Global economic competition is no longer determined solely by control over natural resources, industrial capacity, or the size of domestic markets. Digitalization has become an important factor in determining competitiveness, trade efficiency, and a country’s strategic position in the global economy. In this context, ASEAN and India have an opportunity to build a deeper partnership, not merely through trade in goods, but also through digital economic integration.

ASEAN has placed digital transformation on its common agenda. In October 2025, ASEAN member states reached the substantial conclusion of negotiations on the ASEAN Digital Economy Framework Agreement (DEFA). This framework covers digital trade, electronic payments, digital identity, data protection, cybersecurity, and the development of new technologies. The Indonesian government estimates that ASEAN’s digital economy, projected to be worth around US$1 trillion by 2030, has the potential to increase to US$2 trillion through the comprehensive implementation of DEFA.

India's Relevance to ASEAN

However, building a regional digital economy requires more than expanding internet connectivity. ASEAN also needs technology, skilled professionals, payment infrastructure, data security, and an innovation ecosystem capable of connecting businesses across borders. This is where India becomes a relevant partner.

India has developed digital capabilities on a large scale, ranging from information technology services and digital identity systems to electronic payments. According to a report by India’s Ministry of Electronics and Information Technology, the country’s digital economy is estimated to have contributed 13.42% of national income in 2024–2025, up from 11.74% in 2022–2023. The Unified Payments Interface (UPI) payment system demonstrates India’s ability to build digital payment infrastructure that is widely used.

This experience is important for ASEAN. The region’s challenge is not merely to adopt technology, but to ensure that digitalization can increase business productivity, expand market access, and create domestic added value.

Strategic Foundation for Relations

Geographically, ASEAN and India are also connected by strategic maritime trade routes. The Strait of Malacca, located between the Malay Peninsula and the island of Sumatra and connecting the Indian Ocean with East Asia, is one of the important corridors of international trade. India’s position in the Indian Ocean region and its proximity to Southeast Asia’s maritime routes provide a strategic foundation for relations between the two regions. However, these geographical advantages need to be translated into more productive economic cooperation.

The perspective of economic integration theory explains that geographical proximity and trade relations can generate greater benefits when barriers between markets are reduced. In the digital economy, these benefits emerge through payment system interoperability, simplified trade procedures, recognition of digital identities, and secure cross-border data exchange. 

Meanwhile, the theory of comparative advantage suggests that cooperation will be more beneficial when each party makes use of its relatively stronger capabilities. India can contribute through technology and digital services, while ASEAN provides a regional market, production networks, and a diverse industrial and trade base.

Four Priority Areas

There are at least four areas that could become priorities for ASEAN–India cooperation.

First, digital payment integration and cross-border trade. ASEAN and India can develop connectivity between payment systems to facilitate trade, tourism, and remittance transactions. Micro, small, and medium-sized enterprises (MSMEs) would benefit from lower transaction costs and broader market access. This cooperation needs to be accompanied by security standards, consumer protection, and compliance with each country’s regulations.

Second, the development of artificial intelligence, data centres, and cloud computing services. India can share its experience in developing software and affordable digital solutions, while ASEAN countries can strengthen their data centre capacity, telecommunications networks, and the application of technology in manufacturing, agriculture, logistics, and public services. Research and development partnerships should also be directed towards producing innovations suited to the region’s economic needs.

Third, strengthening cybersecurity and data governance. Digital integration without trust can instead increase the risks of fraud, information leaks, and dependence on particular technology providers. Therefore, ASEAN and India need to strengthen information exchange, professional training, and the development of data protection standards. Integration does not necessarily mean standardizing all regulations, but rather building compatible standards that allow different systems to work together securely.

Fourth, developing human resources and digital MSMEs. ASEAN can expand joint training programmes with Indian technology companies, universities, and research institutions. The focus should not only be on producing workers capable of using technology, but also on improving their ability to create products, build start-ups, and develop local technologies.

Indonesia's Important Role

In terms of the division of roles, ASEAN needs to guide regional integration. Through DEFA and the ASEAN–India cooperation framework, member states can agree on interoperability standards, data governance principles, consumer protection, and digital dispute resolution mechanisms. ASEAN must also ensure that countries with different levels of digital readiness can participate, so that the benefits of integration are not concentrated solely in more advanced economies.

India, on the other hand, needs to become a partner in technology and capacity development. Its contributions can include knowledge transfer, investment, research cooperation, workforce training, and the development of digital solutions that can be adapted to the needs of ASEAN countries. This cooperation must be built on the principle of mutual benefit, rather than merely expanding the market for Indian technology companies.

Ultimately, digitalization can serve as a bridge to strengthen economic relations between ASEAN and India. This partnership is also in line with the two sides’ official agenda to expand cooperation in the digital economy, artificial intelligence, connectivity and science.

The challenge ahead is to ensure that cooperation does not stop at declarations and diplomatic forums. ASEAN and India need to establish pilot projects, measurable targets, funding, and joint evaluation mechanisms. Indonesia can play an important role by leveraging its position within ASEAN, its proximity to the Strait of Malacca, and its large domestic market to advance this agenda.

In a global economy increasingly shaped by technology, advantages belong not only to countries that control technology, but also to those capable of building cooperative networks and turning technology into productivity. ASEAN–India integration through digitalization is therefore not merely a technical choice. It is a strategy to strengthen competitiveness, expand economic self-reliance, and build a stronger position within the Indo-Pacific economic order.

(The author is an Economist, Lecturer at STIES Mitra Karya Bekasi, Indonesia, and Business Practitioner. The views expressed are personal. He can be contacted at esb.setiobudi@gmail.com)