Japan146;s rising yen for India

Shinzo Abe8217;s visit to India will have a strong economic component. He comes along with a hundred businessmen, many of them top CEOs

The visit of Japanese Prime Minister, Shinzo Abe, to India on August 20 is expected to take forward the idea of a comprehensive India-Japan strategic partnership 8212; first conceived during Prime Minister Manmohan Singh8217;s visit to Tokyo last December. True, Abe is facing a political volcano at home, following the defeat of his party in the recently held House of Councillors8217; elections and the defeat may propel him to review his policy priorities on the domestic front. His foreign policy priorities, however, are unlikely to witness major change.

Abe8217;s drive to build harmonious relationships with Japan8217;s immediate neighbours as well as with South Asia does not show any sign of diminishing. Such an Asia-centric policy framework is based on the premise that Japan8217;s economic vulnerability increasingly makes it incumbent upon the country to remain engaged in the region, economically, politically, strategically as well as culturally. It is against this background that Abe8217;s visit to India has to be seen. So far India-Japan relations have been focusing predominantly on the economic aspects. However, the centuries-old cultural ties are now being re-discovered, more specifically the common Buddhist heritage.

There are conservatives within Abe8217;s government who perceive such an external orientation as detrimental to the country8217;s interests. Also, the average citizen has traditionally shown little concern with his or her leaders8217; external policy agendas although, generally speaking, people have not taken kindly to the perceived hawkishness in Abe8217;s foreign policy and his attempts to introduce structural reform to stimulate the economy. Yet, whatever his domestic compulsions may be, Abe cannot afford to turn inward in his policy-making in view of Japan8217;s increasing dependence on the outside world. What is commendable is that his foreign policy has a greater Asian orientation, despite the fact that such a focus is not to the liking of America, Japan8217;s strategic partner.

Abe8217;s visit to India will have a strong economic component. The new hotspot of Japan8217;s economic focus in India is now the Delhi-Mumbai Industrial Corridor DMIC, a 90 billion initiative which has caught the imagination of Japanese companies. That Abe will be accompanied by almost 100 businessmen, many of whom are CEOs of top Japanese companies, is a demonstration of Japan8217;s intent to strengthen its economic partnership with India. In fact many of these companies, like Mitsui, Hitachi, Mitsubishi, Honda and Orix, have started identifying potential areas of investment around this corridor.

The DMIC project is very important for both India and Japan. It will provide investment opportunities for Japanese companies on an unprecedented scale. Work on the 1,483-km industrial corridor is expected to start next year. As many as 250 projects would be part of the corridor in sectors such as roads, ports, industrial parks and SEZs. It is expected that Abe may announce a Japanese contribution to the 250 million project development fund for the corridor. A detailed report for the DMIC project is expected from both countries by the end of the year.

Abe will also be accompanied by 12 vice-chancellors of top Japanese universities, so there is a distinct educational component to this visit. It will provide an opportunity for senior Japanese university officials to negotiate with their Indian counterparts and institutionalise exchange programmes and the instituting of research projects.

The Left has looked askance at India developing a strategic and security partnership with Japan. But Abe has also planned a visit to Kolkata where he is expected to unfold an economic agenda that is bound to disarm the Buddhadeb government. In any case Japan8217;s Mitsubishi Chemicals is believed to be the most successful foreign investment in Bengal, and Abe would certainly like to use that as a model for the India-Japan partnership as a whole. Abe will visit Netaji Bhavan, pay homage to Rabindranath Tagore and inaugurate a new Japanese cultural centre at Kolkata. The Japanese have an old link with Bengal: they are grateful for the role played by Justice Radha Binodbihari Pal in helping the country emerge with its honour intact after the Second World War. Abe is likely to convey Japan8217;s gratitude to the Kolkatans.

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That the Japanese economy is on a revival path is good news for India. Japan8217;s GDP accounts for 10 per cent of the world GDP and the Japanese economy is growing at 2 to 3.3 per cent for the past two to three years, ahead of the world average of 2.7 per cent. It is also very much at the centre of things when it comes to technological innovation and R038;D. So, doing business with a country that has such impressive characteristics and principles should be to India8217;s advantage, and entrepreneurs here should seize the potential of the moment.

The writer is chief programme officer, The Japan Foundation, New Delhi. Views expressed are personal