6 proliferation of weapons of mass destruction and the spread of terrorism. Energy security and control of scarce resources are assuming trans-national proportions. 1.7 As part of the Southern Asian Region, India has considerable interests in the areas stretching from West Asia through Central Asia and South Asia to South East Asia. The Indian Ocean region is of great importance to India and it assumes strategic significance due to the high volume of Indian and international trade transiting through the Indian Ocean. Existing and emerging regional groupings give rise to competitiveness with the attendant possibility of increasing instability due to inter and intra-regional conflicts. The region also includes a number of nuclear weapon or nuclear-capable states. In addition, this region is witnessing an unprecedented proliferation in small arms and narcotics trafficking which, in turn, threaten the stability of states and societies. Trans-border migration on economic grounds also raises serious security concerns. 1.8 India is a member of the South Asian Association for Regional Cooperation (SAARC), the Association for South East Asian Nations Regional Forum (ARF) and the Indian Ocean Rim Association for Regional Cooperation (IOR-ARC). By virtue of her size and strategic location in the Indian Ocean region, India is expected to play her rightful role to ensure peace and stability in it. The Economic Environment 1.9 With market forces playing an important role, economic strength is likely to become the currency of power. National economies are undergoing liberalisation to cater to globalisation. The dominance of the developed world over the global economy is, nonetheless, likely to continue. Even so, China and India have been acknowledged as emerging economic powers. Economic linkages and inter-dependence amongst countries are likely to result in mutual security becoming an important issue. Water, energy sources (mainly oil) and even environmental issues may emerge as causes of future conflict between states.