Japan, India's 'Swing' Power

In the popular imagination, India's relationship with Japan begins and ends with bullet trains. Of course it doesn't.

Japan is emerging as a "swing" power in the complex trilateral relationship between India, the United States and China.

At the heart of the India-Japan entente cordiale is geopolitics and business. The mix resonates in Tokyo and New Delhi. The personal chemistry between Japanese Prime Minister Shinzo Abe and Indian Prime Minister Narendra Modi is a bonus.

What's clear is this: whichever government is in office in either country, the India-Japan partnership is set to flourish. The key areas of cooperation: nuclear energy, infrastructure investment, technology transfer, manufacturing and defence.

The Rs 90,000-crore bullet train between Mumbai and Ahmedabad has monopolised the headlines. Critics cavil that the money (lent by Japan International Cooperation Agency - JICA - at a negligible interest rate of 0.25 per cent a year) should be spent on refurbishing India's shambolic railways network.

That's true but misses the bigger picture. Along with the Mumbai-Ahmedabad "bullet", Japan is also quietly working on modernising India's decrepit railway stations. Japanese investment in railway infrastructure outside high-speed trains is now at an inflection point.

The Japanese are particularly keen to use India as a manufacturing base. Japan has long been China's largest FDI contributor. However, following the festering dispute over the Senkaku islands in the East China Sea, Tokyo's long-term vision is to develop India as a manufacturing hub for its industries. India's low-wage economy and skilled workforce fit neatly into this vision.

Wages and nationalist antagonism towards Japan are both rising in China. India with its underdeveloped infrastructure, huge marketplace, democracy and rule of law presents Japan with a valuable ally as it seeks an increasingly assertive global political and economic role. India is a more than willing suitor. It sees Japan as a long-term source of technology and investment.

Japan plans several industrial zones in India. In one such zone in Rajasthan, Japanese executives have set up a mini-Japan with sushi eateries, Japanese-language schools and neat little apartments fitted with high-tech Japanese-style toilets.

The Delhi-Mumbai industrial corridor in which Japan is heavily invested will further strengthen economic ties. The civil nuclear deal between the two countries, awaiting ratification by Diet, Japan's parliament, will take the partnership further.

Without the deal, US nuclear reactor contractors like GE and Westinghouse cannot build nuclear power stations in India under the India-US civil nuclear agreement. The reason: many critical components of these reactors are made by Japanese companies like Mitsubishi.

During his recent visit to India, Prime Minister Abe pledged an investment of Rs 83,000 crore in a slew of industrial projects under a "Make in India" fund apart from the loan earmarked for India's first bullet train. But beyond business lies politics. Abe is keen to build a triangular partnership between Japan, India and the US. He rightly sees India emerging alongside China and the US as one of the world's three largest economies by 2025.

In a sharply polarised world, trade, climate change and counter-terrorism are key issues. For India's voice to be heard - as it was during the climate change summit in Paris earlier this month - New Delhi must build alliances across countries and blocs.

The deadlock over global trade and farm subsidies at the recent WTO meet in Nairobi underscores how difficult it can be to deal with entrenched Western interests. Given its close ties with Washington, Japan represents an important bridge between the West and the East on, for instance, India's bid for a permanent seat in the United Nations Security Council (UNSC) and developing a fairer global trade regime.

Ranging across business, technology, defence and geopolitics, India's alliance with Japan could thus develop into one of New Delhi's most important strategic partnerships.