Prime Minister Narendra Modi’s visit to Japan, starting on Saturday, is significant for a bilateral relationship that has not fulfilled its potential despite the absence of any historical or ongoing negative dimensions, barring the Indian nuclear tests in 1974.
Global and regional strategic equations have changed beyond recognition since with the economic and military rise of China, as well as its declared search for parity and a new type of ‘great power’ relationship with the US. China’s rise is felt in Asia — by India with its 5,045-km-long disputed land border, and by Japan, Vietnam and the Philippines, which have territorial disputes with China. If the India-Japan civil nuclear cooperation agreement is concluded during this visit, it can unlock the strategic and economic potential of the relationship. It will also enable multinational companies like GE-Hitachi to participate in India’s nuclear energy sector.
Anticipating Chinese expansionism, Japanese Prime Minister Shinzo Abe also devised the concept of a “strategic quadrilateral” with India, Australia and the US. Cooperation in the quadrilateral framework is now materialising, with Modi’s forthcoming visit to Washington and Australian Prime Minister Tony Abbott’s to India on September 4.
While annual bilateral trade is around $16 billion, India is the largest recipient of Japanese official development assistance worth nearly $38 billion cumulatively (till 2013). Suzuki Motor Corporation’s investment in India in the early 1980s transformed the automobile sector. Modi’s perceived decisiveness and massive electoral mandate is interpreted in Japan — and elsewhere — as India becoming more significant in the international arena, while it seeks to revive domestic economic growth. Japan has high foreign exchange reserves of $1.3 trillion and its companies are cash-rich. Given the political difficulties with China, Japan Inc is seeking to diversify its investment destinations. However, Japan is cautious and its companies move in groups. India can become the big new investment hub if it can address their regulatory anxieties.
{{/usCountry}}While annual bilateral trade is around $16 billion, India is the largest recipient of Japanese official development assistance worth nearly $38 billion cumulatively (till 2013). Suzuki Motor Corporation’s investment in India in the early 1980s transformed the automobile sector. Modi’s perceived decisiveness and massive electoral mandate is interpreted in Japan — and elsewhere — as India becoming more significant in the international arena, while it seeks to revive domestic economic growth. Japan has high foreign exchange reserves of $1.3 trillion and its companies are cash-rich. Given the political difficulties with China, Japan Inc is seeking to diversify its investment destinations. However, Japan is cautious and its companies move in groups. India can become the big new investment hub if it can address their regulatory anxieties.
{{/usCountry}}China remains critical of Japanese atrocities in World War II despite receiving over $30 billion in aid and $40 billion in investment to fuel its economic miracle. To counter this, Tokyo has a defence treaty relationship with the US; it initiated strategic partnerships with Vietnam and the Philippines, and now seeks a more substantive defence relationship with India.
Japan is also mindful of the need for freedom of navigation in the seas and is cognisant of India’s location at the centre of sea lanes, reinforcing the strategic convergence between both sides. Japan’s willingness to supply the sophisticated US/2 amphibious aircraft to India imparts a special flavour to the relationship, which could mature into joint development and production of defence equipment.
China will not be the only country watching India’s expanding strategic and economic relations with Japan. Russia and South Korea, which have their own disputes with Japan, but are also India’s strategic and trade partners, respectively, will also be cautious. Therefore, while remaining cognisant, Modi need not be reticent about expanding ties with Tokyo.
Neelam Deo, a former Indian diplomat, is director at Gateway House
The views expressed by the author are personal