INDIA-JAPAN
2022 marks the 70th anniversary of the establishment of diplomatic relations between India and Japan.
Current Relations
- Economic Relations
- Bilateral Trade: $11.2 billion (2019-20), while Japan-China trade is $300 billion.
- Trade Relations:
- Comprehensive Economic Partnership Agreement (2011).
- Japan is India’s 12th largest trading partner.
- FDI:
- India is the largest recipient of Japanese foreign aid.
- Japan is the third largest source of FDI for India.
- Infrastructure Projects: Includes ongoing projects like the Bullet Train and Industrial Corridor.
- Supply Chain Resilience Initiative: Both countries introduced the SCRI to create a resilient supply chain cycle aimed at attaining robust and inclusive growth in the region.
- Bilateral Presence: Approximately 1,455 Japanese companies operate in India, and the Indian government has established a ‘Japan Plus’ desk at the Ministry of Commerce.
- Strategic Relations
- 2+2 Dialogue: Engagement between Foreign and Defence Ministers.
- Act East Forum: A platform to synergize India’s “Act East Policy” with Japan’s “Free and Open Indo-Pacific Strategy.”
- Asia-Africa Growth Corridor: Enhances relations and presence in China to counter China’s OBOR Initiative.
- Security-Based Relations
- Acquisition and Cross-Servicing Agreement: Allows armed forces of both countries to coordinate closely in services and supplies.
- QUAD: To assertively counter China.
- Military Exercises: Includes exercises such as Dharma Guardian, Malabar, and SHINYUU Maitri-18.
- Indo-Japan Nuclear Deal, 2017: Cooperation on energy security.
- Technological Relations
- India-Japan Space Dialogue (2019): Focused on space cooperation.
- Lunar Polar Exploration Mission: Joint mission by ISRO and JAXA.
- Smart City Initiative: Japan collaborates with India on smart city projects in Ahmedabad, Chennai, and Varanasi.
- Mumbai-Ahmedabad Bullet Train Project: Indo-Japan deal on the bullet train.
- 2017 MoC on Disaster Risk Reduction: Collaborative efforts in disaster management.
- India-Japan Digital Partnership: Cooperation in ICT.
- Cultural Relations
- Tourism:
- Japanese visitors to Buddhist sites in India.
- MoU for sister cities.
- Multilateral Engagements
- QUAD
- East Asia Summit
- G20
Importance/Benefits of India-Japan Relations
- Economic Benefits
- Investment: Japan has proven to be a reliable source of FDI in India, especially in technical fields.
- Example: Japanese Official Development Assistance (ODA) in projects such as the Dedicated Freight Corridor Project, Yamuna Action Plan Project, and Bangalore Metro Rail Project.
- Credit and Investment: In 2022, Japanese Prime Minister Kishida announced a 5 trillion yen investment in India over the next five years to finance mutual interest projects. This included the signing of exchange notes for 300 billion yen (US$2.5 billion) in loans to India.
- Third-Party Development: Japan and India have the potential to collaborate on investments in other countries like Nepal and Myanmar.
- Developing Andamans: JICA signed a grant agreement with the Indian Government to provide around US$133 million for a power supply project in India’s Andaman & Nicobar Islands (ANI).
- North East Development: India and Japan established the Act East Forum (AEF) in 2017 to develop India’s North-Eastern Region (NER) and promote connectivity with Southeast Asia.
- Examples:
- Collaborating on skill centres, like the Japanese Endowed Course (JEC) at IIT Guwahati, Assam.
- Supporting food processing, organic farming, and horticulture to empower women.
- Promoting Japanese language education through JICA’s Japan Overseas Cooperation Volunteers (JOCV) and Japan Foundation (JF).
- Examples:
- Japanese Goodwill: Japan could support India via multilateral banks such as the ADB and through JICA projects.
- Complementary Economic Interests: Japan could benefit from India’s skilled workforce and economic growth, which aligns with Kishida’s view of India as a “major manufacturing base.
- Investment: Japan has proven to be a reliable source of FDI in India, especially in technical fields.
- Strategic Benefits
- Containing China: Both countries face issues with China and work together on platforms like QUAD and the Malabar Exercise to contain China’s influence.
- Trade Security: Ensuring secure trade routes through the South China Sea and the Straits of Malacca.
- Increasing QUAD’s Influence: India and Japan are key to strengthening QUAD’s role in the Asia-Pacific, where Japan has historically strong goodwill.
- Example: Both India and Japan aim to ensure the security of other regional actors such as Malaysia, Myanmar, Thailand, and Indonesia, especially around the Andaman & Nicobar Islands.
- UNSC Mutual Interest: Both countries support each other’s bid for permanent membership at the United Nations Security Council.
- Logistics Pact: In 2020, both nations signed a Mutual Logistics and Supply Agreement (MLSA), allowing militaries access to each other’s bases and other support facilities.
- Defense Cooperation: Joint military exercises, such as Dharma Guardian (Army), Shinyuu-Maitri (Airforce), and JIMEX (Navy).
- Strategic Cooperation: Japan endorses the Indo-Pacific Ocean’s Initiative (IPOI), promoting maritime security, sustainable resource management, and disaster response, as announced at the 2019 East Asia Summit (EAS) in Bangkok.
- Technology Cooperation
- Digital Partnership: India and Japan cooperate on initiatives like the India-Japan Digital Partnership.
- Nuclear Deal: Japan can provide reactors and nuclear fuel to aid India’s transition to renewable energy.
- Skill Development: Japan-India Institutes of Manufacturing are being established.
- Technical Cooperation: Focuses on advancing defense technologies, such as Unmanned Ground Vehicles and robotics programs.
Concerns and Issues
- Economic Concerns
- Languishing Trade: India-Japan trade constitutes only 5% of Japan-China trade.
- Trade Deficit: There exists a deficit with Japan, with slow growth in Indian exports.
- Example: While CEPA improved bilateral trade, India’s trade deficit with Japan has grown.
- Underutilized CEPA: CEPA (Comprehensive Economic Partnership Agreement) is crucial but underused, with Indian exports to Japan still limited.
- Data: India’s exports to Japan have seen limited tariff line access, with certain goods excluded from the CEPA.
- High Japanese Barriers: Non-tariff measures (NTMs) like technical standards and safety barriers raise compliance costs for Indian exporters, affecting MSMEs and agricultural exports.
- Project Delays: Japanese projects in India face bureaucratic hurdles.
- Example: The bullet train project has experienced a 5-year delay.
- Chinese Dominance: Japan’s FDI interest in China remains higher than in India, highlighting China’s economic appeal.
- Strategic Concerns
- Failure of Asia-Africa Growth Corridor (AAGC): The India-Japan initiative for African infrastructure did not gain traction, raising questions about commitment.
- Divergent Foreign Policy: New Delhi’s neutral stance on issues like the Ukraine crisis contrasts with Tokyo’s stance, indicating potential friction.
- Lack of Military and Technology Transfer: Japan’s reluctance on defense technology transfer to India limits the depth of defense cooperation.
- Operationalization of QUAD: The framework of the Quadrilateral Security Dialogue (QUAD), involving India, Japan, the United States, and Australia, has not been fully operationalized. This implies that while QUAD exists as a strategic partnership to counterbalance China’s influence, there are challenges in its effective execution or coordination among member nations.
- Anti-Nuclear Lobby in Japan: Japan’s strong anti-nuclear sentiment poses issues for nuclear cooperation with India. This reflects Japan’s cautious stance on nuclear energy and non-proliferation, potentially limiting deeper strategic or energy-related cooperation with India in nuclear domains.
The text concludes by highlighting that India-Japan relations are among the fastest-growing in Asia, with the potential to counter Chinese aggression in the region. However, it suggests that both nations need to establish more formal mechanisms for dispute resolution and mutual growth, emphasizing the need for structured agreements and operational partnerships to strengthen this strategic relationship.