India and Japan bond together

The real achievement of Singh’s visit has been to put Japan and India on the same page in terms of international security. The joint declaration on security cooperation opens up Asia to a security association between two of the biggest maritime powers in the region. It’s an agreement that will certainly raise eyebrows in Beijing, despite both Aso and Singh going to great lengths to deny any connection with or “targeting” of China.Interestingly, for Japan, it’s only the second security agreement that it has in the world apart from US. Japan has stitched very similar agreements with Australia in March 2007 and now India. A new security architecture in Asia is taking shape.After the talks, Singh told a joint press conference, “Economic partnership and security cooperation between India and Japan are not at the cost of any third country, least of all, China.... I sincerely believe there is no competition between India and China. The world offers enormous hope for both our countries to realise their development ambitions.” Aso added, “This is not aimed at, or meant to target China.” The declaration says India and Japan will work together not only on transnational crimes and terrorism, but will conduct joint exercises, work together in “peace building”, disaster management and disarmament and non-proliferation. The agreement now binds the two countries to regular consultations at the level of foreign ministers, foreign secretaries, NSA, defence ministers, defence secretaries, service chiefs, navies as well as Isro and JAXA (Japan Aerospace Exploration Agency).Foreign secretary Shivshankar Menon told journalists later that the India-Japan relationship “walks on two legs, economic and security”. India saw a huge commitment of 450 billion yen for the dedicated freight corridor and projects on the Delhi-Mumbai Industrial Corridor, which the PM believes will transform the nature and scope of the Indian economy. It’s the largest-ever loan by Japan for any single overseas infrastructure project. The commitment at a time of a financial recession is seen by India as a “strategic” gesture by Japan. Japan on Wednesday also announced that it would give $971 million in 2008-09 to four projects in India: Chennai metro, Hyderabad ring road, forest management and energy saving projects for small and medium enterprises. Singh spent the better part of the morning soliciting investment in India from the cream of Japanese industry. Addressing the Nippon Keidanren, the apex body for Japanese Inc., Singh said, “The short term outlook (for the Indian economy) is cloudy but I am confident that the Indian economy has the resilience to sustain its growth momentum in the medium term.” Singh outlined the areas of future cooperation: high technology trade, energy efficiency technologies, power generation, “ultra-mega projects based on super-critical technologies”, clean coal, etc. “This will broaden our trade basket and enhance reciprocal investments,” Singh told a group of Indian and Japanese CEOs at lunch.

Prime Minister Manmohan Singh provoked Japan to invest more in India and participate in its growth story. Today, Japan lags behind China considerably in terms of its bilateral trade with India. Korean companies such as Samsung, Hyundai and LG too have overtaken iconic Japanese brands to get a higher mindshare among the Indian masses in the value for money segment.
Addressing a business luncheon hosted by Nippon Keidanren, Japan’s most influential industry chamber, Singh pointed out that the increase in India’s bilateral trade with China in the past one year alone is more than the whole of India’s total trade with Japan. “Korean products dominate our white goods sector and have high brand recognition in India,” he said.
The total trade between India and China has jumped from just $4.8 billion in 2002-03 to $25 billion in 2006-07. It increased $12.7 billion or more than 50 per cent to touch 37.8 billion in 2007-08. In fact, China has already displaced the US as India’s number one trading partner and the government expects bilateral trade to top $50 billion in the current financial year.
Compare this with India’s trade with Japan that stood at a meager $10 billion in 2006-07. Even by 2010, the two countries hope to just about double the size of bilateral trade to $20 billion. The tepid response by Japanese private sector to investments in and trade with India is attributed to the procedural bottlenecks that plague the domestic business climate.
“...new investors often worry about the difficulties that they may face in a new environment. A vibrant democracy often presents new challenges. I urge you to have faith in our system and our resolve.We are committed to creating a congenial climate for private initiative, risk-taking and enterprise,” Singh said. Stating that “sky is the limit” for Japanese investments in India, the Prime Minister said India’s infrastructure funding needs are expected at $500 billion over the next five years. “Financing this level of investment presents a special challenge in view of the uncertainties now prevailing in capital markets. We have begun to attract investment from Japan, but it is much less than the full potential,” he said.
Japan Prime Minister Aso Taro, however, said in a media briefing later in the day that over the past five years, Japanese investment in India had increased ten-fold compared with the last 10 years. “We are making progress and the situation is changing really fast,” he said, pointing out that the number of Japanese companies has doubled to over 500 during the period.
Japanese premier Taro Aso, however, said negotiations were still underway and he would refrain from commenting on specific issues. “We will strive for early conclusion of the talks on CEPA,” he said.

1 comment:

Anonymous said...

Singh outlined the areas of future cooperation: high technology trade, energy efficiency technologies, power generation, “ultra-mega projects based on super-critical technologies”, clean coal, etc.