Modi’s first foray outside South Asia was to Brazil to attend the sixth BRICS Summit on 15-16 July. This gave him the opportunity to meet President Xi Jinping and President Vladimir Putin. Incidentally, he was to visit Japan in early July. But he postponed his visit ostensibly due to his compulsions with remaining in Parliament for the budget presentation, which created some unhappiness in Tokyo. Its sensitivities were ruffled by the unfortunate impression created that Modi wished to converse with Xi Jinping before meeting Abe, who had been the chief guest at India's Republic Day Parade this year.

India chooses its guest country after much deliberation each year taking into consideration its strategic, economic and political interests. Now, Modi is expected to visit Japan in August before proceeding to New York for the UN General Assembly session starting in the third week of September. He is scheduled to visit Washington thereafter to meet President Obama. What should one make of these complex manoeuvres to evaluate the present state of India-Japan relations? 

On the economic front, Japan is India’s third largest foreign direct investment (FDI) investor. Japan’s Bank for International Co-operation rates India as a valuable FDI destination over the longer term. Currently, Japan is assisting the progression of the Delhi Metro Rail Project. Discussions are afoot on a Delhi-Mumbai Industrial Corridor, and dedicated Mumbai-Delhi and Delhi-Howrah Industrial Corridors. A similar dedicated freight corridor project is contemplated between Bangalore and Chennai. Trade between the two countries has risen from a modest US$ 4.1 billion (two-way) in 2001 to US$ 18.51 in 2012-13, which is largely in Japan’s favour at present.

On the military front, Japan and India have joined in the Malabar series of naval exercises. Their maritime forces are maintaining cordial and cooperative relations in pursuit of their compulsion to protect their commerce through the Pacific and Indian Oceans. They have a common interest also in battling terrorism, maritime piracy, and preventing the spread of weapons of mass destruction. The totality of their strategic partnership needs fuller appreciation. 

Shinzo Abe is conscious of its significance and has strongly advocated closer security cooperation with India to counter rising tensions in East and Southeast Asia, aggravated by China's territorial expansionist policies in these regions. Japan is acutely conscious of this reality of a non-peacefully rising China, which is also of concern to India. Indubitably, moreover, the central focus of the American ‘pivot’ or ‘rebalance’ towards Asia is China, which requires Japan and India to shape their foreign and security policies around this basic reality. Neither country needs to frontally challenge China, but it is apparent in which direction they will turn if China threatens their supreme national interests. Indeed, China has enhanced the relevance of the US ‘pivot’ or  ‘rebalance’ towards Asia by encouraging the regional countries to coordinate their security efforts and seek the countervailing power of the US.

These circumstances are unlikely to change because China is afflicted by its Middle Kingdom syndrome, and can only conceptualise a hierarchical international system, not one based on the premises of coordination, trust and mutual respect. The problem with the rising China model is that it also embeds an incipient confrontation with the US and, by logical extension, confrontation with a rising India. India is strengthening its land and maritime defenses. But, India also needs to deepen its relations with Japan that faces a similar predicament. Japan has buttressed its long-standing alliance with the US by entering a security agreement with India in 2008. For its part, the US finds Chinese behaviour in the East and South China Seas deeply problematical, since it must protect US allies while eschewing any overt containment of China.

But, are there any persisting tensions between Japan and India? Indeed, yes, and they pertain to the nuclear arena. Japan had strongly disapproved of India’s Pokharan-II nuclear tests in 1998, and imposed sanctions on India. These were lifted three years later. Japan has always wished that India joined the Comprehensive Test Ban Treaty to embody its pledge that it would not conduct any more nuclear tests. But India has diligently refused. Currently, India’s Civil Liability for Nuclear Damages Act (2010) is excoriating their relations and discouraging Japan from entering India’s atomic energy market. Why? India does not permit foreign countries to enter the atomic energy area for strategic reasons, but allows them to become suppliers of nuclear equipment.

The problem lies in Section 17(b) of the impugned Act, which permits the Indian Atomic Energy Commission to exercise a ‘right to recourse’ and claim compensation from the supplier for any fault of its employees, apart from supplying defective equipment or spare parts, and for any problems arising from their usage. Japan is leery of entering a contract with such uncertain liabilities, which is greatly inhibiting its nuclear commerce with India. 

Can Modi resolve this complex issue before reaching Tokyo? He also needs to bring greater clarity into India’s ‘Look East’ policy to serve its larger national interests. These are prerequisites for improving Indo-Japanese relations.