Prime Minister Manmohan Singh and the visiting Japanese Prime Minister Shinzo Abe targeted a two-fold increase in the annual bilateral trade volume to $20 billion (Rs82,000 crore) by 2010, even as the two sides failed to make specific announcements regarding progress on the Dedicated Freight Corridor Project (DFC) and the Delhi-Mumbai Industrial Corridor (DMIC).
India and Japan reached an in-principle $3 billion currency swap agreement, which will allow either side to exchange local currency for US dollarsto meet short-term liquidity difficulties.
Despite domestic political opposition to the Indo-US nuclear agreement, Singh sought Japan’s support to help operationalize the agreement.
“When it comes before the Nuclear Suppliers Group (which needs to ratify the nuclear deal, after the approval of the International Atomic Energy Agency, or IAEA), I hope to have the support of the Japanese government,” said Singh.
Abe, however, said, “We now have to watch very closely the implications it may have on nuclear non-proliferation. I told Prime Minister Singh it is essential for India to respond to the concerns of Japan and the international community.”
The Communist Party of India national secretary D. Raja said, “This is definitely a concern for us, we have already asked the PM to respond to our existing concerns, but he is determined to go for the deal despite everything. We will address this issue along with the IAEA issue in our centralcommittee meeting on the 28th and 29th.”
In the joint statement, the two countries, renewed their bid to cooperate to operationalize the DFC and the DMIC projects. As reported in Mint on 16 August, the joint statement confirmed that the feasibility study for the DFC will be ready only by October.
Earlier, addressing a joint session of Parliament, Abe invoked historical ties and long-term strategic concerns to propose a shared future in “broader Asia”, even as he took care to steer clear of mentioning the cooperation on nuclear energy.
Rajiv Kumar, chief executive of Indian Council for Research on International Economic Relations, said, “Doubling trade in three years is an aspirational target. It probably hinges on investment from Japan in the Delhi-Mumbai corridors, which might bring along big Japanese companies. The target is not important. What’s important is this new engagement with India that Japan is seeking.”
Kumar said the target underscores the “shift from China” for Japan. “Japanese companies are likely to use India as a manufacturing hub for exports. India has never been a big market for them.”
In his address, titled Confluence of the Two Seas after secular Mughal prince Dara Shikoh’s 1655 treatise, Abe noted, “We are now at a point at which the confluence of the two seas is coming into being... This broader Asia will evolve into an immense network spanning the entirety of the Pacific Ocean, incorporating the United States of America and Australia.”
Abe referred to the Delhi-Mumbai and Delhi-Kolkata freight corridors for which, he said, the Japan is actively considering means for financial assistance. He said his government would also cooperate with India to establish a dedicated fund for the Delhi-Mumbai industrial corridor.
Pushpesh Pant, dean of the School of International Studies at New Delhi’s Jawaharlal Nehru University, said, “For decades, India was too poor and underdeveloped to interest Japan, which, under the nuclear umbrella provided by the United States during the cold war, developed into a superior and technologically advanced economy. India has a small, but growing, segment of consumers that still prefer Japanese goods over their Korean counterparts. For Indian companies, Japan is a tough market because the Japanese are very fussy consumers.”
Kumar added that big Japanese companies kept away because Indian consumers couldn’t afford quality products and small companies kept away because they couldn’t compete with their Chinese and Korean counterparts.
Pant reminded, “India and Japan’s strategic interests have historically been divergent. Even now, the two countries are rivals for the United Nations Security Council membership.”
Abe said Japanese diplomacy is promoting the “Arc of Freedom and Prosperity” along the outer rim of the Eurasian continent. “Japan has undergone ‘The Discovery of India’, by which I mean we have rediscovered India as a partner that shares the same values and interests,” he said.
Abe said his country’s official development assistance to India (the largest given by Japan) has two recurring themes, forest conservation and improvement of water quality. He invited India to jointly work towards reducing greenhouse gas emissions by 50% by 2050.