India and Japan strengthen ties

By Suvi Dogra, Research & Liaison Officer, Geo-economics and Strategy Programme.

India and Japan stepped up their defence cooperation this week, saying on Monday that they would conduct their first joint naval exercise in June. This will be part of a new maritime dialogue mechanism announced by Indian External Affairs Minister S. M. Krishna and his Japanese counterpart, Koichiro Gemba, after wide-ranging strategic and economic talks. The two ministers also announced a new cyber-security dialogue and the resumption of negotiations over a proposed civil-nuclear deal. Begun in June 2010, these fell into abeyance in the post-Fukushima period.

Meanwhile, India agreed to give the Japanese government a 26% stake in the Delhi-Mumbai Industrial Corridor Development Corporation. The move is an attempt to accelerate a much-delayed new rail freight link between India’s capital and its largest city, while also cementing a long-term economic partnership between India and Japan.

After years of neglect during the Cold War and a frosty period following Japanese protests about India’s nuclear tests in 1998, the Indo-Japanese relationship entered a warmer phase in 2006, in the final days of Prime Minister Junichiro Koizumi’s term of office. This culminated in the launch by Koiziumi’s successor, Shinzo Abe, and India’s PM Manmohan Singh of a ‘Strategic and Global Partnership’.

Since signing a ‘Joint Declaration on Security Cooperation‘ in 2008, the two countries’ militaries have had regular meetings and held joint exercises. The new dialogues on maritime and cyber-security demonstrate an increasing interest in defence cooperation against a backdrop of an increasingly assertive China in Asia-Pacific and tensions in the South China Sea.

Last month, China and Russia concluded a six-day joint naval exercise in the Yellow Sea that involved warships cruising near Japanese waters. Now the Indian Navy and Japan’s Maritime Self-Defence Forces will conduct a similar exercise off the coast of Japan in less than two months’ time. There is growing security cooperation among major democracies in the region, including the US and Australia.

The Indo-Japanese partnership is viewed as one that could provide strategic balance in the region. It also has deeper implications for the development of Asian regionalism. In 2005 Japan helped lobby for India’s entry into the East Asia Summit (EAS). Tokyo is also proposing a free-trade zone for EAS members,  the Comprehensive Economic Partnership for East Asia (CEPEA), which has assumed greater relevance in light of the West’s current economic malaise.

India and Japan have also been strengthening their bilateral economic ties. Once India’s fourth-biggest trading partner, Japan dropped out of the top-ten list in 2010. However, this decline has been significantly reversed since the signing of a Comprehensive Economic Partnership Agreement (CEPA) in February 2011. The CEPA was India’s first truly comprehensive bilateral agreement, moving beyond goods and services to areas such as investment, competition policy, intellectual-property rights and government procurement. It was also India’s first such deal with a strategically significant and industrialised economy like Japan.

Japanese business interests have been growing steadily in India. The Delhi-Mumbai Industrial Corridor discussed earlier this week is about more than the planned rail link; the project envisages new industrial townships developing alongside. From the planning and feasibility study stages, the Japanese government has provided technical assistance and long-term financial assistance. Japanese companies will also establish green-field industrial projects along the rail corridor.

Japan has already played a role in upgrading and expanding India’s infrastructure, from electricity distribution in Bangalore, electricity-transmission modernisation in Hyderabad, the Delhi Mass Rapid Transport System and the Visakhapatnam port-expansion project. Tokyo has been the largest national provider of overseas development assistance (ODA) to India for several years.

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