Set up in 2006, Indian and Japanese prime ministerial summits are held every year alternately in New Delhi and Tokyo. The summits are one of the few mechanisms to carry on bilateral relations that have become multi-dimensional over years, and now stand qualitatively improved. The joint statement issued every time indicates the depth, strength, dimensions and potentials. It is both symbolic and substantial.
“Sharing a strong strategic interest in expanding co-operation on maritime security and promoting regional stability, both India and Japan realise that ensuring sea lanes remain open and free as vital for the regional prosperity because of its dependence on oil imports from the Middle East.” Prime minister Manmohan Singh visit to Japan primarily focused on firming up bilateral economic ties and co-operation in other areas.
“India’s relations with Japan are important not only for its economic development but also because India considers Japan as a natural and indispensable partner in our quest for stability and peace in East Asia and the Asia-Pacific.”
India and Japan have long expressed concern over potential threats to energy supplies due to sea lanes vulnerable to piracy and blockades. Both “have shared interests in maritime security, face similar challenges to energy securities”.
Japan and India are working toward a deal on nuclear energy co-operation, as Tokyo tries to boost exports of atomic technology and other infrastructure to help revive its economy.
Armed with a trillion dollar foreign exchange reserve, targeting an achievable 2% domestic inflation, and a huge bulging bag of development assistance, Japanese premier Abe Shinzo is eager to promote sales of Japanese nuclear technology as part of its push to expand exports, especially in emerging markets in Asia and the Middle East that have better growth potential than within Japan. Aided by “Abenomics” — monetary easing and huge public expenditure policy, massive stimulus — the yen has fallen by about 25% and Japan is looking for attractive investment propositions abroad. India is certainly on the cards but not priority since development opportunities in Africa and Myanmar commands Japan’s investment attention.
Recent Japan and India agreements on economic co-operation and investment include continued assistance to 100 billion dollar plans for industrial corridors between New Delhi and Mumbai, and between Chennai and Bangalore. Though the former project has begun, it is moving slowly and may not meet the 2017 deadline due to cost escalation and other problems.
The world has huge stakes in Japan returning to sustained economic growth, its continued leadership in enterprise, technology and innovation and ability to remain the locomotive in Asian development. India offers increasing opportunities for growth and internationalisation of Japanese corporations.
Trade between Japan and India had never been impressive. Japan’s exports to India in the fiscal year ending March 2013 were worth $8.25 billion. Imports were worth $5.7 billion. Indian bilateral trade with Japan for 2012-13 worth $14 billion is dwarfed by Japan-China trade ($68 billion). Despite Comprehensive Economic Partnership Agreement that envisages abolition of tariffs in 10 years, higher trade with Japan has led India to register higher deficit of $ 6.2 billion for 2012-13. Japan has a goal of 30 trillion yen in infrastructure exports in its growth strategy to be compiled in June. Since India’s plan is to invest $1 trillion (for five years), the India-Japan summit was a good chance to promote sale of infrastructure like railways and other facilities.
India and Japan also will reinforce bilateral co-operation for massive infrastructure projects. Joint research will be conducted for the construction of a high-speed railway connecting Mumbai and Ahmedabad to enable introduction of bullet trains. Abe announced 71 billion yen in loans for the construction of Mumbai metro and 17.7 billion yen for the IIT-Hyderabad. India’s economic growth declined to 6.5% in 2011 and 5% in 2012-13 and hence Japanese investment could be a catalyst. In spite of sustained complementarities between India and Japan, Japanese firms are holding back investment waiting for further reforms relating to problems such as law, labour, land acquisition, tax and the like.
Though the civil nuclear pact could not come through this time, India and Japan have agreed to accelerate talks to conclude a pact to facilitate Japanese firms to export nuclear power generation technologies and equipment to India. Such a pact is problematic because India is not a party to the Treaty on the Non-Proliferation of Nuclear Weapons. India plans to build about 20 nuclear power plants to increase the share of nuclear power in supply from the current 4% to 25% by 2050. The worth of India’s nuclear power market is estimated at $150 billion. Besides, the strong anti-nuclear lobby in Japan can create trouble even if the Abe administration gains confidence to move forward politically.
Abe has already signed agreements with the UAE and Turkey to enable the export of Japan’s nuclear power technologies and equipment. Such exports to India need to pay attention to the danger of nuclear power generation and need to thwart nuclear weapons proliferation.
Under pressure from the Bush administration, the Nuclear Suppliers Group, including the US, Britain, France, Germany and Japan, had decided to allow exports of nuclear power technologies and equipment to India. In turn India pledged unilateral and voluntary moratorium on nuclear weapons tests. The Indian call for insertion of a clause in a Japan-India nuclear pact to ensure it would not hamper India’s nuclear weapons programme, besides right to reprocess spent nuclear fuel from Japanese generation equipment, could continue to be a point of difference.
Japan has now offered the US-2 amphibious aircraft. The joint statement has also mentioned India and Japan would regularly hold exercises between the Maritime Self-Defence Force and the Indian Navy and begin talks for the export of MSDF’s US-2 amphibious planes to India.
They will co-operate to improve counter-cyber attacks, ensure safe sea lanes and strengthen coast guard authorities. The statement was obviously drafted with China’s increasing maritime presence in mind. Thus, the summit was symbolic and gains were substantial.
H S Prabhakar teaches Japanese Studies at School of International Studies, JNU. Email: hsprabhakar@gmail.com