India-Japan strategic relationship reshaping Asia

by Arnab Mitra

With common ground around unresolved territorial disputes with China, Japan is fast emerging as India’s strongest ally within the “Act East” spectrum. The plethora of deals struck during the Abe visit hold great promise for the future.

A civilian nuclear deal, a Rs 98,000-crore ($16 billion) agreement for a bullet train between Mumbai and Ahmedabad, a commitment by Japan to help India build and improve its infrastructure in roads, rail, metro rail, industrial corridors and urban development and a closer strategic and defence embrace marked Japanese Prime Minister Shinzo Abe’s visit to India.

The Indian side is most pleased with the deal on civil nuclear cooperation, though the Japanese side took pains to point out that it will be operationalised only after ratification by its Parliament, the Diet. The deal clears the way for India to buy high technology nuclear reactors from US firm Westinghouse, which is a subsidiary of Japanese giant Toshiba.

So, the deal will also help operationalise the Indo-US nuclear deal. As Indian officials pointed out, there is no such thing as an “American nuclear reactor”, since critical components such as the “core” and “reactor vessels” come from Japanese firms like JSW and Hitachi. The same is the case with French or Korean nuclear technology.

India is expected to now buy up to six AP1000 Westinghouse reactors over the next four months. These have the latest safety features and have the capacity to generate more than 1000 MW of power each.

Officials said a determined push by Indian Prime Minister Narendra Modi and his personal equation with Abe helped overcome Japanese reservations about India’s military nuclear capabilities – a lingering legacy of the holocaust at Hiroshima and Nagasaki.

The deal marks a major foreign policy triumph for Modi and is another step towards integrating India fully into the global civil nuclear architecture. It is also yet another step in the direction of making India’s foreign policy more transactional and based on its strategic interest.

“Now that Japan supports India’s quest for civil nuclear energy, it will be much easier to deal with other countries, all of which depend critically on Japanese technology,” said a senior foreign ministry official.

Then, Japan clinched the deal for the bullet train between India’s financial capital Mumbai and Modi’s home base Ahmedabad. Japan will provide a soft loan of more than $8 billion at 0.1 per cent annual interest and a 50-year repayment period. There will also be a moratorium of 15 years on loan repayment. India will source 30 per cent of the equipment from Japan.

This high-speed rail link will reduce the train travel time between the two commercial centres from eight hours at present to two and will give a huge boost to Modi’s pet Make in India initiative as the deal includes transfer of technology. A large proportion of the machinery and other components required for this prestigious project will be made domestically.

Besides, Japan will provide assistance from its Overseas Development Assistance (ODA) programme to improve India’s road and irrigation infrastructure in the North East and Jharkhand, respectively. It will also assist India’s shipping sector by helping build the Trans Harbour Link in Mumbai.

Abe, who visited Modi’s parliamentary constituency Varanasi, the world’s oldest city, and participated in the majestic Ganga Aarti, also agreed to provide help to turn the city into a smart city on the lines of the holy Japanese city of Kyoto.

it may be recalled that Abe had promised Modi $35-billion Japanese investments in India and support for the Make in India, Digital India and Skill India initiatives.Though there is no estimate yet of the money that will be required in all the initiatives agreed upon during Abe’s visit, rough back-of-the-envelope calculations show that these could add up to more than half the committed sum.

These will mark the first concrete economic benefits flowing from Modi’s high profile foreign policy outreach to India’s strategic and economic partners and could result in the creation of hundreds of thousands of new jobs in India.

Japan will now be a regular partner in the annual Malabar Naval Exercise that the Indian Navy conducts with its US counterpart. This exercise, which has raised China’s hackles in the past, will improve the security of shipping lanes in the Indian Ocean.

Japan has also agreed to transfer defence technology to India and the two-year long negotiations to sell India the US-2 seaplane remain on track. Once finalised, it will be Japan’s first overseas defence sale in more than half a century.

In a clear indication that New Delhi is prepared to be more assertive vis-a-vis Chinese forays into the Indian Ocean as well as its unilateral territorial claims in the South China Sea, the two countries called for the right of free navigation through the disputed waterway. Both India and Japan have unresolved territorial disputes with China, which has objected to ONGC Videsh’s deal with Vietnam to prospect for oil in that area.

“We stand strongly for ensuring freedom of navigation and overflight and maritime commerce. We believe that disputes must be resolved peacefully and that all countries must abide by international law and norms on maritime issues,” Modi said in a statement. This is a reiteration of earlier Indian statements on the issue.

“The visit, the slew of agreements signed and the strong personal chemistry between Modi and Abe show that Tokyo is fast emerging as India’s all-weather friend. The deeper economic, cultural and defence ties between Asia’s two leading democracies – and New Delhi’s growing proximity to Washington – promise to strongly influence and reshape the emerging strategic architecture of the continent,” said a retired foreign office mandarin.

Arnab mitra japanArnab Mitra is a senior journalist based in Delhi. He writes on business and politics.

2018-05-18T13:06:26+00:00January 25th, 2016|2016, Act East, India Investment Journal Feb/March Edition, Year|

About the Author: Arnab Mitra