. In August 2025, Trump criticised India’s trade barriers for being “stubborn and obnoxious”, called its economy “dead”, and imposed one of the world’s highest tariffs on it, barring China. To an extent, Trump’s perception of India having a relatively protected market is shared by Southeast Asian countries.

India is already struggling to address its ballooning trade deficit with ASEAN, which soared to nearly USD45 billion in FY2024-2025. While the two sides agreed to review the AITIGA in 2015, the review was delayed for years. While the review recommenced in 2023, its progress remains deadlocked despite a series of negotiations. This stands in contrast to China, which successfully upgraded its FTA with ASEAN to the China-ASEAN Free Trade Area (CAFTA) 3.0. While the terms of negotiations differ between India and China, perceptions are often shaped by outcomes, and India has failed to produce one. Furthermore, the delay in concluding AITIGA, despite Prime Minister Narendra Modi’s set deadline by the end of 2025, was compounded by India’s Commerce Minister Piyush Goyal’s comments on the trade agreement, calling it “silly” and describing ASEAN as the “B team of China”. The ASEAN co-chair overseeing the AITIGA review expressed strong displeasure over the remarks.

India’s economic position remains stalled. The India-Indonesia Comprehensive Economic Cooperation Agreement (CECA), which has been ongoing since 2011, has yet to be finalised. According to the Global Investment Risk and Resilience Index by Henley and Partners, India is in a ‘high’ risk category, ranking 104^th, way below many Southeast Asian countries. Foreign companies often complain about India’s arduous land and registration processes, high taxes, and complex paperwork, which make it difficult to set up a business. Despite being globally competitive in IT, pharmaceuticals and tech start-ups, Indian companies lag in expanding their business footprint in ASEAN countries. This has resulted in the decline in perceptions of India as a formidable economic influence, ranking it second last in the Survey, just above the UK, a decline from last year.

Furthermore, India’s unstable neighbourhood and its recent armed conflict with Pakistan, along with its rivalry with China, have affected Southeast Asian perceptions of New Delhi. Countries in the region were already sceptical of India’s ability to project stable, reliable leadership beyond its neighbourhood. India has been placed third from last with 1.6 per cent in projecting political and strategic influence in Southeast Asia, above South Korea (1.2 per cent) and the UK (0.5 per cent).

To build trust, India should first address economic limitations, including expediting the timely conclusion of upgrade negotiations for AITIGA. This will make it more relevant for the current economic challenges, enhance trade facilitation and strengthen supply chain linkages. While there is a range of concerns regarding AITIGA, including trade imbalance, rules of origin issues and limited market access to Indian exporters, New Delhi has bagged some successes, such as the EU-India FTA, UK-India FTA and trade agreements with Oman and New Zealand. It is also expanding trade negotiations with Mexico, Canada and Gulf Corporation Council (GCC). This shows that India intends to reach an agreement with ASEAN. The challenge is the will to push it through.

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