There is a strong case for saying that the expanding engagement with Japan is the most important bilateral relationship in India’s global grab-bag. The potential is enormous. If Tokyo is able to accomplish its core objectives with regard to India, the result would be this country’s economic transformation.
The nub is whether India has the wherewithal to match the expectations of Japan and especially those of its prime minister, Shinzo Abe. Mr Abe’s presence at the Republic Day parade this year will cause some angst in Beijing.
However, the bedrock of the India-Japan relationship is economic. But it is an economic blueprint so large that it will have strategic consequences.
At the heart of it is Tokyo’s interest in using the mammoth cross-border capital flows of its corporations and financial institutions to recreate the circumstances that led Japan to transform Southeast Asia and China into export-based, manufacturing dynamos. While there are many missing links in the Indian economy among the most important is its narrow manufacturing base.
Among all emerging economies, India has the smallest manufacturing base as a percentage of GDP. This has plenty of fallout. As millions of Indians move from their ever-shrinking farms to the cities, they are not finding factory jobs to accommodate them. India must import billions in arms, electronic products and struggles to compete against ‘made in Bangladesh’ products because it lacks the world-class infrastructure to compete globally.
The cost of this in terms of jobs, finance and keeping India mired in poverty is incalculable.
Which is why Japan is so important. Unlike most other governments who have focussed on selling one or two billion more widgets to India, Tokyo has sought to push India to the next quantum level economically.
Unable to find the right infrastructure, for example, Japan has sought to make this infrastructure on behalf of India.
The Delhi Metro was the first experiment. The massive Delhi-Mumbai Industrial Corridor is the centrepiece of Japan’s vision. When completed it will catapult India into the top rungs of the international trading system. If thousands of Japanese firms move here afterwards, the days of India being a manufacturing wannabe will be over.
The Japanese themselves would profit from this. But there is no hiding the fact that, especially under Mr Abe, Tokyo has also come to see India in a strategic light. New Delhi should not shirk from embracing Japan. It is in India’s interest to, one, have an ally committed to making India something greater than it is and, two, to have multiple centres of power in Asia.