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India must continue to nurture its ties with Japan with care

India’s GDP growth remains strong, though its economy is facing headwinds, and the next general elections are looming, with accompanying uncertainties. Abe remains politically solid and well on his way to become the longest serving premier in post-war Japan. Thus the Modi ongoing visit should aim at further consolidating our partnership.

analysis Updated: Oct 29, 2018 11:07 IST
Prime Minister Narendra Modi and his Japanese counterpart Shinzo Abe during the India - Japan Annual Summit in Gandhinagar, Gujarat, 2017(PTI)

The transformation of India’s relations with Japan is easily the biggest success of New Delhi’s Act East Policy. Japan is now regarded as a natural partner. Two decades ago, however, that was anything but a given. Our relationship was cordial but lacked substance. We have been receiving liberal official development assistance (ODA) from Japan since 1958, but at the same time, Tokyo condemned India’s nuclear tests in 1998, called for punitive sanctions, and promised Islamabad to take the Kashmir issue to the United Nations Security Council (UNSC). It was inconceivable then that the two nations would conclude a Civil Nuclear Cooperation Agreement in 2016, ties would be elevated to ‘Special Strategic and Global Partnership’ in 2014, annual summits would be instituted in 2006, or that India would become the biggest recipient of Japanese ODA of over $3 billion per annum, totalling some $40 billion by 2016.

This transformation was enabled by a growing convergence in our geopolitical and economic interests. India’s speedy GDP growth was one such factor. A Comprehensive Economic Partnership Agreement (CEPA) was concluded in 2011. Japan is now the third largest source of FDI into India: $4.7 billion in 2016-17 alone. India is regarded as one of the most preferred investment destinations by Japanese manufacturers. Tokyo is setting up a string tech and industrial parks in India.

The second key reason is the muscle flexing by China, which is perceived as a growing challenge by both countries. China covets Japanese Senkaku (Diaoyu) Islands and has been engaging in provocative patrolling and unlawful fishing in Japanese waters. Beijing is instinctively opposed to Japanese and Indian permanent membership in the UNSC and continues its efforts to undermine Japanese (and Indian) interests. Given China’s creeping expansionism, both partners have committed themselves to a Free and Open Indo Pacific (FOIP), set up trilateral and quadrilateral dialogue mechanisms with the United States and Australia, and stepped up defence cooperation.

However, what really triggered Japan’s renewed attention on India was an unrelated event. While Tokyo was still sulking about India’s nuclear tests, former President Bill Clinton paid a five-day visit to India in March 2000. The Japanese were stunned. Prime Minister Yoshirō Mori followed suit in August 2000, and the rest is history.

Prime Minister, Narendra Modi, and his Japanese counterpart, Shinzo Abe, have met 11 times since May 2014. Last year, they performed the groundbreaking ceremony for the Ahmedabad to Mumbai 505 km bullet train (Shinkansen) project. Japan is providing India ₹880 billion in loans at an annual interest rate of 0.1%. The Chinese Belt Road Initiative project loans carry an interest rate of around 4%.

Japan has been instrumental in establishing some of the biggest infrastructure facilities in India, including the Delhi Metro and the 1,500 km Delhi Mumbai Industrial Corridor (DMIC) — a $100 billion-project. Many more are nearing completion or in the pipeline.

A lot has changed in our regions since the Ahmedabad summit. China’s mood is mellower due to a trade war and geostrategic divergences with the US. There is renewed hope in the Korean Peninsula. Things are heating up between Tehran and Washington, resulting in a steep rise in oil prices. Afghanistan continues to simmer. The Pakistani economy is tanking but there is no let-up in its hostilities towards India.

India’s GDP growth remains strong, though its economy is facing headwinds, and the next general elections are looming, with accompanying uncertainties. Abe remains politically solid and well on his way to become the longest serving premier in post-war Japan. Thus the Modi visit on October 28 and 29 should aim at further consolidating our partnership.

One of the notable gains has been our steadily deepening defence and security collaboration. According to Nikkei Asian Review (September 22), the two leaders are likely to discuss the “export of Japanese US-2 amphibious aircraft to India, expansion of joint exercises between the armies, and upgradation of 2+2 security talks to ministerial level”. We are also considering a logistical support agreement and collaborative research in Unmanned Ground Vehicle (UGV) /Robotics.

Significantly, a partnership is being forged with Japan to speed up connectivity, infrastructure and industrial development in India’s sensitive Northeastern region. Specific projects could be announced during the prime minister’s visit. However, trade ties need attention. Despite a CEPA, bilateral trade has dipped 6.21% to $13.61 billion in 2016-17. A correction may be difficult given India’s diffidence in upgrading trade pacts with partner nations.

It helps that it is a popular relationship in both nations. Nevertheless, we must continue nurturing the ties with great care and imagination.

Vishnu Prakash is former Indian ambassador to South Korea

The views expressed are personal

First Published: Oct 29, 2018 11:07 IST