Dialogue January-March, 2007, Volume 8 No. 3
Japan-India: Moving Towards a Global and Strategic Partnership
Lalima Varma
Prime Minister of Japan Shinzo Abe in his book entitled, “Towards a Beautiful Country” says that, “it is of crucial importance in Japan’s interest that we further our relations with India”. He also states that, “it will not be a surprise if in another ten years, Japan-India relations overtake Japan-United States and Japan- China relations”.1 The same expectations have been expressed by the President of India Abdul Kalam. In his address to the joint sitting of the Parliament on 23 February 2007 said, “India’s relations with Japan have entered a new era with the launch of a global strategic partnership in 2006".2 This article attempts to understand the reasons behind this optimism shared by the two countries of having very close relations in the future. What are the changes in the international and regional environment which have compelled the two countries to perceive each other differently and feel the need to convert their partnership into the most important bilateral relations in the region. Presently the mood is upbeat and the prospects of relations deepening in the next decade or so seem to be very bright. However, at the same time many analyst are not very optimistic and opine that with each country being at different stages of economic development, culturally very different from each other with Japan being fairly homogenous society and India extremely diverse, institutional and language barriers, in addition to many other obstacles it will take a long time for the two countries to forge a very close relationship. However, as far as India and Japan are concerned the basis on which the relations are being built are very sound.
Historical Relations:
Unlike with the other Asian countries like China, the two Koreas and some of the Southeast Asian countries who were partially or wholly colonized by Japan and till date nurture bitter memories of the alleged atrocities committed by their Japanese masters India shares a cordial past with Japan. Most Japanese have warm feelings towards India which is the land of the Buddha their god. Buddhism reached Japan from India via China and Korea. During the Meiji period [1858-1912] Japan’s victory in the Russo- Japanese war (1904-5) inspired the Indians fighting for freedom from British rule. Noted Indian Nobel Laureate Rabindranath Tagore visited Japan and also invited Japanese scholars like Okakura Tenshin to Shantiniketan.
Japan defeated in World War II till date fondly remembers Prime Minister Jawaharlal Nehru’s affectionate gesture of sending a baby elephant in 1949 named Indira to the Japanese children. In fact Nehru was a very much admired personality in Japan. India did not claim any war reparations from Japan. Indian Justice Radha Binod Pal’s dissenting judgement in the Tokyo War Crime Tribunal was also very much appreciated by the Japanese. Soon after Japan regained sovereignty in 1952 Japan and India signed the Peace Treaty. Japanese Prime Minister Kishi Nobusuke visited India in 1957. A cultural treaty was concluded between the two countries. The same year Prime Minister Nehru visited Japan. In 1958 India was the first country to receive developmental aid from Japan. Soon after Nehru’s visit Indian President Rajendra Prasad was invited by the Japanese Emperor to visit Japan. In November 1960 Crown Prince Akihito and Princess Michiko visited India.
However, despite the friendly feelings and a promising start relations between the two countries did not expand which to a large extent can be attributed to the prevalent East-West rivalry, which determined international relations. Japan was closely aligned with the US and India though a non-aligned country due to its treaty with the erstwhile Soviet Union was placed in the Soviet led block. Moreover, India and Japan both followed economic policies which were not compatible with each others. Japan adopted capitalism and India a mixed economy. It was difficult for the foreign companies to have large scale business interests in India. From 1961 when Japanese Prime Minister Ikeda Hayato visited India till Prime Minister Nakasone Yasuhiro’s visit in 1984 almost after a gap of 23 years is enough commentary on the fact that the relations did not really move forward satisfactorily. However, this does not imply that there was total absence of interest in developing relations. Dialogue and exchanges at a lower level continued to take place. Foreign ministerial level meetings were held regularly. The India-Japan Committees for Studies on Economic Development was established in 1962 and frequent meetings of the Joint Meetings of the India-Japan Business Cooperation were started in 1967.
Meanwhile, however, Japan had emerged as an economic super power. The 1970s and 1980s saw Japan confronted with major economic problems with the United States as its most important economic partner. In it trade with the US as well as with some other western countries the surplus in favour of Japan was growing at rapid pace and it was becoming imperative for Japan to diversify its economic interests. With the appreciation of the Yen after the Plaza agreement in 1985 it became more beneficial for Japan to locate its production bases in other countries. To begin with Japan’s preference was East and Southeast Asian countries. Till the end of the 1980s Japanese investments in these this region flowed in on a large scale. However, gradually it became quite evident that most of these countries were not equipped sufficiently to cope up with the huge investments. This development demanded that the Japanese business community explore opportunities for investments and trade in other countries. South Asian region and India in particular appeared to be an attractive destination for investments and other economic activities.
Since the early 1980s Japan had evinced keen interest in developing economic ties with India but not much progress could be made because the Japanese business community found the environment not very conducive for doing flourishing business with India. Lack of infrastructure, work ethics and stringent economic policies, language barriers were few of the reasons which kept Japanese business away from India. The Japanese business houses, however, were also aware of the advantages such as availability of a vast pool of trained and educated technical manpower; a huge market for Japanese manufactured goods; cheap labour and strong legal system; but doing business in other countries was more advantageous so India was not given priority.
It is a coincidence that by the close of the 1980s and early 1990s when Japan was looking for alternative destinations for investments and trade, the Indian government in 1991 decided to liberalize its economic policies. This development encouraged the Japanese business community and the process of establishing strong economic ties was pursued with renewed enthusiasm. The 1990s saw frequent visits by Japanese business delegations and economic relations improved but it did not improve to the extent expected. Trade between the two countries, for example, increased from a mere $ 500 million in 1970 to $ 4 billion in 1997 which increased marginally to approximately $4.6 in 1999 to $ 6.6 billion in 2005. However, if the figures are compared to Japan’s economic ties with other Asian countries like China and the Southeast Asian countries trade with India is miniscule. Japan’s total trade with China increased from $ 89 billion in 2001 and by 2005 emerged as Japan’s largest trading partner surpassing the US.3 Thus, if China is the Japan’s largest trading partner surpassing even the US, India is way down ranking as 28PthP on the list. For India Japan is 10PthP largest trading partner. More important is that the composition of items imported and exported by the two countries has also remained practically the same for long. India’s main exports to Japan are iron ore, marine products, gems and jewellery, cotton yarn and fabrics and some of the items it imports from Japan are transport equipment, iron and steel, electronic goods.
Japan’s total investment in India is very small in comparison to the amount Japan has invested in China and the Southeast Asian countries. Japan’s investments in China is almost thirty times more than in India. Similarly In the last three years the number of Japanese companies having branches in India has increased by fifty percent during the last three years. In 2005 there were about 350 Japanese companies having branches in India. However, the number is small compared to 6,000 companies operating in China and 2,000 in Thailand. Factors enumerated earlier which dissuaded Japanese companies from investing in India are still prevalent. For example due to power shortages many Japanese companies have to generate their own power. Clearly much needs to be done to strengthen economic relations between the two countries.
This insufficient growth of economic relations led Japanese Prime Minister Koizumi Junichiro during his visit to India in 2005 to say in his address to the Confederation of Indian Industries and Federation of Indian Chamber of Commerce and Industry that, “Economic ties are central to strengthening the global partnership established by Japan and India five years ago”. He added that, “Our economic relations are blessed with a huge potential, but perhaps the business communities of the two countries have not woken up to the possibilities.”4 The same concern was also expressed by Prime Minister Manmohan Singh during his visit to Japan in December 2006. In his address to the Japanese Diet he told the legislators that his country was focusing on building infrastructure that would support manufacturers and boost India’s competitiveness and efficiency. India since 2004 is the topmost recipient of Japanese ODA replacing China. Japan’s ODA will be utilized in building and upgrading the infrastructure. He said, “Our trade and investments ties are well below potential. This must change’.5
Post Cold War Era: Shift in Foreign Policy Goals:
The main thrust of Japan’s foreign policy during the Cold War Years was economic interests. However, with the end of the Cold War in 1991-2 Japan’s foreign policy objectives witnessed significant shifts. Though economic interests are still not undermined but at the same time other political and strategic interests are increasingly emphasized upon in foreign policy decision making.
Significant changes were witnessed in international affairs in early 1990s. Disintegration of the erstwhile Soviet Union brought to an end the Cold War which for the last four decades had determined international relations. The US was the only superpower in the world. Japan was apprehensive that its utility as an ally for US in East Asia may gradually reduce and it may not be a good policy to depend entirely on the US for its security. Japan’s economic relations with the US as mentioned earlier were strained since the early 1980s and after the 1990-91 Gulf war Japan’s confidence in its relations with the US received a setback. Japan even after having contributed $13 billion towards the war effort did not receive much appreciation from the US their close ally. This fear of being “abandoned” by the US has to some extent contributed to the Japan’s actively pursuing a foreign policy which would protect its economic and strategic interests without too much reliance on any one power. These developments have compelled Japan to play a more proactive role in regional and world affairs. It was necessary that Japan establish close relations with major countries of the region. Building close political and strategic relations with India seemed to be a good option. However, at this point Japan felt that promoting close relations with China would ensure its security in the region better.
In 1978 Japan and China concluded a peace treaty and in the same year China launched its four modernization programme. Japan extended aid assistance to China to build its infrastructure etc. Providing aid was to serve two purposes one was economic and the other to mend relations with its neighbour with whom it shared a bitter past. Though economic relations during the 1980s did improve but anti Japanese feelings were still widely prevalent. After the Thiananmen Square incident of 1989 in which the demonstration of the students was mercilessly crushed by the Chinese authorities economic sanctions were imposed against China by most western countries and Japan was a party to it. However, Japan was the first country to resume economic relations and also went to the extent of convincing the other powers to restore normal relations with China. This was an opportunity for Japan to strengthen political relations with their close neighbour and convince it of its intention to maintain not only good economic but also political relations.
Though the main focus during this period was to strengthen ties with China attempts were also were being made to build close ties with India. Regular dialogues were held between the two countries at various levels but the main emphasis was on building economic aspect of the relations. One of the non-economic subjects which were frequently on the agenda when the leaders of the two countries met was Japan’s effort to persuade India to sign the Comprehensive Test Ban Treaty and the Nuclear Non-Proliferation Treaty. Japan has been one of the important aid providing countries to India and often aid was used as tool to influence India to be signatories to these treaties Things worsened after May 1998 when India conducted nuclear tests at Pokharan. Japan like other countries was shocked and reacted very strongly by suspending aid to India.
Moving Towards a Global Partnership :
Attempts to restore disrupted relations were initiated in late 1999. During the one year of minimal relations Japan realized that freezing aid to India did not have much impact on the Indian economy. India is a huge country and the amount of aid provided by Japan was not so big so as to have a major effect on the Indian economy. To some extent the quality of aid provided was also such that its suspension did not really make much difference. Almost 95% of the aid is in form of loans and needs to be paid back and the rest is in the form of grants and technical assistance.
More important were other developments which compelled Japan to review its relations with India. The fact that other western countries, more importantly the US, which had severely criticized India for conducting the tests soon normalized relations with India. In March 2000 US President Bill Clinton visited India. Opportunities of expanding business in India took precedence over other issues such as India’s refusal to sign the CTBT and NPT. Opportunities of doing business in India were growing and most countries did not want their relations with India to continue to be stagnant. India’s rapid economic growth, an excellent market with its growing middle class, its edge over other countries in the Information and Technology sector were advantages which many countries could not ignore any more. India drew the attention of the world after predictions were made about India emerging as one of the largest economies in the world in the next few decades by Goldmans Sachs in its BRIC report. According to this report by 2050 China will be the largest economy with a GDP $ 46 trillion, second will be the US with GDP of $ 35 trillion and third will be India with GDP of $28 trillion and fourth will be Japan with a GDP of $ 7 trillion.6 Asia Development Bank also predicted that by 2015 India will become the third largest economy with a share of 14.3% of the global economy.7
About 53 to 54 percent of India’s one billion population is 25 yrs or younger. This figure is important for it makes India an important market and source of labour. In China on the other hand like in Japan working population is expected to shrink in the next one or two decades. One of the major advantages which India has is its large pool of skilled labour. JBIC report in 2005 according to its findings put India just after China as a preferred destination for investments up from the sixth position it enjoyed in 2002. Both India and Japan compliment each other while India has abundant skilled, educated, English speaking personnel, it is short on capital. Japan on the other hand has capital but is short of workers. Other areas where both complement each other is that India has software prowess and service skills while Japan is a reputed producer of quality high tech hardware. India’s enhanced expertise in IT, Biotechnology, pharmaceuticals, and knowledge intensive enterprises have created new areas of cooperation between the two countries. In future Japan may due to declining birthrate and retiring corporate engineers may have to depend on India which produces a sizable number of engineers every year.
However, in case of India and Japan so far, despite the advantage and keenness to strengthen economic relations, things have not progressed satisfactorily. Considering that economic activity between the two countries is minimal it is obvious that the reasons for the two countries to build strong ties are different. Clearly it is the political and strategic objectives which have precedence over economic gains. India’s importance as a strategic partner had increased over the years. India’s cooperation and support was important in maintaining the security of the sea lanes running through South and Southeast Asian waters through which passed Japanese oil tankers coming from the West Asian region. Japan imports more than 85 percent of its oil requirements from this region. Hence the security of the sea lanes is very crucial for Japanese economy. Since the mid 1990s cases of looting and hijacking have increased greatly in this region causing great concern to Japan. In 1999 in the “Alondra Rainbow” incident a Japanese cargo ship was hijacked which was retrieved with the help of the Indian navy.8
The process of normalizing relations began with the visit by Yamamoto Ichita, member of the House of Councilors in October 1999. The following month Indian Foreign Minister Jaswant Singh visited Japan. After the initial ground work was a prepared in January 2000 India’s Defense Minister George Fernandes visited Japan. His visit highlighted the importance of strengthening the strategic relations between the two countries. This was the first visit by Defense Minister to Japan.
Both countries also realized that there are other areas such as terrorism, restructuring of the United Nations, environmental issues etc. besides economic where they could cooperate. The growing importance of the relationship was evident when Japanese Prime Minister Mori Yoshiro during his visit to India in August 2000 announced his intention to develop “Global Partnership with India in the Twenty First Century”. He said that he wanted to build a multifaceted cooperative relationship with India in a wide range of fields. The very fact that he visited Bangaluru first during his visit to India indicated the Japan’s keenness to promote cooperation between the two countries in the IT sector. Atal Bihari Vajpayee visit to Japan in December 2001 completed the process of normalizing relations which were damaged due the nuclear tests. Since then there has been a significant upswing in the relations between India and Japan.
China Factor:
In recent years Japan’s strained political relations with China has further pushed Japan to strengthen ties with India. Relations with China will always be a major concern for Japanese government. The irritants between the two countries such as memories of Japanese atrocities in China, Japan’s close ties with Taiwan and both staking their claim over the Senkaku islands continue to strain relations between the two countries. The possibilities of resolving these issues in the near future seem rather remote. Since Koizumi Junichiro became Prime Minister political relations between Japan and China slipped to the lowest in 2005. Strong anti Japan feeling were ignited to a great extent due to Koizumi’s actions. He determinately visited the Yasukuni shrine where the fourteen war leaders are also enshrined hurting the sentiments of neighbouring countries like China. China feels that Japan has not apologized properly for the atrocities it committed during the pre-World War II period. It is also opposed to Japan’s claim for permanent seat in the Security Council. Rising China in terms of its economic growth and growing military prowess, technological abilities is a cause of great concern for Japan. Japan’s sense of insecurity is reflected in a recent statement made by Nakagawa Shoichi, policy chief of the ruling party. He said that China could bring Japan under its control in the future given Beijing’s increasing military capabilities. “If something goes wrong in Taiwan in the next fifteen years, we (Japan) might also become just another Chinese province within twenty years or so”.9 Japan has also noted with concern China conducting an anti missile weapon test in January 2007, indicates the level to which its technological know-how has been achieved. China’s increasing influence in the Southeast Asian region poses a stiff competition for Japan not only in terms of trade, investments, access to markets but also as a source of raw materials. China’s close ties with countries like Myanmar enables it to have access to the sea. Like Japan , India too is concerned with China expanding its sphere of influence in the strategic Indian Ocean Region, hike in its military budget and its strategic relations with Pakistan. It also notes with apprehension China’s development of military infrastructure in Tibet and other border areas as well as its expanding military cooperation with countries in India’s backyard like Myanmar, Sri Lanka, Bangladesh, Maldives, Seychelles and other countries.10 It is, hence, important that both Japan and India forge close relations to counter the growing influence of China in the region. Both the countries are devoted to building and engaging and managing their relations with China but at the time are concerned and would not like to see China dominate Asia. It is important to have power centres and bilateral relations which can counter China’s ascendancy in the region.
Considering the background of the “cold” political relations between Japan and China, establishment of close relations with India has become more urgent, a fact which was very much apparent during Koizumi’s visit to India in April 2005. A Joint Statement on the “India-Japan Partnership in a New Asian Era: Strategic Orientation of the Global Partnership”, and the “Eight-fold Initiative for Strengthening India-Japan global Partnership” were signed on 29 April 2005 to build overall strong relations.
Shinzo Abe has followed in the footsteps of his predecessor and is committed to strengthen ties with Asia in which he places a lot of emphasis on its relations with India. Abe has described India as a “new partner in Asia” and has proposed a four-way strategic dialogue among Japan, US, India and Australia. It is not surprising that it was at Japan’s insistence that India was made member of the East Asia community. Initially the membership of the community was to be limited to ASEAN+ 3 (China, Japan and Republic of Korea). Japan’s argument is that India’s inclusion is necessary for the economic prosperity and integration of the region. India adopted the “Look East” policy in the early 1990s and since then has been developing its ties with the countries of this region.
Japan is also aware that it is not possible to maintain the stability and economic prosperity of the South Asian region without India’s participation and support. India undoubtedly is a major player in the this region Japan being a major donor to the SAARC countries and also being the only country to have established a Japan Special Fund for SAARC in 1993 underscoring its interest in the developments in the region. Shift in India’s economic and foreign policy will impact the whole South Asian region. Japan realizes that it can play a meaningful and mutually beneficial role in the region by having close relations with India. It was India which supported Japan’s candidature as an observer in the SAARC.
It is important to encourage people to people exchange programmes to disseminate knowledge about each other. Mori during his visit announced fellowships which will enable exchange of five thousand youths between Japan and South Asian region. It is with the view to promoting understanding between the people of the two countries that 2007 was declared as a year India – Japan Friendship year during Indian Prime Minister Manmohan Singh’s visit to Japan from 13-16 December 2006.
Manmohan Singh’s visit is a turning point in the relations between the two countries. The Joint Statement entitled “Towards India-Japan Strategic and Global Partnership” signed on 15 December 2006 envisages all round development of relations, as well as political and economic coordination on bilateral, multilateral, regional and global issues. Besides the Joint Statement, eleven other memorandums were signed or issued covering cooperation in various fields like economic, science and technology, financial, people to people exchanges, cultural exchanges, developing an industrial corridor along Delhi- Mumbai Dedicated Freight Corridor which will have several supporting infrastructure projects such as power facilities, rail connectivity to ports etc. It is, so far the most comprehensive statement concluded between the leaders of the two countries.
The importance attached to the relations is evident from the fact that both leaders agreed to hold summit level meeting annually in addition to regular exchanges between Cabinet ministers holding different portfolios such as like Foreign Affairs, Technology, Tourism and Civil Aviation. Most important was the decision to implement with immediate effect the conclusion of a bilateral Comprehensive Economic Partnership Agreement, the negotiations for which have already been initiated. According to the Joint Statement if all the agreements the two leaders have arrived at are realized over the next few years the relations between the two countries will be one of the most important bilateral relations in the region.
References:
1. Chellany, Brahma, “Japan-India partnership key to bolstering stability in Asia”, Japan Times (edt), 14 December 2006.
2. “Abe to Visit India”, The Asian Age, p.4.
3. Varma, Lalima, “Japan’s Policy Towards East and Southeast Asia: trends in Re- Asianization”, International Studies, vol. 43, no. 1, 2006, p.41
4. “Economic Ties Key to India-Japan Relations:Koizumi”, Indo-Asian News Service, 13 May 2005.http://www.yahoo.com/050429/43/5ycm.html.
5. Yoshida Reiji, Singh urges expansion of India economic ties, Japan Times, 15 December 2006.
6. http:// www. Emb-go.jp/lectures/lecture24html. “India’s ascendance and lessons for Japan “, Ambassador Yasukuni Enoki
7. “India to be Third Largest Economy by 2015” Times of India, New Delhi, 11 April 2005.
8. Varma , n.3., p34.
9. Japan Faces becoming Chinese province.HTUhttp://www.english.people. comcn/200702/28/eng20070228- 352842.htmlUTH.”].
10. Pandit Rajat, “China Hikes Arms Budget to $ 14 bn: Bad News for an Already Worried India’, Times of India, 6 March 2007.