India's Prime Minister's visit to Japan
5th Annual summit under strategic and global partnership arrangement
Indian Prime Minister Manmohan Singh (L) shakes hands with Japanese Prime Minister Naoto Kan in Tokyo October 25, 2010. Japan and India pledged closer strategic ties between Asia's second and third biggest economies in talks.Photo: Reuters
Indian Prime Minister Manmohan Singh paid a three-day visit to Japan from October 24th, 2010.to exchange views with Japanese leaders. It is important to note that the visit took place at a time of high diplomatic tensions between Japan and China. India is the only country with which Japan has an institutional arrangement of annual summit-level visits under the India-Japan Strategic & Global Partnership. This was the 5th Annual Summit between the Prime Ministers of India and Japan since 2006 Japan's Prime Minister Naoto Kan stressed the warm ties linking two of Asia's biggest democracies and said that "through this meeting, we were able to confirm and be confident about progress in the strategic global partnership between Japan and India". Both Prime Ministers discussed ways to expand, enhance and strengthen bilateral ties including trade and investment. At present, India only accounts for about 1% percent of Japan's global trade, whereas more than 20% percent of Japanese imports head to China. "We signed a joint statement confirming the conclusion of negotiations on a Comprehensive Economic Partnership Agreement between Japan and India," said Kan after a meeting with Singh. The Economic Partnership Agreement will cut tariffs on the flow of goods in both directions and promote bilateral investment. The deal will slash tariffs on 94% percent of two-way trade in the 10 years after implementation. The deal will help Japanese auto giants such as Suzuki who have opened plants in India by lifting tariffs on parts, while also easing access to the market in fast-greying Japan for Indian generic drugs. On another key agreement sought by New Delhi -- civilian nuclear cooperation -- the leaders however only said they welcomed the start of talks. Japan and India launched negotiations in June on a pact that would allow Tokyo to export its cutting-edge nuclear technology to the energy-hungry South Asian nation, a hotly contested market for atomic plants. Analysts say Japan -- the only country to have suffered atomic bombings and a key voice in global de-nuclearisation efforts -- is worried by the fact that nuclear-armed India has not been a party to the 1970 Nuclear Non-Proliferation Treaty. The Delhi-Mumbai industrial corridor, which was officially in December 2009, could prove to be a big leg-up for Indian manufacturing. This industrial corridor will have several supporting infrastructure projects such as power facilities, rail connectivity to ports en route and would also cover development of ports on the west coast of India. Along this corridor, several industrial estates, Special Economic Zones and clusters with high quality infrastructure are proposed to be developed to attract more investments, including from Japan. The two countries are targeting some "early bird" ventures that will take off soon. Over the years, the Indo-Japanese relationship has grown in diverse fields. However, it is in the fields of trade, business and infrastructure that have been focussed. Both sides aim to raise the trade figure to $20 billion by this year. Furthermore, partnering in developing infrastructure and tying up with industry in a variety of fields, such as automobiles, has prompted the Japan-India Business Leaders Forum to describe economic relations between India and Japan as among the richest in potential both in Asia as well as in the world. As reported in the Japanese media, from 2006 to 2010, 27 projects have brought to India Japanese FDI of around $5.5 billion Japanese joint ventures in India are also contributing to India's exports to third countries; for example, Maruti Suzuki exporting its cars to various parts of the globe. These trends indicate that a qualitative shift in the strategies being followed by Japanese companies, which have started considering India as a future export hub for their products. If the same trends continue, they are likely to facilitate export from India in the future. The number of Japanese business establishments operating in India has also increased. It is estimated that there are more than 500 Japanese business establishments in India. The fact that India continues to be high on the radar of the Japanese business community was brought out again as late as December 15 2009 when the Japan External Trade Organisation (JETRO) released the results of its latest survey on business operations of Japanese-affiliated firms in 17 countries/regions including India. China appears to be Japan's main concern both in strategic and economic areas. In August, China has leapfrogged Japan as the world's second biggest economy. Its current growth rate is about 9.1% per cent. Japan has also raised the issue of military expenditures of China without transparency and voiced concerns about China's military muscle. Furthermore China has been assertive in claiming the islands in the South China Sea. Washington has weighed in saying it considers the peaceful resolution of disputes in the South China Sea in its national interest and stressing the importance of "freedom of navigation" in the area. At a time of diplomatic tension between Japan and China on the claim of disputed island in the East China Sea, Japanese Prime Minister Kan seems to have turned his attention to India for economic and strategic reasons. This visit signifies that both India and Japan have come to the conclusion that Asia cannot mean China alone.
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