India-Japan: Past Trends Continue – Analysis

By Shamshad A Khan*

At the time of the transition of government in India in 2014, the strategic community in Japan speculated whether the new government in New Delhi would accord the same priority to its bilateral relations with Japan as the UPA government had. 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 forge closer India-Japan relations and Tokyo was keen to continue this momentum in its bilateral relationship with New Delhi. Consequently, Japan invited the new Indian Prime Minister, Narendra Modi, in order to host his first prime ministerial foreign visit after assuming office. Modi however 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 infrastructure sector, development of rail, road and port facilities; and civil nuclear cooperation -dominated the agenda of Modi’s week-long visit, and were reflected in the joint statement called ‘Tokyo Declaration 2014’. The new political dispensation was wise to carry forward the consultations on these issues which were identified during the Manmohan Singh government but which were not brought to fruition in terms of actual cooperation. As part of a new agenda, Prime Minister Modi proposed his dream projects including clean Ganga 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 will maintain continuity rather than change the course of bilateral relations with Japan.

During Prime Minister Modi’s Japan visit 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 similar status at par with India’s “time tested” and a “reliable friend” Russia, was perhaps aimed at indicating to Japan that India attaches utmost importance to its relations with the country and in coming decades Tokyo would remain on the top of 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, negotiation on India-Japan civil nuclear cooperation began in 2010 but remained inconclusive till November 2016 because of Japan’s insistence for 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 stating that the two countries will conclude the nuclear cooperation after finalising the “technical details.” The deal was concluded during Prime Minister Modi’s November 2016 visit to Japan. Tokyo has 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 passed when the Japanese Diet approved the India-Japan civil nuclear cooperation agreement on 7 June 2017. The implementation of the deal however remains a challenge given that financial crisis has hit the US nuclear reactor maker Westinghouse, in which the Japanese parent company Toshiba has major stakes.

India-Japan cooperation in the infrastructure sector has also strengthened during the last three years. In 2013, the two countries agreed to start a joint feasibility study for the high speed railway technology on the Mumbai-Ahmedabad route. . After the conclusion of the study in 2015, it was announced that construction project of the bullet train track will begin in 2017 and will be completed by 2023. India-Japan cooperation on various dedicated freight corridors, including the Delhi Mumbai Industrial Corridor, also continues. 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 and is seen as a counter to the Chinese project.

The huge 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.

Right in 2006, India and Japan had realised that the 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. The CEPA propelled the bilateral trade volume within a year of its implementation; the bilateral trade figures reached US$18 billion in FY2011-12, from US$13 billion in the previous fiscal year. However, after delivering marginal growth in successive years, it has started decelerating and at present the 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 destinations for business for many Japanese companies and their presence in India continues to grow.

In summary, during the first three years of 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 the bilateral relations; they need special attention. Moreover, the agreed but unfinished projects also 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.

* 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)