Foreign Policy Watch: India-Japan

Foreign Policy Watch: India-Japan

[pib] JIMEX 20

Note4Students

From UPSC perspective, the following things are important :

Prelims level : JIMEX 20

Mains level : Not Much

The 4th edition of India – Japan Maritime bilateral exercise JIMEX will be held in the North Arabian Sea from 26 to 28 September 2020.

JIMEX 20

  • It is conducted biennially between the Indian Navy and Japanese Maritime Self-Defense Force (JMSDF)
  • This series of exercises was commenced in January 2012 with a special focus on maritime security cooperation.
  • The last edition of JIMEX was conducted in October 2018 off Visakhapatnam, India.
  • JIMEX 20 will showcase a high degree of inter-operability and joint operational skills through the conduct of a multitude of advanced exercises, across the spectrum of maritime operations.
  • Multi-faceted tactical exercises involving weapon firings cross deck helicopter operations and complex surface, anti-submarine and air warfare drills will consolidate coordination developed by the two navies.
  • JIMEX 20 will further enhance the cooperation and mutual confidence between the two navies and fortify the long-standing bond of friendship between the two countries.

Foreign Policy Watch: India-Japan

Supply Chain Resilience Initiative (SCRI)

Note4Students

From UPSC perspective, the following things are important :

Prelims level : SCRI

Mains level : Global trade tensions with China and its repercussions

With COVID-19 and trade tensions between China and the US threatening supply chains or actually causing bottlenecks, Japan has mooted the Supply Chain Resilience Initiative (SCRI) as a trilateral approach to trade, with India and Australia as the other two partners.

Q.Discuss the efficacy of the idea of Supply Chain Resilience Initiative (SCRI) initiaited by Japan.

What is Supply Chain Resilience (SCR)?

  • In the context of international trade, SCR is an approach that helps a country to ensure that it has diversified its supply risk across a clutch of supplying nations instead of being dependent on just one or a few.
  • Unanticipated events whether natural or man-made that disrupt supplies from a particular country or even intentional halts to trade, could adversely impact economic activity in the destination country.

What is Japan proposing?

  • The pandemic has brought into sharp focus the assembly lines which are heavily dependent on supplies from one country.
  • While Japan exported $135 billion worth of goods to China in 2019, it also imported $169 billion worth from the world’s second-largest economy, accounting for 24% of its total imports.
  • So, any halt to supplies could potentially impair economic activity in Japan.
  • In addition, the U.S.-China trade tensions have caused alarm in Japanese trade circles for a while now.
  • If the world’s two largest economies do not resolve their differences, it could threaten globalisation as a whole and have a major impact on Japan.
  • It is heavily reliant on international trade both for markets for its exports and for supplies of a range of primary goods from oil to iron ore.

Japan eyeing India as a partner for the SCRI

  • Japan is the fourth-largest investor in India with cumulative FDIs touching $33.5 billion in the 2000-2020 periods.
  • It accounts for 7.2% of inflows in that period, according to quasi-government agency India Invest.
  • Imports from Japan into India more than doubled over 12 years to $12.8 billion in FY19. Exports from India to the world’s third-largest economy stood at $4.9 billion that year, data from the agency showed.
  • It is a clear reflection that the two countries are unlikely to allow individual cases to cloud an otherwise long-standing and deepening trade relationship.

Where does Australia stand?

  • Australia, Japan and India are already part of another informal grouping, the Quadrilateral Security Dialogue, or the Quad, which includes the U.S.
  • Media reports indicate that China has been Australia’s largest trading partner and that it counts for 32.6% of Australia’s exports, with iron ore, coal and gas dominating the products shipped to Asia’s largest economy.
  • But relations including trade ties between the two have been deteriorating for a while now.
  • China banned beef imports from four Australian firms in May and levied import tariffs on Australian barley.

India’s stand to gain or lose

  • Following the border tensions, partners such as Japan have sensed that India may be ready for dialogue on alternative supply chains.
  • Earlier, India would have done little to overtly antagonize China. But an internal push to suddenly cut links with China would be impractical.
  • China’s share of imports into India in 2018 stood at 14.5%. It supplies dominate segments of the Indian economy.
  • Sectors that have been impacted by supply chain issues arising out of the pandemic include pharmaceuticals, automotive parts, electronics, shipping, chemicals and textiles.
  • Over time, if India enhances self-reliance or works with exporting nations other than China, it could build resilience into the economy’s supply networks.

Foreign Policy Watch: India-Japan

The wilting Sakura

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Not much.

Mains level : Paper 2- New avenues for cooperation between India and Japan.

Context

A resilient nation, Japan has risen from the ashes, phoenix-like, each time. It is now confronting COVID-19, which has wreaked havoc on global financial and economic systems and disrupted production, supply chains and markets.

The cruise ship incident and no reprieve to the Japanese from Covid-19

  • COVID-19 received a high-rating televised start in Japan with the cruise ship, Diamond Princess, steaming into Tokyo Bay with 3,711 passengers on board and quickly being quarantined.
  • Over the next month, with more than 700 cases of infection on-board, it remained the single-largest cluster outside China.
  • Gradually, as numbers swelled exponentially elsewhere and the incidence of new cases remained low locally, the Japanese went back to their ways, with holiday crowds celebrating the annual Hanami (sakura viewing) season in idyllic spots
  • It seemed as if the Japanese had dodged the bullet even as it delayed until April 3 the blocking of tourists from 70-odd countries, including China, which accounted for nearly 9.6 million tourists in 2019, one-third of the total.
  • With new infections mounting in recent days, the reprieve, it seems, was as ephemeral as the bloom of the sakura.

Postponing the Olympics

  • The biggest collateral damage of the fresh wave of COVID-19 infections in Japan is the belated decision to postpone the Tokyo Olympics to 2021.
  • It reminded the nation of the jinxed Olympics of 1940, which Japan was to host but fell victim to the Second Sino-Japanese War.
  • If the 1940 Olympics were intended to showcase Japan’s industrial and economic resurrection after the devastation of the 1923 Great Kanto earthquake, the 1964 Tokyo Olympics had symbolised the economic miracle in Japan after the ravages of the Second World War.
  • The 2020 Olympics, dubbed by Prime Minister Shinzo Abe as the “Recovery and Reconstruction Games”, were to demonstrate Japan’s mojo in the aftermath of the 2011 Triple Disaster.
  • Reports indicate that Japan has already spent $12.6 billion on the preparations for the Olympics.
  • Nikkei and Goldman Sachs estimate that the postponement of the games would easily set Japan back by another $5-6 billion.

Impact on economy

  • Recession in the world: The pandemic could not have come at a worse time. The IMF has confirmed that COVID-19 has pushed the global economy into a recession, potentially much worse than the one in 2009.
  • The Japanese economy now faces the daunting prospect of a sharp contraction, with the OECD Report for March 2020 forecasting its GDP growth at 0.2 per cent in 2020.
  • Even before the global pandemic struck, Japan was dealing with the adverse effects on consumer spending of the hike in consumption tax from 8 per cent to 10 per cent.
  • Dwindling demand from China, where Japan has huge economic stakes, can only worsen the regional economic outlook already strained by US-China trade friction.
  • Abe’s decision this week to declare a month-long state of emergency in Tokyo and six other prefectures, alongside the release of a gargantuan stimulus package worth nearly $1 trillion, including cash doles and financial support to households and businesses, may help turn the tide.
  • However, providing healthcare to a rapidly ageing population in the face of an abrupt disruption in the sizeable inward flow of foreign care-givers will prove a daunting challenge.
  • Meanwhile, several prefectures that depend heavily on tourism from China and the Republic of Korea have suffered deep losses.

Impact on Japan’s international commitments and initiatives

  • As one of the world’s richest countries, Japan can perhaps hope to cushion itself from such blows.
  • Whether the economic distress unleashed by COVID-19 also adversely impacts some of Japan’s commitments to its Official Development Assistance (ODA) or outlays for regional infrastructure and connectivity under flagship programmes such as the Expanded Partnership for Quality Infrastructure (EPQI), the Tokyo International Conference on African Development (TICAD) and the Indo-Pacific Business Forum, including the Blue Dot Network and LNG projects, remains to be seen.
  • This could well be true of the US too, in the context of the International Development Finance Corporation under the BUILD Act, aimed at countering China’s expanding writ across the region.

Implications for Indo-Pacific region

  • The pandemic could have broader implications for military postures in the Indo-Pacific.
  • As it was seen in the outbreak of the COVID-19 virus onboard the US Navy’s Theodore Roosevelt, which had sailed from San Diego in January for a scheduled Indo-Pacific deployment.
  • It is at the centre of a controversy involving the sacking of its captain and the vessel’s ill-advised port visit to Da Nang in Vietnam earlier in March despite the high risk of contagion.
  • Of course, China’s PLA Navy (PLAN) could well be grappling with similar problems out at sea but, unlike in the democratic world, these facts will be treated as “state secrets”.
  • Opportunity for China to further its influence: As China gradually recovers from the pandemic, relatively earlier and faster than the West, Beijing’s “charm offensive” and leveraging of its deep pockets may help it to further its geopolitical influence.
  • Its assistance to developing countries in mitigating the impact of COVID-19 will create new scope to proselytise its governance and development models.

India-Japan relations

  • Japan-China relations: A high-profile casualty of the pandemic is Chinese President Xi Jinping’s long-pending visit to Tokyo.
  • But Japan’s “mask diplomacy” and generous assistance to China at the start of the pandemic augur well for Sino-Japanese ties, which have improved in recent years, their inveterate differences notwithstanding.
  • India visit by Japan: Abe’s postponed visit to India, earlier scheduled to take place at the end of 2019, will be hard to resurrect before the pandemic is completely under control.
  • Nevertheless, the fundamental convergence of interests and the extraordinary political capital invested in the relationship by both PM Modi and Abe in recent years ensures that the Special Strategic and Global Partnership between India and Japan will remain robust.
  • New vistas for India-Japan cooperation: The pandemic opens up new vistas for cooperation in healthcare, non-traditional security and global governance, including reform of the UN and affiliated bodies such as the WHO whose contributions in the battle against COVID-19 are moot.

How Japan tackled the pandemic so far?

  • So far, Japan had relied on its customary discipline and prevention methods, with an exhortation to the public to avoid the “three Cs” — closed spaces, crowded places and conversations at close proximity.
  • No lockdown: Japan has shied away from taking the bold approach that Modi took in announcing a 21-day nationwide lockdown.
  • The declaration of a state of emergency covering the megacities of Tokyo and Osaka and some prefectures would give local governors in the hardest-hit areas greater legal authority to impose curbs, albeit without the power to impose penalties.
  • Japan’s case-by-case approach to the reopening of schools by regional authorities has been criticised.
  • There have been calls for a strict lockdown before it is too late to avert the same fate as Italy, Spain and the US.
  • In a race to develop vaccine: With formidable scientific prowess at its disposal, Japan remains at the forefront in the race to develop a vaccine against COVID-19.

Conclusion

Prime Minister Abe is viewed by voters as a leader capable of taking bold decisions. If Abe’s administration overcomes the COVID-19 crisis despite the odds and succeeds in staving off a recession, there is every chance that the LDP might again amend its rules to grant him a fourth term. After all, it is not easy for any of his political rivals to step into his shoes in the middle of such a crisis.

In the context of 21st Century, among all the bilateral relations, Indo-Japan relations have all the potential to transcend this era into an ‘Asian century’.

This relationship, which incorporates no dispute- ideological, cultural or territorial, was embarked upon in 6th century A.D. when Bhuddhism was introduced in Japan.

Direct exchange in modern times commenced only in Maiji era (1868-1912), when Japan set off the process of modernization. Japanese support and assistance to Netaji and INA continue to persist in popular imagination.

Although diplomatic relations between two countries were established in 1952, it was only in august 2000 when Japanese PM Yoshiro Mori and his Indian counterpart Atal Bihari Vajpeyi set in motion ‘Global partnership in 21st century’.

Commonalities such as shared democratic values, commitment to human rights, pluralism, open society and rule of law are foundation blocks of this global partnership.

Backgrounder

During World War II

Since India was under British rule when World War II broke out, it was deemed to have entered the war on the side of the Allies. Over 2 million Indians participated in the war; many served in combat against the Japanese who conquered Burma and reached the Indian border.

Some 67,000 Indian soldiers were captured by the Japanese when Singapore surrendered in 1942, many of whom later became part of the Indian National Army (INA). In 1944-45, the combined British and Indian forces defeated the Japanese in a series of battles in Burma and the INA disintegrated.

Indian National Army

  • Subhas Chandra Bose, who led the Azad Hind, a nationalist movement which aimed to end the British raj through military means, used Japanese sponsorship to form the Azad Hind Fauj or Indian National Army (INA).
  • The INA was composed mainly of former prisoners of war from the British Indian Army who had been captured by the Japanese after the fall of Singapore. They joined primarily because of the very harsh, often fatal conditions in POW camps. The INA also recruited volunteers from Indian expatriates in Southeast Asia. Bose was eager for the INA to participate in any invasion of India, and persuaded several Japanese that a victory such as Mutaguchi anticipated would lead to the collapse of British rule in India.
  • The idea that their western boundary would be controlled by a more friendly government was attractive. Japan never expected India to be part of its Greater East Asia Co-Prosperity Sphere.
  • The Japanese Government built, supported and controlled the Indian National Army and the Indian Independence League.. Japanese forces included INA units in many battles, most notably at the U Go Offensive at Manipur. The offensive culminated in Battles of Imphal and Kohima where the Japanese forces were pushed back and the INA lost cohesion.

Modern relations

  • At the International Military Tribunal for the Far East, Indian Justice Radhabinod Pal became famous for his dissenting judgement in favour of Japan. The judgement of Justice Radhabinod Pal is remembered even today in Japan. This became a symbol of the close ties between India and Japan.
  • A relatively well-known result of the two nations’ was in 1949, when India sent the Tokyo Zoo two elephants to cheer the spirits of the defeated Japanese empire.
  • India refused to attend the San Francisco Peace Conference in 1951 due to its concerns over limitations imposed upon Japanese sovereignty and national independence. After the restoration of Japan’s sovereignty, Japan and India signed a peace treaty, establishing official diplomatic relations on 28 April 1952, in which India waived all reparation claims against Japan.
  • This treaty was one of the first treaties Japan signed after World War II. Diplomatic, trade, economic, and technical relations between India and Japan were well established. India’s iron ore helped Japan’s recovery from World War II devastation, and following Japanese Prime MinisterNobusuke Kishi’s visit to India in 1957, Japan started providing yen loans to India in 1958, as the first yen loan aid extended by Japanese government. Relations between the two nations were constrained, however, by Cold War politics.
  • Japan, as a result of World War II reconstruction, was a U.S. ally, whereas India pursued a non-aligned foreign policy, often leaning towards the Soviet Union. Since the 1980s, however, efforts were made to strengthen bilateral ties.
  • India’s ‘Look East’ policy posited Japan as a key partner. Since 1986, Japan has become India’s largest aid donor, and remains so.
  • Relations between the two nations reached a brief low in 1998 as a result of Pokhran-II, an Indian nuclear weapons test that year. Japan imposed sanctions on India following the test, which included the suspension of all political exchanges and the cutting off of economic assistance. These sanctions were lifted three years later. Relations improved exponentially following this period, as bilateral ties between the two nations improved once again, to the point where the Japanese prime minister, Shinzo Abe was to be the chief guest at India’s 2014 Republic Day parade.

Complementarities: Why are both important to each other?

  • Varied factors have supported momentum of this partnership viz. India’s economic resurgence, its engagement with USA and its increasing interest and stakes in East Asia in the form of Look East Policy in 1992 and Act East Asia Policy in 2015.
  • On similar lines, for Japan, India has emerged as an alternative economic partner and important constituent of Asia’s emerging security order.
  • A transition of power is unfolding in Asian continent and the shape and substance of Indo-Japan relationship is one of its spin-off. Notwithstanding, strengthening of the Indo-Japan relations is not the only consequence of rise of china and USA’s shifting of regional policy in the form of “Rebalancing of Asia”.
  • Factors like domestic perception of the alliance partner, which is amicable, have stimulated this relationship. Japanese perception of India has also been molded by the dissenting opinion of Radha Binod Pal- the Indian judge at famous Tokyo trials – who declined to convict Japan’s top military brass as war criminal proving that Japan’s imperial history has been discounted by Indian consciousness.
  • In addition to this, personal bonding between Japanese PM and his Indian counterpart, who are leading single party majority government in respective countries, is a class by itself.

Cooperation in Various Domains:

Strategic cooperation

Increment in china’s military expenditure was almost one and half times bigger in 2014 than defense outlay in 2010. This expansion is a cause of concern for both countries, since both countries are engaged in negotiation with China over Arunachal Pradesh (India) and Shenkaku Island (Japan).

New Delhi and Tokyo are apt to hedge against USA’s possible failure in containing china’s growing assertiveness in the region in the backdrop of this era of power transition. This hedging strategy can be analyzed in three main categories-

  • Firstly, increasing bilateral defence partnership against fear of American retrenchment,
  • Secondly, economic engagement against an over-dependence on china and
  • Finally, multilateral hedge against China’s rising influence in international and regional institutions.

Defence Cooperation

In the sphere of defence, in 2009, 2+2 dialogue (foreign and defence ministerial) were initiated. India has always supported freedom of navigation and unimpeded lawful commerce in international waters in sync with UNCLOS vis-à-vis South China Sea dispute and East China Sea issue.

India invited Japanese navy to participate in annual Malabar exercise in 2014 with USA in pacific waters, reviving an earlier practice of joint India-USA-Japan trilateral exercise.

Negotiations on possible trade in defence equipments from Japan, as per Tokyo deceleration, are in the pipeline. Indian interest is in Japanese US-2 amphibious aircraft for surveillance purpose in the Indian Ocean is high. If this deal is realized then it will signify for the first time Japanese export of defence goods and technology since World War II.

Can we collaborate in Defence?

Collaborative projects in defence equipment and technology is under consideration.

Tokyo has lifted ban on six Indian firms involved in defence R&D blacklisted after 1998 nuclear test, commencing towards transfer of Japanese military technology.

Tokyo declaration of 2014 underscores the significance of strategic cooperation between two of Asia’s largest maritime democracies and castigates states indulging in expansionist policies in the region.

In 2010 china accounted for 28% of total military spending in Asia. Its share has increased to 38% by 2014. Its DF-21d anti-ship ballistic missile is capable of targeting the entire South China Sea, Malacca Strait, most of Bay of Bengal and parts of Arabian Sea.

After south Korea and USA jointly announced they would deploy USA Missile Defence System Terminal High Altitude Area Defence(THAAD) in South Korea in 2016 in order to devise a fitting line of regional deterrence , Japan is rushing forward to do the same.

These strategic maneuvers dictate steps in the direction of balance of power in Asian continent, which is tilting in favor of China.

Change in Article 9

Japan has revised Article 9 of its Constitution to allow Japan’s self-defence forces to act more like a conventional army.

The clause forbids Japan from using force to settle international disputes and restricts its land, air and naval forces to a strictly defensive role.

Japan has scrapped the article to reform its pacifist, post-WW-II constitution to develop its military for collective self defence.

Balance of military power and ever accentuating territorial and recourse nationalism in Asia has paved intensification of strategic cooperation between India and Japan.

Although Japan controls Senkaku island, its sovereignty has been aggressively contested by China, as is evident in Beijing’s decision to establish an Air Defence Identification Zone (ADIZ) in the Eastern Asia in Nov. 2013.

China’s Aggressiveness

Chinese revisionism is also evident in South China Sea (SCS) where Beijing claims ownership over “Nine Dash Line” which if established by force, would entail that almost all of the SCS will be the exclusive economic zone of China.

SCS is endowed with fossil fuels and vital for merchant and international free navigation given the fact that 71% international cargo passes through this region.

Hague Arbitration Tribunal in Phillipines V/S China case in 2016 rejected China’s claim Of Nine Dash Line and the historic rights of Middle Kingdom off the hand. But China does not subscribe to UNCLOS, adding to tensions in the region.

On the Himalayan side, transgressions in Demchok, Ladakh, Chumar and Depsang areas tell a story of territorial hunger of China.

Although India-China relations look normal but distrust lingers deep within, which is a fallout of 4000 km. long Himalayan border dispute resulting from 1962 war.

Indian side has suspicion for huge investment sponsored by china in developing port and deep underwater ports (which can be used for military purpose) in India’s neighborhood through Maritime Silk Route Project.

This is owing to the fact that it resembles China’s earlier policy of “String of Pearls” theory – encirclement of India through a series of ports in different maritime countries in India’s neighbourhood.

Development of Kyaukphu port and deep underwater port at Maday island (Arakan coast ) in Myanmar nearby North East region of India and development of Gwadhar port in Pakistan near Western India is supposed to be a part of this grand scheme.

In addition to this, Great Coco Island and Little Coco Island are controlled by Myanmar. Since the early 1990s, there have been frequent reports of China using those islands for military and naval purposes but there is no certain proof of whether the islands are actually under Chinese control.

Thus, Chinese presence on the Coco Islands, developing intelligence systems and other naval facilities, is unnerving for nearby India.

While it is yet not certain whether the Great Coco island hosts Chinese intelligence systems, there is greater acknowledgement on the building of runways and other connectivity infrastructure on the Cocos.

This represents an array of attempts by China to intrude into the Indian ocean region to surround India from all four corners.

Economic cooperation

For 2011-12 India-Japan bilateral trade stood at $18.31 billion. The comprehensive trade pact between India and Japan aims to double bilateral trade nearly to $25 billion.

Japan is looking to boost trade and investment ties with India. The reasons behind this interest in India is obvious. India offers a large domestic market base.

Besides, mutual synergies between businesses in the two countries are driving initiatives-

  • Firstly, Japan’s ageing population (23% above 65 years) and India’s youthful dynamism (over 50% below 25 years)
  • Secondly, Japan is a relatively labour scarce, capital abundant country that complements India’s rich spectrum of human capital.
  • Thirdly, India’s prowess in the software sector lends synergy to Japan’s excellence in the hardware sector
  • Fourthly India’s abundance of raw materials and minerals matches well with Japan’s capabilities in technology and capital to produce knowledge-intensive manufactured goods
  • Fifthly India’s large domestic market has been the main factor for investments by Japanese companies.
  • Sixthly Japanese small and medium enterprises have begun to discover India as the new growth market.

The majority of investments are in traditional fields like machinery, automobiles and auto parts . Japan and India share a common vision for the world. This is aptly illustrated by the fact that there has been an increase in the number of joint declarations, delegation visits and other business events between the two countries.

India Japan CEPA

The Comprehensive Economic Partnership Agreement (CEPA) between India and Japan came into force in August 2011.Despite this agreement India-Japan bilateral trade stands at measly USD16 billion as compared to Sino-Indian trade amounting to USD 70 billion and Sino-Japanese trade at whooping amount of USD 343 billion in 2014 .

The agreement had two major concerns, namely: the infrastructure in India, and non-tariff barriers in Japan. On the infrastructure front, the two countries are collaborating on the huge, US $90-billion Delhi–Mumbai Industrial Corridor (DMIC) project.

The project agreement appears highly promising in the environment of the new manufacturing policy whereby India is targeting to increase the share of manufacturing in GDP to 25 percent within a decade, potentially creating 100 million jobs.

Japan had invested in dedicated freight corridor west project, strategic port facility in Chennai, development of strategic assets including highways and dams in North East Region where India’s immediate neighbor is eyeing for territorial expansion.

Japan has set up multi product SEZ and clusters, custom free and warehousing zones ( in Neemrana in Rajsthan ) leading to greater economic integration in Asia. In 2014 Kyoto-Kashi pact was signed between two countries wherein Kashi became as popular as ‘city of ten-thousand shrines’ in ‘land of rising sun’.

Under this agreement Kyoto and Kashi will prepare a detailed roadmap for making Kashi a ‘smart city’, retaining its rich culture,tradition and heritage.

Tariff & Non Tariff barriers – an obstruction?

  • An important factor affecting Indo-Japan trade is the tariff and non- tariff barriers imposed by both countries. Japan has placed import prohibitions and quantitative restrictions on imports from India, for example, on fish and silk items.
  • Japan’s Sanitary and Phytosanitary Measures (SPS) are major barriers to Indian exports of poultry, meat, shrimps and fruits like mangoes and grapes. This issue highlights the need for sharing and facilitating the exchange of technology under the agreement to promote Indian exports to Japan.
  • Engaging Japan economically is important as India is biggest recipient of Japan’s ODA. India is also premium destinations for foreign direct investment from Japan.
  • Attracting Japanese investment, technology and business is crucial for transforming India into Asia’s new production line. There is a strategic rationale behind economic engagement of India with Japan.
  • India is far more comfortable with Japanese businesses investing in development of strategic assets of infrastructure but Chinese investment in infrastructure is seen with concerns and suspicions due to security reasons and mistrust, even when such investment can resolve some of the trade imbalance of India with china.
  • For Japan economic partnership is shaped by realpolitik too. Japanese investment was very vital for Chinese miracle as china has been highest recipient of Japanese aid between 1980-2003. Greater economic integration with china has not translated into political trust between two countries, hence boundary disputes has escalated.
  • During Indian Pm visit to Japan 2014 two countries have announced ‘India-Japan Investment Promotion Partnership’. Japan has promised to invest more than USD 35 billion in India.
  • ODA and private investment is biggest foreign investment by any single country into India. Substantial contract on export of rare earth minerals from India to Japan is on anvil, which would offset Japan’s reliance on china for supply.
  • Both India and Japan are concerned that their growing economic interdependence on China might make the Indian and Japanese economies more vulnerable to Beijing’s economic coercion.
  • Secondly, both the nations are exasperated by china’s strategy of deploying surrogates in East and South Asia primarily North Korea and Pakistan, to wear both the countries out.
  • The China Pakistan Economic Corridor (CPEC) a USD 45 billion project traversing through highly sensitive Karakoram border region of India is one of the examples.

India-Japan Economic and Commercial Cooperation

  • Complementarities between the two countries
  • Japan’s ageing population (23% above 65 years) and India’s youthful dynamism (over 50% below 25 years);
  • India’s rich natural and human resources and Japan’s advanced technology;
  • India’s prowess in services and Japan’s excellence in manufacturing;
  •  Japan’s surplus capital for investments and India’s large and growing markets and the middle class.
  • The signing of the historic India-Japan Comprehensive Economic Partnership Agreement (CEPA) and its implementation from August 2011 is expected to further accelerate growth of trade, economic and commercial relations between the two countries.
  • Japan has been extending bilateral loan and grant assistance to India since 1958. Japan is the largest bilateral donor to India. Japanese ODA supports India’s efforts for accelerated economic development particularly in priority areas like power, transportation, environmental projects and projects related to basic human needs. For example New Delhi metro network. The Western Dedicated Freight Corridor (DFC), The Delhi-Mumbai Industrial Corridor with eight new industrial townships, The Chennai-Bengaluru Industrial Corridor (CBIC) India’s primary exports to Japan have been petroleum products, chemicals, elements, compounds, non-metallic mineral ware, fish & fish preparations, metalliferous ores & scrap, clothing & accessories, iron & steel products, textile yarn, fabrics and machinery etc.
  • Japanese FDI into India grew exponentially from US$ 139 million in 2004 to all time high of US$ 5551 million in 2008. Currently FDI from Japan to India was US$ 1.7 billion during January-December 2014. Japanese FDI has mainly been in automobile, electrical equipment, telecommunications, chemical and pharmaceutical sectors.
  • The number of Japanese affiliated companies in India has grown significantly over the years.
  • 13 big infrastructure projects to be financed by ODA loans such as Metro projects both in Chennai and Ahmedabad and road network connectivity in our Northeastern states.

India and Japan signed a Protocol for amending the existing Convention for the avoidance of double taxation and for the prevention of fiscal evasion with respect to taxes on income which was signed in 1989. The protocol provides for

  • Internationally accepted standards for effective exchange of information on tax matters including bank
  • information and information without domestic tax interest.
  • The information received from Japan in respect of a resident of India can be shared with other law
  • enforcement agencies with authorisation of the competent authority of Japan and vice versa.
  • Both India and Japan shall provide assistance to each other in the collection of revenue claims.
  • Exemption of interest income from taxation in the source country with respect to debt-claims insured by the Government/Government owned financial institutions.

Multilateral cooperation domain:

Despite being benefited by USA’s uni-polarity, multilateral-ism has emerged as cornerstone of contemporary foreign policy of both the nations.

Joint statement of 2006 incorporated “cooperation in multilateral forums like UN,SAARC, EAS and ARF”. The impulse for multilateralism stems for desire to make 21st century as Asian century through working for peace and stability in the region, providing better connectivity and greater regional integration.

Although undercurrent of fears of China’s hegemony in the Asia and USA’s declining clout in global affairs also boost force of multilateralism supported by India and Japan.

Significant agenda for New Delhi and Tokyo is to reform UNSC. Both demand democratization of UNSC and both claim permanent membership in this regard. Post WWII international security architecture with Beijing as only Asian representative in UNSC with veto power ensures that China will continue to enjoy extraordinary leverage in the region.

So maintaining a status quo is in favor of china as it does not support claim either by India or by Japan. China’s opposition has further cemented the Indo-Japanese relationship wherein countries declared solidarity for each-other’s positions demanding permanent membership and formed G-4 including Germany and Brazil too.

India was included into East Asia summit membership (ASEAN 3+3) on behest of Japan along with Australia and New Zealand despite protest by China.

India shows its appreciation for current Japanese PM’s initiative to help Bangladesh in developing the region around the Bay Of Bengal though ” Bay of Bengal Industrial Growth Belt” or BIG -B initiative.

Japan’s active involvement in this region offsets china’s growing economic and strategic influence in India’s neighborhood. Two course shares similar view of establishing peace and stability in Afghanistan and has invested into Afghanistan’s prosperity and development. India and Japan institutionalize trilateral strategic dialogue partnership with USA in 2011.

These trilateral initiative has serious potential to transform into ‘Quad of Democracies’ (including Australia) in the Indo-Pacific region.

Nuclear Conundrum

Issue of civilian nuclear technology cooperation remains a constraint in realizing true potential of this strategic partnership. Japan’s anti-nuclear stance often conflicts with India’s aspiration of to be a nuclear power.

Tokyo however has relented and supported India-USA Civil Nuclear Cooperation Agreement at IAEA and  NSG, given the responsible nuclear state history of India.

India and Japan has started discussion on a Civilian Nuclear Cooperation Agreement in 2010. For India, nuclear cooperation with Japan is essential to consummate indo-USA nuclear deal owing to the fact that Westinghouse is Toshiba’s subsidiary and Mitshubishi has a technical cooperation agreement with General Electric.

Even crucial components of nuclear reactors offered by French nuclear consortium -Areva- are manufactured in Japan.India also needs Japan’s support for NSG membership but later has expressed reservations citing New Delhi’s lack of commitment to nuclear disarmament, especially at CTBT and FMCT.

Nuclear disaster at Fukushima Daiichi plant in 2011 had also derailed ongoing consultations. Japan’s preconditions to such an agreement includes stringent inspections of Indian civilian nuclear facilities, termination of agreement in case of India conducts nuclear test and India’s abdication of right to enrich or reprocess fuel of Japanese origin(rule of origin i.e. fagging and benchmarking).

Tokyo has attached significance to ratification to CTBT and a unilateral moratorium on production of fissile material.For India, the benchmark for bilateral civilian cooperation deal has been already fixed by Indo-USA nuclear deal and India will not go more than what it has committed to its civilian nuclear pact with USA.

Notwithstanding, having accepted the IAEA’s ‘Additional Protocols’ which allows IAEA to conduct extensive inspection of India’s civilian nuclear programme, India have affirmatively addressed one of the Japan’s major concerns.

In the backdrop of CTBT being discriminatory and instrument to maintain status- quo in favor of recognized nuclear states, India replies with “Not Now, Not Ever” approach in words of former diplomat Arundhati Ghosh.

With a responsible nuclear doctrine in 1998 itself India had adhered to unilateral moratorium on nuclear test. In addition to this, China and USA has not ratified CTBT yet, so India has no strategic rationale to move forward and ratify it. Same line of argument goes for the FMCT issue too.

Nonetheless Japan in recent times is going ahead with Civil Nuclear Cooperation Agreement very eagerly owing to economic compulsion resulting from global economic slowdown, which augurs well for India.

What Lies Ahead?

India and Japan are two powerful democratic forces in Asia which are searching for more options to work and prosper jointly.

Economic front needs to be strengthened to reach “Low Hanging Fruit of Asia” wherein demographic dividend of the India and other Asian countries can be deployed to benefit Asia as whole.

Both need to join hand to establish peace and order in not only disturbed region of Asia but of the whole world.

Recent Developments

Japanese PM Visit to India(2015)

  • Mr. Shinzo Abe, Prime Minister of Japan, visited India from 11 to 13 December, 2015.
  • Japan has always been a significant economic partner of India, but not a strategic one. Now, both on the economic and strategic fronts, the India-Japan relationship is being transformed.

Important Outcomes

1. Nuclear agreement signed

  • Reached broad agreement on civil nuclear cooperation after five years of wrangling.
  • This will clear the way for American firms — which source key equipment in Japan – to sell nuclear reactors to India.
  • Commerce aside, this agreement is also symbolically important because Japan was one of India’s most vocal critics after New Delhi’s 1998 nuclear tests.
  • This is part of India’s decade-long process of progressive nuclear rehabilitation.

2. Defense and Security relationship

  • New linkages between the Indian and Japanese air forces and coast guards.
  • Indian training for Japan’s counterterrorism capabilities.
  • Agreements to share classified military information.
  • Transfer of Defense Equipment and Technology.
  • India’s decision to invite Japan as a ‘formal partner’ to the US-India Malabar naval exercises.
  • This will passively balance Chinese power. This will complement other initiatives of
  • India like US-India-Japan trilateral at the foreign minister level in October and a US-India-Australia trilateral at a slightly lower level in June.

3. Trade and Investment

  • Japan will create a $12bn-facility to support Japanese companies investing in India to further our Make in India objective
  • As part of the broader Japanese support for Indian infrastructure, memorandum of cooperation on the high speed Shinkansen rail system between Mumbai and Ahmedabad to be financed with a highly concessional yen loan has been signed.

Upgrading civilian infrastructure in the Andaman and Nicobar Islands.

India and Japan are in talks to collaborate on upgrading civilian infrastructure in the Andaman and Nicobar Islands.

  • The first project being discussed is a modest one — a 15-megawatt diesel power plant on South
  • Andaman Island.
  • To counter china’s growing influence, India is building strategic relations with Japan, Australia and
  • the United States, as well as regional powers like Vietnam.

Way forward

  • India’s Act East policy — of which the India-Japan relationship is a core strand — is important not just
  • For boosting investment but also signaling to China.
  • It is also to strengthen India’s voice in regional debates, whether on economic or security issues,
  • such that India will be in a position to shape emerging economic and security architectures as they form, rather than accommodate to them afterwards.
  • As a recent RAND study noted, ‘Southeast Asia sees India primarily as a security partner, while India primarily sees Southeast Asia as a trade partner’. The more that India accepts the garb of security partner, the more pivotal its role in Asia and its voice in debates.

US-JAPAN-INDIA TRILATERAL MEET

The foreign ministers of India, Japan and the US met in New York in the first such trilateral engagement between the three countries with an eye on China’s growing influence in the world.

  • The foreign ministers underscored the importance of international law and peaceful settlement of disputes, freedom of navigation and overflight and unimpeded lawful commerce, including in the South China Sea.
  • The US maintains the South China Sea is international water, and sovereignty in the area should be determined by the UN.
  • With China getting more assertive, the US is looking to marshal allies in the region to take a strategic role.
  • India’s participation in this new trilateral forum along with the US and its most important Asian-Pacific ally marks a new benchmark in India’s integration into the US “Pivot to Asia”—Washington’s drive to militarily-strategically isolate and encircle China.
  • The US has long been pressing India to join US-led trilateral and quadrilateral initiatives with Japan and its other key military partner in the region, Australia.
  • “The U.S. concept of Asia Pivot revolves around isolating China and creating a block of Regional and Extra Regional 2nd tier powers to strategically suffocate China in the 21st century. These 2nd tier powers include India, Australia and Japan.”
  • The three Ministers discussed maintaining maritime security through greater collaboration and appreciated Japan’s participation in the 2015 Malabar naval exercise. Humanitarian assistance and disaster relief also featured in the first trilateral ministerial meet.
  • China had objected to the participation of Japan, Australia and Singapore in Malabar 2007 exercise, which was hosted by India in the Bay of Bengal.
  • To promote regional economic linkages, the three Ministers launched an expert-level group on regional connectivity to identify collaborative efforts, including between south and southeast Asia.

IFS Officer Nayantara D with Honourable Lok Sabha Speaker Sumitra Mahajan. She is currently serving as the Third Secreatry, Embassy of Seoul.

(D)PM Modi Visit to Japan(2016)

Prime Minister Modi recently visited Japan at the invitation of Prime Minister of Japan Abe. The two Prime Ministers held wide-ranging consultations.

Outcomes of the visit

Synergising the partnership-∙ Both countries undertook a comprehensive review of the Special Strategic and Global Partnership as outlined in the “India and Japan Vision 2025” and acknowledged the significant progress in bilateral relations over the past two years.

Enhanced space and cooperation on global challenges- such as climate change, countering terrorism and violent extremism, reform of the United Nations (UN) including the United Nations Security Council (UNSC), as well as maintaining rules-based international order.

Building stronger partnership for stable and safe world

Emphasis on rising importance of Indo-Pacific region- stressed the core values of democracy, peace, therule of law, tolerance, and respect for the environment in realising pluralistic and inclusive growth of the region.

Consolidation of security and defence cooperation- welcomed two Defence Framework Agreements concerning the Transfer of Defence Equipment and Technology and concerning Security Measures for the Protection of Classified Military Information.

Deepening bilateral security and defence dialogues, through the “2+2” Dialogue, Defence Policy Dialogue, Military-to-Military Talks and Coast Guard-to-Coast Guard co-operation.

Partnership for prosperity-∙ A dedicated task force to be set up comprising representatives of both countries to develop a concrete roadmap for phased transfer of technology and “Make in India.” Cooperation on the human resource development in the manufacturing sector in India through “Manufacturing Skill Transfer Promotion Programme.”

The two Prime Ministers noted the growing collaboration between India and Japan in the modernisation and expansion of conventional railway system in India.

To build upon cooperation in the field of smart cities to develop smart islands by initiating consultations to identify technologies, infrastructure, development strategies and management processes facilitating development of smart islands in an efficient and effective manner.

Cooperation for a cleaner and greener future

Recognised the importance of access to reliable, clean and affordable energy and welcomed the JapanIndia Energy Partnership Initiative laid by the Japan-India 8th Energy Dialogue held in January 2016.

Commitment to work together in developing the rules for successful implementation of the Paris Agreement on Climate change.

Signed the Agreement for Cooperation in the Peaceful Uses of Nuclear Energy which reflects a new level of mutual confidence and strategic partnership in the cause of clean energy, economic development and a peaceful and secure world.

Foundation of a Future-oriented Partnership– Both the countries signed the following MoUs-

  • MOU between JAXA and ISRO concerning Cooperation in the Field of Outer Space
  • MoU between Ministry of Earth Sciences (MoES), Republic of India and The Japan Agency for MarineEarth Science and Technology (JAMSTEC) on Mutual Collaboration in Marine and Earth Science and Technology.
  • Will advance of academic research in the field of Earth Sciences for the benefit of the peace and human welfare.
  • Will enhance capability in the field of atmospheric and climate research, ocean technology observation and hazard mitigation in case of tsunami, earthquakes and other phenomenon.
  • Will boost our “Blue Economy” with better research and exploration of marine resources.

INDO-JAPAN NUCLEAR DEAL

Summary:

The annual strategic dialogue between India and Japan which began in 2009 has now come to fruition with the signing the nuclear cooperation agreement in Tokyo during Prime Minister Narendra Modi’s visit.

  • Japan has civil nuclear treaties with 13 countries, including the US, France and Russia, but this is the first with a nation that is not part of the Nuclear Nonproliferation Treaty (NPT).

Background:

India and Japan were at loggerheads since 1998 when India conducted its nuclear tests. Japan was the country that took it the hardest. It put all political exchanges with India on hold, froze aid and announced economic sanctions within hours. A thaw in ties didn’t come until 2001, when sanctions were lifted. And then, in 2009, the two countries began an annual strategic dialogue.

india-and-japan-nuclear-deal

Why both countries took so much time to sign this deal?

The deal had been proposed six years ago and till very recently, it seemed that the process would not be concluded.

  • The two prime ministers had signed a memorandum of understanding last December but the thorny issues of Japanese companies’ liability for nuclear accidents, the reprocessing of spent nuclear fuel, and the consequences of any future testing of nuclear weapons by India, remained on the table.
  • The last stage of negotiations on the deal was keenly watched due to a “nullification clause”, which sought automatic cancellation of the agreement if India resorts to nuclear testing in the future.
  • Another sticking point has been India’s refusal to sign the NPT, as it considers the treaty unfair to the developing world.

What’s there in the new deal?

  • Nullification clause issue was resolved by annexing a separate memorandum to the treaty which specifies that Japan can suspend cooperation if India breaches its no-testing pledge to the NSG.
  • India conceded to Japan on another clause which says that Japan can notify India of the termination of the pact with one year’s notice.

Why this deal was important for India?

  • Apart from the Russian reactors, India’s planned nuclear reactors with France and US also depend on Japanese parts. Moreover, GE, Westinghouse, and Areva, the companies planning reactors in India, have important ownership stakes of Japanese companies such as Hitachi, Toshiba and Mitsubishi, which were stopped by the Japanese government from doing business with India without a final nuclear deal. This deal will help guarantee Japan’s continued support to India’s civil nuclear programme for generation of clean and cheap power.
  • Reservations in Japan against nuclear energy have hardened after the Fukushima accident. Tokyo’s support to the deal so far is therefore an indication of the importance it accords to relations with India.
  • The agreement is also important for the message of trust it would convey to Nuclear Suppliers Group members in a year the country hopes to have its admission accepted. It gives a much-needed moral boost.
  • The move will also boost the meagre, and dipping, bilateral trade of $15 billion, and lift the strategic military and defence relationship.

What’s in it for Japan?

This deal will mainly help Japan for economical reasons as companies like Mitsubishi and Hitachi are also in the nuclear energy field, and they are running in loss ever since the Fukushima disaster.

These companies are frantically looking for new markets to expand in and there could be no better place than energy starved India. Japan had initially opposed the Indo-US Nuclear deal, as India wasn’t a member of NSG but later changed its position after realizing that its going to be the sole loser in the lucrative Indian market.

Why few countries are opposing this deal?

They say, signing a nuclear trade deal with a country that has shunned the treaty designed to stop the spread of nuclear weapons is itself a big mistake. Besides, the agreement contains many questionable and worrisome elements. For instance, the pact doesn’t make it clear whether India has to immediately shut down reactors using Japanese technology when it carries out a nuclear test.

Way ahead:

Now, Japanese Prime Minister must bring the deal to Parliament in early 2017 to ensure that the commercial agreement for Westinghouse’s six reactors in Andhra Pradesh that is due in June 2017 comes through. This will also coincide with the next plenary of the NSG. Both New Delhi and Tokyo must also be wary of the impact on Beijing of this new stage in their ties.

China has been hedging against deeper Japan-India ties in Asia by investing in its relationship with Russia and Pakistan. As the two Asian rivals to China, India and Japan might need the partnership even more in the days to come, as the U.S. President-elect has indicated a lower level of interest in “playing policeman” in the region.

Conclusion:

Japan now follows eight other nations, including the US, France and Russia, in entering into a pact with India. It signals a wider acceptance of India’s status as a responsible actor.

Overall, given the economic, nonproliferation, and regional power balance issues examined above, it is clear that full-fledged Japan-India civil nuclear cooperation is fundamentally a development to be welcomed. The question remains regarding whether India is likely to conduct further testing of nuclear weapons and how such tests would impact the bilateral agreement.

Subscribe
Notify of
1 Comment
Oldest
Newest Most Voted
Inline Feedbacks
View all comments