Policy briefs · Oct 19, 2026
India's Modi Signs Maritime Connectivity Deal with Indonesia at ASEAN-India Summit in Jakarta
Indian Prime Minister Narendra Modi signed a bilateral maritime connectivity and port development agreement with Indonesian President Prabowo Subianto on the margins of the ASEAN-India Summit in Jakarta on 19 October 2026. The agreement covers joint development of four Indonesian port facilities and a direct shipping corridor between Sabang, Aceh, and Chennai. The India-ASEAN trade target was simultaneously revised upward from $200 billion to $300 billion by 2030, reflecting growing economic integration.
Contents
Key takeaways
- India-Indonesia maritime connectivity agreement covers 4 port development projects and Chennai-Sabang direct shipping route
- India-ASEAN trade target revised to $300 billion by 2030, up from $200 billion set in 2022
- Modi announced $1.5 billion Maritime Development Fund for ASEAN infrastructure co-financing
- Agreement includes joint hydrographic survey of the Andaman Sea and Strait of Malacca approaches
- Indonesia is India's 9th largest trading partner; bilateral trade reached $28 billion in 2025-26
Agreement Substance and Maritime Architecture
The India-Indonesia Maritime Connectivity Agreement signed in Jakarta establishes a framework for joint development of port infrastructure at four Indonesian sites, including Sabang (Aceh province), Bitung (North Sulawesi), Kuala Tanjung (North Sumatra), and a facility at Makassar (South Sulawesi). Sabang's strategic significance is particularly notable: located at the northwestern tip of Sumatra, the port controls access to the Malacca Strait from the Indian Ocean side and has been discussed as a potential Indian strategic foothold since 2018 negotiations that were not concluded. The current agreement stops short of establishing a formal Indian military access arrangement but includes provisions for Indian naval vessel port calls and joint hydrographic survey operations in the Andaman Sea.
The direct Chennai-Sabang shipping corridor, envisioned as a fortnightly container and roll-on/roll-off service, addresses a longstanding gap in direct India-Indonesia maritime connectivity that has forced bilateral cargo to transit through Singapore at additional cost and time. India's Sagarmala port development programme will co-finance upgrades on the Chennai end, while Indonesia's Pelabuhan Indonesia (Pelindo) state port operator will manage Sabang infrastructure investment with Indian Export-Import Bank financing of approximately $400 million. The agreement also covers crew and officer training exchange, with Indian maritime academies to accommodate 200 Indonesian officers annually — a soft-power investment that builds people-to-people maritime sector links.
India-ASEAN Trade and the $300 Billion Target
The revised India-ASEAN trade target of $300 billion by 2030 requires a compound annual growth rate of approximately 12 percent from the 2025-26 baseline of approximately $155 billion. This is ambitious but potentially achievable given structural drivers: ASEAN's rapid industrialisation creates demand for Indian pharmaceuticals, IT services, and engineering goods, while India's growing middle class creates demand for ASEAN-produced electronics, processed foods, and automotive products. The primary constraint on India-ASEAN trade growth has been the India-ASEAN Free Trade Agreement's underutilisation: Indian companies complain that rules-of-origin requirements are overly restrictive, while ASEAN partners point to non-tariff barriers in Indian services and agricultural imports as limiting full market access reciprocity.
Modi's announcement of the $1.5 billion Maritime Development Fund, channelled through the India-ASEAN Fund's infrastructure window, provides co-financing for smaller-scale port and maritime connectivity projects across ASEAN member states that fall below the threshold for major bilateral agreements. The Fund is explicitly positioned as an alternative to Chinese-financed port infrastructure, acknowledging the political sensitivity of BRI debt arrangements in several ASEAN states. The Fund's governance structure — managed jointly by India's External Affairs Ministry and the ASEAN Secretariat — ensures multilateral legitimacy and prevents characterisation as Indian bilateral aid with strategic conditions.
Strategic Context: India-China Competition in Southeast Asia
India's Jakarta engagements occur in a strategic environment shaped significantly by ASEAN member states' navigation of US-China competition and their desire to maintain hedging options. Southeast Asian governments consistently poll their publics and strategic communities as preferring engagement with multiple external powers rather than exclusive alignment with any single partner. India, which is neither a US ally nor a Chinese partner and simultaneously a Quad member and SCO member, occupies an unusual position as a major power that ASEAN states can engage without triggering US-China rivalry optics. Modi's government has invested substantially in cultivating this positioning through the Act East Policy and its maritime dimension.
China's BRI-financed infrastructure presence in ASEAN remains the dominant external power footprint in the region's port and transport sector, with Chinese-led or co-financed projects in ports including Kyaukpyu (Myanmar), Hambantota (Sri Lanka, outside ASEAN proper), and projects in Cambodia, Laos, and Malaysia. India cannot match Chinese financing scale in the near term, but Indian infrastructure offers are increasingly competitive in countries that have experienced debt sustainability concerns with Chinese terms — notably Malaysia and Thailand, where project renegotiations have created political space for alternative partners. India's Mumbai-based development finance institution, the National Bank for Financing Infrastructure and Development (NaBFID), has been specifically capitalised to support international infrastructure co-financing alongside the EXIM Bank.
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