Convergence of Strategic Interests between India and Japan

In the unfolding strategic landscape in Asia, India and Japan are positioned in an extremely important place. This was demonstrably clear in the Joint Statement that was issued on 29 December 2009 at the conclusion of the three-day visit to India by Japanese Prime Minister Yukio Hatoyama. The Joint Statement catapulted India-Japan strategic and global partnership to a “New Stage” in which the bilateral relationship is going to be deepened on all fronts, embracing regional, global and economic issues. The Joint Statement contained an Action Plan to advance security cooperation and strengthen cooperation on issues of common strategic interests.

This is not to say that differences do not exist between the two countries. Though both countries are sincere to deepen the economic component of the relationship and are working towards a Comprehensive Economic Partnership Agreement (CEPA), a breakthrough in the critical civil nuclear area eluded them. That both strive for the ultimate goal of total elimination of nuclear weapons remained unquestioned. However, while Hatoyama stressed the importance of bringing into force the Comprehensive Nuclear Test Ban Treaty (CTBT) at an early date, Prime Minister Manmohan Singh reiterated India’s commitment to a unilateral and voluntary moratorium on nuclear explosive testing.

Nuclear Issue

Singh firmly reiterated India’s long-standing position that India’s decision on the CTBT would follow ratification by the United States and China. Though India expressed its deep interest in working with Japan and other “like-minded” countries for “the cause of universal, verifiable and non-discriminatory disarmament”, a breakthrough in the civil nuclear area could not be reached. However, Japan promised to relax curbs on hi-tech trade as the two countries sought to impart greater depth to their ties by unveiling an action plan covering defence and counter-terrorism exchanges and vowing to step up trade.

As the only country to have been a victim of nuclear attack in history, Japan is quite sensitive to things ‘nuclear’ and public opinion is vehemently opposed to nuclear proliferation in any form. No wonder, Japan has remained inflexible on issues such as NPT and CTBT, though it understands India’s position and history of using nuclear power for civilian purposes. A public position by Japan on this issue in India’s favour would send a wrong signal to the world about Japan’s possible nuclear future. As such, differences between the two countries on the nuclear issue must not be read seriously in evaluating the evolving India-Japan relationship or even making projection for the future.

Prime Minister Singh clarified that should the US and China ratify the CTBT, “a new situation will emerge”. Both the US and China are yet to approve the pact intended to prohibit all nuclear weapon test explosion. India has taken a consistent position that both the NPT and CTBT are discriminatory. So far, India has unilaterally declared a moratorium on nuclear tests and it is a commitment that India has promised to honour, though a minority of nuclear analysts within India advocate further testing. While pleading for India to sign the NPT and CTBT, Japan understands and appreciates “the circumstances in which India had to go the nuclear weapon” way in 1998. At that time, however, Japan overreacted and suspended all economic contacts and froze Official Development Assistance (ODA).

Though there was no agreement on civil nuclear cooperation this time, it is a matter of time when Japan will see the enormous benefits that would accrue if it revisits its position. In view of the waiver granted by the 45-nation Nuclear Suppliers Group to India to conduct trade in nuclear materials and technology, India would expect Japan to re-examine its position. In fact, even without a breakthrough, Hatoyama sounded positive on possible civil nuclear cooperation, though he remained cautious on relaxing high-technology trade.

Hatoyama almost made the high-technology trade conditional to India’s efforts in a speedy conclusion of the Fissile Material Cut-off Treaty (FMCT) that proposes to prohibit further production of weapon-grade uranium and plutonium. Hatoyama said that Japan needed India’s assurance that its high-tech imports would not be diverted for weapons or to third countries, taking note of the “enormous” scope in the area.

In the Joint Statement, the two prime ministers supported the immediate commencement of negotiations in the Conference on Disarmament and an early conclusion of a FMCT. The Joint Statement also supported the strengthening of international cooperation with a view to addressing the challenges of nuclear terrorism and clandestine proliferation.

Let this not be forgotten that this is for the first time the DPJ has come to power by ousting the LDP from its uninterrupted rule in Japan during the post-War years. Without obtaining public approval in Japan, Hatoyama cannot be expected to overhaul the country’s policy on such a sensitive issue within a few months of assuming office. Moreover, critical domestic economic issues need immediate attention. Further, elections to the Upper House will be due in July 2010 and Hatoyama would not like to lose control over the House where the DPJ enjoys a majority at present through bold policy initiatives which may not have public approval. Understanding Hatoyama’s India visit from this perspective would mean that it was a success and would open up new frontiers for deepening the bilateral relationship.

Economic

On the economic front, bilateral trade has begun to leapfrog after a decade of stagnation. Until five years ago, the bilateral trade volume hovered in the vicinity of $5 billion. In 2008, this figure crossed $13 billion, with the trade balance in Japan’s favour ($2.6 billion). Both Hatoyama and Singh vowed to push for an early conclusion of a CEPA to scale up trade and investment and cooperate on a range of global issues, including UN reforms, climate change and nuclear disarmament. Both have a $20 billion target in trade by 2010 end. By way of comparison, India-China trade is over $40.6 billion.

In his interaction with the Press, Prime Minister Singh stressed that economic partnership between the two countries is the bedrock of the bilateral relationship. India is making the investment climate attractive to Japanese investors by progressive policy measures. India’s economic growth in spite of the global economic meltdown not only demonstrates the strong resilience of the Indian economy but also offers huge opportunities to substantially increase its trade and economic cooperation with Japan. In particular, there is great scope for expansion of cooperation in the areas of urban infrastructure, high technology, and renewable and energy efficient technologies.

Though negotiations for the CEPA in 2007 and 12 rounds of talks have taken place, differences between the two in sectors like services and pharmaceuticals are not yet resolved. It was appropriate, therefore, that and Singh instructed the officials to work out the “remaining issues” left in the way of inking the trade pact. In fact, negotiations on the CEPA are at an advanced stage and are expected to be completed for signing during the next Annual Summit meeting.

The most ambitious project – the Delhi-Mumbai Industrial Corridor (DMIC) – conceptualized as a global investment and manufacturing destination with emphasis on expanding the manufacturing and services base is going to catapult the bilateral relations to a level that will be the envy of other nations in Asia. Both have agreed to set up a project development fund. The fund will initially finance the preparations of overall development and feasibility studies for the 1483 km DMIC.

The corridor would include six mega investment regions of 200 square kilometres each and will run through seven states. Each investment region would have a combination of production units, public utilities, logistics, environmental protection facilities, residential area, social infrastructure and administrative services. The first phase of the project is likely to be completed by 2012 with an estimated $90 billion (Rs. 4,23,000 crore) to be invested to develop infrastructure in the investment regions.

Two MoUs were signed. The first MoU assured collaboration between DMICDC (DMIC Development Corporation) and the Japanese External Trade Organisation on two-dozen industry-based communities, and promised to be environmentally efficient. The second MoU set up a project development fund which will serve as the financial common-ground between the two partners. The $75 million will be paid back to the Japanese Bank for International Cooperation (JBIC) in about 18 years. Japanese investment which has remained lukewarm so far is likely to zoom suddenly in the next 2 to 3 years. These developments suggest that in the coming decade, India-Japan relations are going to be the one of the most robust economically, politically, and strategically in Asia.