Indo Japanese ties on fast track

Chemistry between Prime Ministers Narendra Modi and Shinzo Abe has imparted much boost to rather dormant bilateral relations. Indeed, Indo–Japanese ties have never been as strong as they are today. The closeness of Asia’s second and third largest economies augurs well for both.

It also allows greater leeway to India that would not like to place all its eggs in the Western basket. Most significant development is a framework agreement on civil nuclear energy cooperation, which is a win-win for both economies. Another landmark agreement is Japan’s pledge to fund India’s first rapid rail transport system, bullet train project linking Mumbai with Ahmedabad.

From “Chal beta Japani” call in Raj Kapoor’s “Shree 420” (1955), a torn shoe symbolising brittleness of things Japanese, we have come a long way this month with the visit of Prime Minister Shinzo Abe. The chemistry he enjoys with Narendra Modi has helped as much as the one he had with predecessor Manmohan Singh. Indeed, India–Japan ties have never been as strong as they are today.

If Abe hosted Modi at the traditional Japanese tea party when the latter visited, the Indian PM responded with “Ganga Aarti” at Varanasi. After long years of sluggishness, some of which can be blamed on India’s cold war era reservations, the trajectory of upward swings began only a decade ago. It has accelerated in the last few years. The closeness of Asia’s second and third largest economies augurs well for both. It also allows greater leeway to India that would not like to place all its eggs in the Western basket.

Abe visited India from December 11 to 13 as part of a series of annual summits since 2007. A number of new agreements and memoranda of understanding were signed. Some of these pacts were expected, but the visit also saw some surprising and significant announcements being made.

Far from being formally and finally concluded, as much remains to be done at both ends, the most significant development was a framework agreement on civil nuclear energy cooperation. The proposed agreement would allow Japanese companies to directly export nuclear plants. But it needs further technical and legal negotiations as well as approval from the Japanese parliament.

It is a breakthrough for India after five years’ negotiations that it paves the way for third country suppliers like the American Westinghouse, having Japanese investment and collaboration with Hitachi, to export nuclear technology to India. This helps in the long run to expand India’s nuclear energy programme. Talks begun in 2010 stalled after the Fukushima nuclear disaster amid strong anti-nuclear protests in Japan. Since then, Japan has been running only two of its nuclear reactors and has not set up new ones.

But its anxiety to export them stems from its sluggish economy, what with its cars no longer dominating the world auto market, and much else that has been adverse. Abe wants Japan to be a nuclear export super power in order to give a much-needed boost to its nuclear industry. There is a strong anti-nuclear lobby in Japan, however, and opposition to the India deal has been strong since India is not a signatory to the nuclear non-proliferation treaty (NPT). How Abe surmounts this opposition remains to be seen.

While Japan does export nuclear technology and equipment to many countries, India will be an exception. The two sides agreed on the framework on the condition that Japan would suspend nuclear cooperation, if India carries out further nuclear tests or reprocesses spent nuclear fuels for military purposes.

Ostensibly, Japan is not taking into consideration India’s earlier declaration of no further tests. Hence, the agreement implies that Japan has acknowledged India’s status as a nuclear weapons state and is willing to do business even though it is not a party to the NPT. This is significant.

A framework agreement on defence technology transfer and cooperation was another significant development. Talks have been on for long for Japan’s sale to Indian of the Shin Maywa

US-2 amphibious aircraft. Although a sale pact was not concluded, experts say it is a matter of time before that happens. After long years of pacifism in the wake of the Hiroshima and Nagasaki nuclear trauma, Japan has lifted bans on arms exports. India, as a leading arms importer, is obviously an important market for Japan. The sale of this aircraft will signify a landmark development in Japan’s postwar arms policy.

It is clear that Japan and India are emerging as key strategic partners. Along with the United States and Australia, the two are emerging as collaborators in the Asia Pacific region. Japan has joined the Malabar naval exercises with India and the United States. Japan and India already hold joint dialogues involving high-ranking officials from both countries’ defence and foreign ministries.

Not surprisingly, China has reacted. Forever sensitive to any development that even obliquely connects with it. Beijing’s envoy in New Delhi has urged India to pipe down in its naval sojourns.

Now we come to the most visible in the public discourse and perhaps, also the most controversial of the Indo-Japanese deals that materialised during the Abe visit.

This is the landmark agreement coming with Japan’s pledge to fund India’s first rapid rail transport system, bullet train project linking Mumbai with Ahmedabad. Under its yen loans programme, Japan will provide a highly concessional, long-term credit loan of $12 billion over the life of the project.

The project is likely to start in 2017 at a total cost of $15 billion. Under the agreement, a Japanese contractor will be responsible for the mammoth project. The entire loan will be tied to Japanese technology and Japanese corporations, making the arrangement water-tight and hopefully, more efficient. Tokyo has won the Indian deal over offers India received from some other leaders in this field. This is part of the economic hard-sell as Japanese corporations need government-funded projects for their financial flow.

Following the India deal, Japan is now wooing Malaysia and some others to sell the bullet train. Only recently, it lost out to China that got the Indonesia deal, which was a major setback. Hence, while the India deal is economic in nature, it has deep political connotations for Japan. The Abe administration did not want to lose out this time since India is emerging as a key strategic partner for Japan.

There will be many jobs in plants that India will need to set up for the rolling stock required for the bullet train that is envisaged to go further south from Mumbai to Bangalore, Hyderabad and Chennai. All this merges well with Modi’s “Make in India” plans. He has already heralded a “revolution in Indian railways and is speeding up India’s journey into the future.” However, does India really need a bullet train? Criticism had begun to mount even before the Abe visit and the tempo is likely to rise. There are apprehensions that bullet train would incur cost and time overruns, going by past performance, including that of Japan-aided Delhi-Mumbai Economic Corridor.

Critics ask whether spending on bullet train would divert funds from the Indian Railways’ much needed, much-delayed modernisation. The government, they say, has yet to commit even a fraction of the Rs 8 lakh crore required for this.

True, the Bharatiya Janata Party had promised a “golden quadrilateral” in its manifesto that would link the four mega metros, a distance of over 5,000 km. But Ahmadabad was on the list. Is it because Gujarat is Modi’s home state?

The world’s third-largest rail network that employs 1.36 million people has poor infrastructure and has recurring losses. It lost Rs 30,000 crore last year alone. Its rolling stock, signal system and gangways need refurbishing. With bullet train, is India going to miss the woods for the golden trees? The short point is misplaced priorities, ostensibly to earn political brownie points.

Of course, the Japanese cannot be blamed for Indians choosing Ahmedabad and/or the bullet train. The relationship remains lop-sided in that only a few areas are covered. Greater cooperation, at the industry, academic and people-to-people levels, is needed. Indeed, the Modi government can make relations with Japan the core of its Act East Policy.