The following article originally appeared in The Times of India on December 15, 2015.
In the early 1990s, just a few years after the Tiananmen Square crackdown drew international opprobrium, China began raking in foreign investment. Between 1990 and 1996 some $435 billion was committed to China, helping to fuel that country’s transformative economic modernisation. Japanese pledges during that period accounted for a significant proportion, including almost 11% of total investment into Shanghai. At the same time, Tokyo was committing similar amounts to the Asian Tigers (Singapore, Hong Kong, South Korea and Taiwan) and to the emerging economies of Southeast Asia (Thailand, Indonesia and Malaysia).
If there is one takeaway from Prime Minister Shinzo Abe’s just concluded visit to India, it is that Japan is willing to make the same big bet on India that it once did on China and Southeast Asia. During Abe’s visit, Japan and India signed a spate of agreements – 16 in all. But there were four developments of major significance.
The first was the much-anticipated agreement to introduce high-speed railway technology between Mumbai and Ahmedabad, with financial and technical assistance from Japan. If seen through to its full conclusion, this agreement has the potential to create a valuable demonstration effect for Indian infrastructure, much as Hyderabad showed that India could have world-class airports or Delhi demonstrated the possibility of efficient and safe metro rail systems.
Neither was considered possible in India until they happened, and their successful implementation saw demand increase around the country for similar ventures. Today, 15 metro transit systems are in operation or under construction in India. The Mumbai-Ahmedabad highspeed railroad could, consequently, be the start of something much bigger for India.
The low-interest loan to develop an Indian ‘bullet train’ may have stolen the headlines, but Japan’s commitment to create a $12.4 billion financing facility to “help materialise Make-in-India” is no less significant. This is in addition to almost $1billion in overseas development assistance to projects in Bengaluru, northeast India and Jharkhand, following on a similar $1billion commitment to metro rail projects in Chennai and Ahmedabad. Taken together, this is beginning to emulate the scale of investment that allowed the Chinese and Southeast Asian economies to take off in the 1980s and 1990s.
Three, the long-awaited agreement for cooperation on peaceful nuclear energy has implications far beyond the bilateral relationship. Japan’s civil nuclear industry, still hurting from the 2011 Fukushima Daiichi nuclear accident, is deeply integrated with the industries of other countries, notably the United States. For India to truly access global nuclear markets, a Japanese decision to allow the sale or transfer of civilian nuclear technology, material and fuel was necessary.
Beyond that, Japan’s faith in India’s stewardship of nuclear technology is an emotional issue, it being the only country to have suffered nuclear attacks at Hiroshima and Nagasaki in 1945. That was the reason that India’s 1998 nuclear weapons tests were a major setback for bilateral relations, so much so that just 15 years ago even the visit of a Japanese prime minister to India was considered ground-breaking. It represents a complete turnaround in relations that Japan is today willing to entrust India with the sale of nuclear material, as a responsible nuclear power outside the nuclear NonProliferation Treaty (NPT).
If there was one issue that went unfulfilled during Abe’s visit, it was the inability to seal an agreement on the sale or joint production of US-2 aircraft, although the intention to work towards such an agreement in the future was mentioned specifically in the bilateral joint statement. Such an arrangement has been on the cards for two years.
But even that was offset by two important security agreements, one to share defence equipment and technology and the other to facilitate the sharing of classified military information. Additionally, India and Japan agreed to begin talks between the two countries’ air force staffs, thus institutionalising formal contacts between all three branches of the military.
Japan got something quite significant in return: India “welcomed and supported” Japan’s recent legislation to expand the scope of its use of force overseas. This is an important aspect of India’s facilitating Japan’s evolution into a ‘normal’ military power, unencumbered by its constitutional limitations on the use of force.
The latest raft of agreements sealing a closer economic and security partnership between India and Japan builds upon 15 years of work by several governments in both countries. Just as Prime Ministers Atal Bihari Vajpayee and Yoshiro Mori helped normalise relations after the Pokhran tests, and Junichiro Koizumi and Manmohan Singh foresaw the strategic potential of the relationship, Abe and Modi have the political capital, economic agendas, and strategic impetus to realise the relationship’s full potential.
Still, much work needs to be done, particularly on the Indian side. Japan has made a strong pledge to help build up India’s economy through technological and financial assistance, in a manner in which few of India’s partners – not even the United States – are currently capable of committing. It is up to India now to leverage that.
If India is to fulfil its economic potential – much as China and Southeast Asia did before it – Japan will be an indispensable partner.