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New Delhi: India is getting ready to host Japanese Prime Minister Shinzo Abe who arrives on Saturday on a three-day visit, a development expected to be closely watched by China given the spike in tensions over a territorial dispute between Asia’s top two economies.

Abe, on his second visit to India, is the chief guest at India’s Republic Day parade on Sunday. On Saturday, India and Japan will hold their annual summit meeting, a tradition in place for over a decade and a mark of the India-Japan strategic and global partnership.

The Japanese Prime Minister is the fourth dignitary from the region to be invited as the chief guest at India’s Republic Day parade that showcases India’s military might and cultural diversity. Previous guests include South Korean President Lee Myung-bak in 2010, Indonesian President Susilo Bambang Yudhoyono in 2011 and Thailand’s Prime Minister Yingluck Shinawatra in 2012— a signal that India is seriously engaging the countries in the region long considered China’s backyard and upgrading its ties with them.

China has maritime disputes with a number of countries in South-East Asia, including the Philippines and Vietnam.

Abe, who was elected to office in December 2012, is visiting India at a time when ties between Asia’s top two economies are strained over a dispute over islands in the East China Sea. Both claim the islands known as Senkaku in Japan and Diaoyu in China. In November, China tried to establish its authority over the islands by demanding that all aircraft flying in the region obey its rules or face “emergency defensive measures"—a move that upset many countries in the region including Japan. Japan’s response was to frame the country’s first-ever national security strategy that calls for a more proactive approach to security despite Japan’s post-World War II pacifist constitution.

And earlier this week, Abe upped the ante when he said that current relations between Japan and China were not unlike the ties between Britain and Germany in 1914. But economic interdependence was not enough to prevent World War I, Abe said, according to a report in The New York Times.

A sign that Abe’s visit to India had caught China’s attention came with two recent articles in Indian newspapers by China’s ambassador to India, Wei Wei, earlier this month, which spoke of growing India-China ties and recalled Japan’s role in World War II.

“The Chinese are wary of what India’s views may be on the subjects between China and Japan. Countries like South Korea and Japan are looking at India as a regional player," said a person close to the developments, who did not want to be named.

That tensions with China would be on the agenda of talks between the Indian and Japanese prime ministers was clear with Indian foreign ministry spokesman Syed Akbaruddin on Thursday telling reporters that India and Japan are expected to review all aspects of their wide-ranging bilateral relationship and “also discuss regional issues".

India has its own set of problems with the rising giant China that is viewed by many countries in the region and beyond as unpredictable. For India, the biggest irritant bedevilling ties is the unresolved border issue dating back to the brief, but bitter 1962 war between India and China.

Besides strategic issues, other issues that are expected to come up for discussion are increased Japanese investment in India.

“First of all, we want Japanese technology; secondly, we want Japanese capital, investment into India; and thirdly, we want Japanese modern management practices. So, as someone said, it is the economy which is the crucial part of India-Japan cooperation," said Gautam Bambawale, joint secretary in charge of East Asia in the ministry of external affairs.

With India looking for $1 trillion in investment for its infrastructure sector, Japan is being seen as a key partner. Japan is already involved in the construction of the Delhi-Mumbai Industrial Corridor, a mega infrastructure project of $90 billion, connecting India’s political capital New Delhi with financial capital Mumbai. Incidentally, the final project report was presented to Prime Minister Manmohan Singh and Abe during his last visit in August 2007.

Bilateral trade in 2012-13 was about $18.5 billion. At present, Japan ranks fourth in terms of investments into India. Between April 2000-13, about $15 billion was invested from Japan into India. “This accounts for about 7% of the total investment in India," Akbaruddin said. “Japanese companies have been increasing their presence in India."

Former foreign secretary Kanwal Sibal said, “Today, no other leader of a great power has such positive ideas about strengthening strategic ties with India as Abe. Therefore, we have a vested interest in his success in restoring Japan economically and politically, more so as almost no other country has the resources and technology to assist in modernizing India’s physical and industrial infrastructure through flagship projects like the Delhi-Mumbai industrial and rail corridors and the Chennai-Bangalore industrial corridor."

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