Written by K.V.Kesavan.

Sixty-five years have passed since India and Japan established diplomatic relations. During this period, they have developed a stable and strong partnership based on mutual respect and understanding. Though the cold war period saw a psychological gap dividing them due to ideological differences, they were wise enough to develop useful linkages in trade and economic cooperation.

Bilateral ties have witnessed a paradigm shift since 2000 when they sought to fashion a new global partnership. Until then, Indo-Japanese relations were predominantly confined  only to economic engagements like Official Development Assistance (ODA) and trade. Today they are more diversified and encompass a wide spectrum of interests including global and regional security, counter terrorism, nuclear disarmament, maritime security, energy cooperation, climate change and UN reforms. Mutual perceptions of each other’s national and diplomatic interests have markedly improved and new strategic convergences and commonalities have tended to create unprecedented opportunities for closer partnership. They share many common interests and concerns in the region. Knowing that there is going to be a strategic shift in the Asia-Pacific region in the next ten or twenty years, both India and Japan are keen to cooperate to ensure that such a major change, as and when it occurs, does not disturb the prevailing balance of power. As two vibrant democracies, they want to contribute to the evolution of a new regional order which is open, inclusive, multipolar, rules based and free from the dominance of any single country.

China is the biggest trading partner of India and Japan. Cordial relations with China constitute a key factor for regional peace. Both understand that in any configuration of the future regional order, China would figure prominently and that it would be wise to seek to integrate it in the mainstream of the region and make it a responsible stakeholder.

After Prime Minister Yoshiro Mori launched the India-Japan global partnership in 2000, both countries acted quickly to add more strategic substance to the partnership. In 2005 Prime Minister Shinzo Abe and his Indian counterpart Mr. Manmohan Singh expanded their global partnership to strategic matters. Simultaneously, they created several institutional mechanisms, including insitutionalising the annual summit meeting. Several other dialogue mechanisms at ministerial and secretary levels for security, defence, maritime and energy cooperation have also been set up to carry forward the multi-layered partnership. The entire process reached a high watermark in October 2008 when the two countries signed the Declaration on Security Cooperation. The fact that Japan has a similar agreement only with the US and Australia speaks volumes for the importance Tokyo attaches to India. One significant aspect of the Declaration was the emphasis it placed on the need for bilateral policy coordination in regional affairs as well as bilateral cooperation within the multilateral forums in Asia such as the East Asian Summit (EAS), and the ASEAN Regional Forum (ARF).

In this context it is very important to note that both Mr. Manmohan Singh and Mr. Taro Aso (then Japanese Prime Minister) took care to emphasise that the Indo-Japanese partnership is not directed against any third country and least of all China. Despite their bilateral problems with China, both India and Japan believe in engaging Beijing economically as well as in the security field. China is the biggest trading partner of India and Japan. Cordial relations with China constitute a key factor for regional peace. Both understand that in any configuration of the future regional order, China would figure prominently and that it would be wise to seek to integrate it in the mainstream of the region and make it a responsible stakeholder.

The signing of the Declaration has been followed by developments that indicate greater convergence of their strategic interests. For instance, there is a strong synergy between Prime Minister Modi’s “Act East Policy” and Prime Minister Abe’s “open and free Indo-Pacific strategy”. In addition, their latest initiative to create an Asia-Africa Growth Corridor is aimed at improving the economic and infra-structure connectivities in both continents and could provide an alternative to China’s Belt and Road Initiative. They have formed two trilateral forums with the US and Australia and regularly meet to discuss the changing strategic situation in Asia; including North Korea’s nuclear and missile tests, China’s assertive maritime postures in the South and East China Seas, terrorism and natural disasters.

Defence cooperation between the two countries has witnessed significant strides in recent years. The defence ministers of the two countries meet under the annual Defence Dialogue to discuss a range of issues relating to bilateral cooperation. Mr. Modi has shown great interest in inviting Japan to play a key role in India’s defence production. The Indian government has considerably relaxed its rules to welcome larger foreign technologies in the defence sphere. The Japanese government has also modified its policy on the transfer of defence technology to other countries. There is a real win-win situation here which should be used by both countries. The on-going negotiations on India’s purchase of Japan’s US-2 amphibious aircraft could be a major example of such bilateral collaboration.

Maritime security is another important subject on which both countries have convergent interests. Both are strongly committed to respecting freedom of navigation and overflight and unimpeded lawful commerce in open seas. As regards the disputes in the South China Sea, they have affirmed that all parties involved in the disputes should seek a solution through peaceful means without resorting to the threat or the use of force or unilateral actions.

In this context, one should note that both India and Japan have taken several steps to safeguard maritime security as they both depend on sea-borne trade. Apart from conducting bilateral naval/coast guard exercises, Japan has been a regular participant of the Annual US-India Malabar naval exercises since 2015.

Economic Cooperation

Economic cooperation continues to form the bedrock of the partnership and Mr. Modi is interested in securing Japanese involvement in several important infrastructure projects.  Japan’s official development assistance (ODA) is being utilized to modernise key sectors in India including transport, communication, power, irrigation, ports, environment and health.  Of particular importance is the assistance given by Japan to the establishment of mass transport systems (metro) in major cities like Bengaluru, Chennai, Kolkata and Mumbai. India was the first country to receive Japan’s ODA as early as 1958, and it has been the biggest recipient of Japan’s aid since 2005.  Japan is also deeply involved in some of the flagship projects in India such as the Delhi-Mumbai Freight corridor. Delhi-Mumbai Industrial Corridor and the Chennai-Bengaluru Industrial Corridor. These will change the industrial map of India in the coming years.

At the time of Mr Abe’s latest visit to India to attend his fourth summit, he and Mr Modi performed  the foundation ceremony for the construction of India’s first high speed rail system (shinkansen) between Mumbai and Ahmedabad. This carries considerable importance for Mr. Abe who has been keen to supply Japan’s high-quality infrastructure facilities to Asian countries. Many believe that the Mumbai-Ahmedabad project could set a benchmark for other countries too.

In recent years, the Indian government has encouraged Japan to play a key role in the economic development of North East India which has remained relatively backward due to lack of infrastructure facilities. Japan is now involved in implementing several important projects in the region including the construction of highways, power, sewage, water and management of natural resources. Recently both India and Japan formed a coordination agency to intensify the smooth implementation of various projects.

Trade and investment

According to many surveys of the Japan Bank for International Cooperation (JBIC) India is one of the most attractive investment destinations for Japan. The volume of Japanese FDI has considerably increased in recent years. Japan’s cumulative investment in India during 2000 and March 2017 amounted to $25.6 billion making it the third biggest investor. It accounts for 8 percent of the total FDI in India. The recently held summit provided opportunities for the two leaders to take further measures to accelerate the flow of Japanese investment.

Despite this, the volume of bilateral trade remains very low despite the Comprehensive Economic Partnership Agreement signed by both countries in 2011. The CEPA has still not produced the benefits that were expected. It is therefore necessary for both countries to seek changes in the CEPA to ensure that bilateral trade makes significant progress in the coming years.

Conclusion

The preceding account demonstrates that the India-Japan partnership has witnessed many important shifts since 2000. The partnership has now become a significant component contributing to the peace and stability of the Asia-Pacific region. It has been driven by a combination of strategic and economic factors. The rise of China has provided a common strategic concern. But both India and Japan believe that it would be wise to engage China economically as well as in the security sphere. Expanded economic engagement along with greater transparency in Chinese military strategies in the region, they believe, could make Beijing a responsible stakeholder regionally and even contribute to better understanding among the countries of the region.

Prof. K.V.Kesavan is a Distinguished Fellow at Observer Research Foundation, New Delhi. Image Credit: CC by Shimgray/Flickr.

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