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India announced its ‘Look East’ policy in 1991, but it’s only much more recently that it has actually started looking in that direction, thanks largely to concerns over China’s rapidly growing military and diplomatic clout. Now, India is intensifying its diplomatic outreach to its neighbours—or, more precisely, to China’s next door neighbours.

The long list of Indian outreach targets currently includes Japan, South Korea, Vietnam, Burma, Malaysia and Singapore. And it has now been extended to another Southeast Asian nation: Indonesia.

Diplomatic ties have existed between the two for 60 years, though it was not until 2005 that they signed a strategic partnership deal, followed by a new action plan two years later.

Last month, the two nations discussed ways of further invigorating their now robust bilateral relationship as visiting Indonesian President Susilo Bambang Yudhoyono held talks with Prime Minister Manmohan Singh in New Delhi. Both countries are China-wary, and both are troubled by the scourge of terrorism. 

The importance India attaches to Indonesia can be gauged by the fact that the Indonesian president was the chief guest for India’s Republic Day parade on January 26, an honour that India has for years reserved for select nations with which it intends to step up its strategic ties.

Interestingly, the Indonesian president unequivocally condemned terrorism in all its forms and manifestations, a far cry from Chinese Premier Wen Jiabao’s complete silence on the subject during his recent India visit. A further development was that the two leaders agreed to hold summit-level meetings on the sidelines of multilateral events, which will inevitably lead to annual bilateral summits between the two powers. The two leaders also announced the establishment of an Eminent Persons’ Group to prepare a blueprint for India-Indonesia relations over the next 15 years.

Also during Yudhoyono’s visit, the two countries signed 18 memoranda of understanding agreements worth $15.1 billion on a wide range of areas as diverse as infrastructure, manufacture and mining. Yudhoyono sought to drive home the importance of India-Indonesia synergies when he pointed out that both nations are members of the G-20 and have vibrant economies—the combined GDP of the two is a hefty $2.5 trillion.

The two leaders expressed satisfaction at growing bilateral trade and investment ties and set a new target for boosting bilateral trade to $ 25 billion by 2015—an achievable target, as India-Indonesia trade has tripled over the last five years. Yudhoyono also highlighted the fact that India’s investment in Indonesia has grown from $11.6 million in 2007 to $44 million in 2010, and he invited Indian industry to invest in his country as it offers an conducive industrial environment with handsome returns on overseas as well as domestic investments.

A joint statement issued at the end of Singh’s talks with Yudhoyono said the two leaders noted ‘the development of active cooperation through numerous frameworks governing defence, science and technology, space cooperation, agricultural science, culture, tourism and youth affairs and sports.’

The two leaders also acknowledged cooperation over a range of fields and concerns including education, renewable energy, disaster management, small and medium enterprises and climate change.

Needless to say, China will almost certainly be watching India’s diplomatic moves very closely. Its response will be well worth watching.