As global economic dynamics continue to shift, South Asian nations are increasingly looking to Southeast Asia to strengthen trade and investment ties - a pivot aimed, in part at least, at reducing dependence on China and counterbalancing Beijing’s growing regional dominance. From New Delhi to Dhaka to Colombo, governments and businesses are exploring deeper cooperation with ASEAN countries across multiple sectors, seeking alternative supply chains, greater market access, and more strategic partnerships.

This tilt has been most pronounced in India’s expanding economic outreach to Southeast Asia under its "Act East" policy, which has evolved from a diplomatic slogan to a trade and connectivity strategy.

New Delhi has been actively pursuing free trade upgrades with ASEAN member nations, promoting regional infrastructure connectivity through projects like the India-Myanmar-Thailand Trilateral Highway, and forging closer defence and digital ties with countries such as Vietnam, Indonesia, and the Philippines.

The impetus is both strategic and economic. India has grown wary of China's increasingly assertive posture in the Himalayas and the Indian Ocean, particularly with Beijing’s overtures to Bangladesh, and is eager to secure a stronger presence in East Asia’s booming markets. Trade between India and ASEAN exceeded $130bn in 2023, and both sides are pushing to expand this further through supply chain diversification, joint ventures, and digital economy cooperation.

Bangladesh is also deepening engagement with Southeast Asian economies. Keen to graduate from least developed country (LDC) status by 2026, Dhaka sees closer ties with ASEAN as a route to maintaining export competitiveness and attracting investment beyond China’s orbit. It has applied for sectoral dialogue partner status with ASEAN, and is actively seeking FTAs with countries such as Thailand and Malaysia.

Sri Lanka and Nepal, too, are increasingly looking eastward. Colombo has intensified its diplomatic courtship of Singapore, Thailand and Malaysia of late in an effort to boost tourism and diversify exports. Nepal, for its part, is exploring cross-border connectivity initiatives linking it through India to Southeast Asian markets.

Driving much of this momentum is a desire for supply chain resilience. The COVID-19 pandemic exposed the risks of over-reliance on Chinese manufacturing. In response, South Asian nations are recalibrating trade flows and seeking to integrate more fully into Southeast Asia’s dynamic production networks. Initiatives like the Supply Chain Resilience Initiative (SCRI) — involving India, Japan, and Australia are giving further structure to these ambitions.

At the same time, China’s Belt and Road Initiative (BRI) continues to tie many South and Southeast Asian countries to Beijing through debt-financed infrastructure. But concerns over sovereignty, economic overdependence, and security risks viv-a-vis Chinese involvement in domestic affairs should debts be defaulted upon, are prompting some governments to hedge their bets. Increased India-ASEAN cooperation offers a viable alternative model, one grounded in multipolarity and shared democratic values.

Nevertheless, challenges remain. Trade between South Asia and ASEAN still lags behind that of China-ASEAN ties, and logistical bottlenecks, regulatory mismatches, and a number of historical rivalries continue to complicate integration efforts. But with strategic patience and economic pragmatism, South and Southeast Asia are laying the foundations for a more balanced regional order.