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#5317, 3 July 2017

Three Years of the Modi Government

India-Japan: Past Trends Continue
Shamshad A Khan
Former Senior Researcher and Japan Foundation Post Doctoral Fellow at Keio Research Institute, Keio University , Japan, and Author, 'Changing Dynamics of India-Japan Relations: Buddhism to Special Strategic Partnership' (2017)

When the transition of leadership was underway in India in 2014, the strategic community in Japan speculated whether the new government in New Delhi would accord the same priority to the New Delhi-Tokyo bilateral relationship as the United Progressive Alliance-II (UPA-II) government had done. 

The wariness was a result of a history of 'engagements' and 'estrangements' in India-Japan relations driven mainly by the leadership’s personality. The previous Indian Prime Minister, Dr Manmohan Singh, had paid special attention to forging closer India-Japan relations and Tokyo was keen on continuing this momentum in its bilateral relationship with New Delhi. Consequently, Japan invited the new Indian Prime Minister, Narendra Modi, to host his first foreign visit after assuming office. However, Modi chose to first visit Bhutan as part of his "neighbourhood first" policy. Nonetheless, when Modi visited Japan in August 2014, his Japanese counterpart expressed “deep appreciation” for choosing Japan as his “first destination for a bilateral visit outside India’s immediate neighbourhood.” 

The old issues in India-Japan relations - expansion of trade and economic ties; cooperation in the infrastructure sector; development of rail, road and port facilities; and civil nuclear cooperation - dominated the agenda in Modi’s week-long visit, and reflected in the joint statement, the 2014 Tokyo Declaration for India-Japan Special Strategic and Global Partnership. The new political dispensation was wise to carry forward the consultations on these issues that were identified during Dr Manmohan Singh's tenure but had not been brought to fruition in terms of actual cooperation. As part of a new agenda, Prime Minister Modi proposed his dream projects, including Clean Ganga Project, and developing new smart cities in India; and Japan agreed to help in implementing these projects. The 2014 Tokyo Declaration was testimony that the new Indian leadership would maintain continuity rather than change the course of bilateral relations with Japan.

During Prime Minister Modi’s visit to Japan in 2014, the India-Japan strategic and global partnership was elevated to a “Special Strategic and Global Partnership.” Japan is only the second country after Russia to whom India has accorded this 'special' status. Granting Japan a status at par with India’s “time tested,” “reliable friend” Russia was perhaps aimed at indicating to Japan that India attaches utmost importance to its relations with the country, and that in the coming decades, Tokyo would remain feature prominently in New Delhi’s foreign policy priorities.

New Delhi and Tokyo have effectively used the annual summit meetings between the prime ministers to take stock of developments, to identify roadblocks in implementing bilateral cooperation, and to conclude protracted issues. For instance, negotiations on the India-Japan civil nuclear cooperation began in 2010 but remained inconclusive till November 2016 due to Japan’s insistence on a nullification clause in the deal. In 2015, a breakthrough was reached during Japanese Prime Minister Shinzo Abe’s India visit; Abe and Modi signed a two line Memorandum of Understanding (MoU) stating that the two countries would conclude the nuclear cooperation agreement after finalising the “technical details.” The deal was concluded during Prime Minister Modi’s November 2016 visit to Japan, and Tokyo agreed to provide its civil nuclear technology to New Delhi provided India remains committed to its moratorium on nuclear testing. The last political hurdle was crossed when the Japanese Diet approved the India-Japan civil nuclear cooperation agreement on 7 June 2017. However, the implementation of the deal remains a challenge given the financial crisis that hit the US nuclear reactor manufacturer, Westinghouse, in which the Japanese parent company Toshiba has major stakes.

India-Japan cooperation in the infrastructure sector has also been strengthened in the past three years. In 2013, the two countries agreed to begin a joint feasibility study for the high speed railway technology for the Mumbai-Ahmedabad route. After the study concluded in 2015, it was announced that the construction of the bullet train track would begin in 2017 and be completed by 2023. India-Japan cooperation on other various dedicated freight corridors, including the Delhi Mumbai Industrial Corridor, is also continuing. 

However, these projects have been delayed indefinitely. Notwithstanding delays in the implementation of these internal projects, which are aimed at improving India’s domestic infrastructure, Japan and India have unveiled their plans to build the Asia-Africa Growth Corridor (AAGC). The announcement of this mega project linking the Asian and African continents comes close on the heels of China’s Belt and Road Initiative (BRI) and is seen as a counter to the Chinese project.

The tremendous financial investment needed for this project calls for caution on India’s part. It would be prudent to first implement the internal mega projects before leaping onto external mega projects like the AAGC. 

In 2006, India and Japan had realised that economic ties should be the “bedrock” of their bilateral cooperation, and keeping this in mind, the two countries had signed the Comprehensive Economic Partnership Agreement (CEPA) in 2011 after five years of deliberations. Within a year of its implementation, the CEPA propelled the bilateral trade volume, with bilateral trade figures increasing to US$18 billion in FY2011-12 from US$ 13 billion in the previous fiscal year. However, after delivering marginal growth in the subsequent years, it has begun decelerating; and at present bilateral trade hovers at US$ 13.61 billion. India and Japan must give serious thought to enhance bilateral trade, which is currently below its potential. After all, Japan and India are the second and third largest economies in Asia. On the bright side, India remains one of the most favoured business destinations for many Japanese companies and their presence in India continues to grow.  

Overall, during the first three years of the Modi government, the India-Japan relationship has deepened further, including in the areas of technology and infrastructure cooperation. Economic cooperation and trade, as well as people-to-people relations remain the weak links in bilateral relations; and they need special attention. Additionally, agreed but unfinished projects too need special attention. The completion of these projects will set a benchmark and instill confidence among other partners to participate in intercontinental mega projects such as the AAGC.

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