A tepid confluence of the two seas: India in the Indo-Pacific regional economic architecture

Abstract

India’s economic and strategic engagement with the Indo-Pacific has expanded markedly since the launch of the Act East Policy, yet its integration into the region’s economic architecture remains limited and uneven. Drawing on the metaphor of a “confluence of the two seas”, this paper examines why India’s presence across the Indian Ocean and Western Pacific remains tepid despite dense diplomatic activity and multiple institutional affiliations. It traces the distinctive evolution of Asian regionalism, contrasting ASEAN’s and APEC’s soft, consensus-based approach with European models, and assesses how intensifying US–China rivalry, shifting trade architectures (APEC, RCEP, CPTPP, IPEF), and the proliferation of minilateral arrangements constrains India’s room for manoeuvre. The analysis then turns to India’s domestic political economy, highlighting how structural vulnerabilities, protectionist constituencies, and regulatory frictions have produced a pattern of selective and often defensive trade policy that limits India’s role in regional value chains and rule-making processes. The paper argues that recent developments may mark an inflection point. The review of the ASEAN–India FTA (AIFTA) and renewed debate on India’s APEC membership illustrate both the persistence of integration challenges and the possibility of more calibrated liberalisation. Most significantly, the conclusion of a high-standard EU–India Free Trade Agreement in 2026—covering goods, services, investment, government procurement, digital trade, and sustainable development—is analysed as a potential turning point in India’s trade policy, signalling a willingness to accept deeper, rules-heavy commitments under favourable conditions. The EU’s Indo-Pacific strategy and Global Gateway initiative are situated as a “European variable” that reshapes India’s options by offering a non-confrontational, rules-based partner and an inter-regional bridge between European and Indo-Pacific economic architectures. The paper contends that if India leverages this agreement, along with targeted FTA upgrades and minilateral partnerships, as platforms rather than exceptions, it can gradually convert its economic weight and strategic relevance into more credible, embedded regional economic engagement. In doing so, the confluence of the two seas can shift from aspirational metaphor to tangible network of trade, investment, and regulatory linkages in which India plays a genuinely pivotal role.