India and Japan to deepen defense, trade ties

It's been described as a relationship in an upward trajectory. And ties between India and Japan are likely to get a further boost when PM Abe visits New Delhi for the 9th annual Indo-Japanese summit scheduled for December 11-13. While leaders of both nations have institutionalized the annual visits, the upcoming meeting will be closely watched given that Abe and his Indian counterpart Narendra Modi are likely to sign a host of key investment, defense and energy-related agreements.

The leaders of Asia's second and third-largest economies are also expected to review the implementation of a series of decisions made during Modi's 2014 visit to Japan, in which the two sides decided to elevate their ties to a Special Strategic Global Partnership and significantly boost trade ties.

Against this backdrop, James D. J. Brown, a Japan expert at Temple University's campus in Tokyo, argues that Abe's trip to India will be "highly significant" in both symbolic and practical terms. "This visit not only further entrenches Japan's close relations with India, but it is also seen - especially in Japan - as an effective way of counter-balancing the rise of Chinese power within Asia," Brown told DW.

A civil nuclear deal?

A key priority of the Abe-Modi talks will be to advance negotiations on both defense ties and civil nuclear energy cooperation. In fact, both sides are working to seal a nuclear pact during the three-day summit. A key factor driving the negotiations is India's desire to significantly increase the size and sophistication of its nuclear energy sector, not least in order to help to reduce the country's air pollution woes.

Japan, on the other hand, wants to clear the way for the export of its nuclear technology to India, says analyst Brown. "Given the enormous problems the Japanese nuclear industry is facing domestically, international contracts have taken on ever greater importance."

Despite these incentives on both sides, it seems unlikely that a deal will be signed on this occasion. "There are still some hurdles from the Japanese side, since India has not yet signed the Nuclear Non-Proliferation Treaty. Therefore the discussions will aim to make gradual progress towards reaching a bilateral civil nuclear pact," Rajiv Biswas, Asia-Pacific Chief Economist at the analytics firm IHS, told DW.

Michael Kugelman, a South Asia expert at the Washington-based Woodrow Wilson Center, has a similar view. "This is the closest two sides have ever been to signing one. But there are a lot of delicate matters still to be worked out. And given that nuclear issues are so sensitive in both countries, they will insist on strict safeguards."

Defense secrets

Also likely to top the agenda are defense-related issues. To be specific, Japan and India are expected to agree on measures aimed at preventing the leak of technological secrets - a deal which would pave the way for arms transfers between the two countries.

"This is significant because the stricter controls that this agreement will establish are considered an essential prerequisite for Japan to increase cooperation with India in the field of defense equipment," said Brown. Above all, having eased its long-standing restrictions on arms exports in April 2014, Tokyo is eager to increase sales of military technology overseas, he added.

The first major defense deal likely to be finalized during Abe's trip relates to the joint production of Japan's US-2, an amphibious plane that Japan's Self-Defense Forces use for search and rescue operations as well as maritime surveillance.

But Tokyo's interests in this matter are not only economic. "The Abe administration has been seeking to strengthen security relations with all countries in the region that could assist to balance against the rise in Chinese power. This policy has already been enacted with the Philippines, Vietnam, and Australia, and the same is being undertaken with India," Brown pointed out.

Smart cities and a bullet train

Apart from defense and energy-related issues, the Japanese side will likely use Abe's visit as an opportunity to promote Japan as an infrastructure partner for India. As economist Biswas points out, urban development is a key area of Japanese development cooperation with India, with Tokyo aiming to help New Delhi design and plan new townships and industrial estates in the Delhi-Mumbai Industrial Corridor, as well as new smart cities and townships in the states of Maharashtra and Andhra Pradesh.

Another example is related to railways. For many years now, Japan has been eager to export its high-speed rail technology to India, a country whose rail infrastructure requires significant new investment. Tokyo is now providing official development assistance to India for many railway projects, including the development of urban mass rapid transit (MRT) systems in major Indian cities, including an extension project in Delhi, said Biswas.

Moreover, the Indian government is shortly due to decide on whether to go ahead with the first "bullet train" project between Mumbai and Ahmedabad, as the Japanese offer a soft loan for the $15 billion project at an interest rate of less than 1 percent. The project could cut short the travel time in the 505-kilometer corridor from seven to two hours.

'A natural convergence'

But why elevate the ties now? Japan and India are two of the oldest democracies in Asia and among its three biggest economies. In many ways, analysts argue, they make natural partners given that they have no serious disagreements - such as territorial disputes - and share concerns about the rise of China. And yet despite these factors, they only recently decided to take the relationship to a higher level.

While the latest progress can be seen as a reaction to China's growing assertiveness in Asia, analysts argue that the "personal chemistry" shared by PM Modi and his counterpart Abe may also be contributing to the improvement in relations.

"Although they no doubt make a particular effort when in front of the cameras, it does seem that the two leaders do genuinely get along well. This is perhaps helped by the fact that they are both nationalists who are not afraid of controversy," said Brown.

Dhruva Jaishankar, a South Asia specialist at the German Marshall Fund of the United States, agrees. "Modi is a 'Japanophile,' and Abe retains a strong personal interest in India. They both have similar worldviews and ambitions, their countries share strategic priorities and want to achieve domestic economic transitions with the other's help, so there is a natural convergence." And these personal ties may be further strengthened during the upcoming visit as Abe is expected to accompany Modi on a visit to Varanasi, the Indian Prime Minister's home constituency.

India's 'Act East'

The improvement of Indo-Japanese ties are part of Modi's "Act East" policy, which aims at strengthening relations with Asia-Pacific countries - such as Vietnam, South Korea, Japan and Australia - in line with India's growing economic and strategic interests.

Hence, for both Abe and Modi - who had close ties with Japan ever since he was Chief Minister of Gujarat - a key priority has been to boost bilateral trade ties which in 2014 amounted to a relatively low $15 billion. In fact, India accounted for only 1.2 percent of total Japanese exports, whereas China accounted for 18.3 percent of total Japanese exports in 2014," according to Biswas.

In order to change this, the two countries agreed in last year's Indo-Japanese summit that Japan would double its private and public investment in the South Asian nation to a total of 3.5 trillion yen ($33.6 billion, 25.5 billion euros) over the course of five years.

A positive outlook

So what does this mean for the future? Smruti Pattanaik, a research fellow at the New Delhi-based Institute for Defense Studies and Analyses (IDSA), says it is likely that the two countries will share a close relationship in the mid and long term, which will grow even stronger as their strategic interests increasingly converge. "As Japan becomes increasingly engaged with India economically, the two countries will also have strategic convergences on global issues," said Pattanaik.

South Asia expert Jaishankar also expects steadily improving ties. "Both leaders are politically secure for a few years, and they realize the need for enhancing economic and security relations with each other to reach their political and strategic objectives."

But there are also limitations, as Jaishankar underlines. "India is not a replacement for Japan's alliance with the US, nor is Japan able to offer everything that India seeks, but there is no question about the general trajectory for the medium-term future."

As for the position of the United States, Japan's closest ally, analyst Kugelman points out a stronger Indo-Japanese relationship is one that is enthusiastically supported by Washington. "We can imagine that the US government will do its part to push these two countries to deepen their relations even more."