Japan, which has lost its economic and strategic space in India to China, is keenly awaiting Prime Minister Narendra Modi's proposed visit to that country to regain its space.
"The Japanese are very eager not only to invest in India but participate in joint ventures and technology transfer," said Seshadri Chari, convenor of Bharatiya Janata Party's (BJP) foreign policy cell, who visited Japan recently. Chari's visit, on the invitation of Japan-India Association and other agencies, is perceived to be a curtain-raiser for the PM's trip.
According to sources, Chari has met Japan's finance minister and minister in-charge of foreign affairs and other top government officials, and has submitted his report to external affairs minister Sushma Swaraj.
Japanese companies believe India is ready for the next phase of "Maruti-Suzuki-like" partnership. The Japanese establishment expressed its willingness to supply ShinMaywa US-2 STOL search and rescue amphibian aircraft and other military hardware and equipment. "India needs to take a stand on Japan's foreign end user's list, which has sought to ban some government entities such as Hindustan Aeronautics, which could be key players in technology transfer. This list needs to be scrapped in total as it has become irrelevant," Chari told Business Standard.
The Indo-US nuclear deal remains a non-starter. Although the previous United Progressive Alliance (UPA) government tried its level best to clinch a nuclear cooperation agreement with Japan, the Japanese were not game for it, as they were "not comfortable with corruption and lack of transparency".
Now with Modi in power, Tokyo sees a paradigm shift in governance. Although the global nuclear industry is pushing hard for the India-Japan nuclear deal, Japanese public sentiment and lobbies remain opposed to it. Anti-nuclear lobby has gained ground in Japan especially after the Fukushima tragedy. "But, Japanese technology is at the heart of nuclear power equipment, be it from Areva in France or White Westinghouse and GE in the US. Their Japanese collaborators namely Mitsubishi, Toshiba and Hitachi will not let these companies make a killing in India unless Japan also benefits from the N-power projects; and that depends on overcoming opposition at home," said Chari. Until then, Indo-US nuclear deal cannot be operational.
However, although India is committed to a self-imposed moratorium on future nuclear tests, Japan would like New Delhi to sign a no-test treaty with it. The challenge before the government would be to carry forward the civil nuclear technology cooperation to its logical conclusion without sacrificing India's interests.
Another area Japan is keen to work with India is Africa. China has made deep inroads in this region. "Japan realises the importance of Indian handholding in the African region where India has a strategic edge over that country. Some African countries are eager for greater engagement with India and Japan," said Chari.
To boost trade ties, India and Japan signed the Comprehensive Economic Partnership Agreement (CEPA) in 2011. CEPA covers services, investment, intellectual property rights, customs and other trade-related issues. Under the pact, only 17.4 per cent of the tariff-lines have been offered for immediate reduction of tariff to zero per cent by India. Tariffs will be brought to zero per cent by 2021 on 66.32 per cent of tariff lines to give sufficient time for the industry to adjust to the trade liberalisation.
The Japanese side has put 87 per cent of its tariff lines under immediate reduction of tariff to zero per cent. This brings on board a large potential for Indian exports, including of commodities such as seafood, agricultural products such as mangoes, citrus fruits, spices, instant tea, most spirits such as rum, whisky, vodka etc, textile products such as woven fabrics, yarns, synthetic yarn, readymade garments, petrochemicals and chemical products, cement, jewellery, etc.
However, Japan has not extended tariff concession for products such as rice, wheat, oil, milk, sugar, leather and leather products. Auto parts and agricultural and other sensitive items have been kept out of the liberalisation schedule. "Expectations from India are still high for benefiting from access to Japanese technology and insights on world-class management practices," Chari noted. According to experts, although Japan is investing great hopes in Modi with New Delhi not clearly revealing its foreign policy road map they are at sea. Not only the Japanese, but the Chinese and Americans are also finding themselves in a similar spot. However, they all see huge opportunities up for grabs. "With a tough bargainer like Modi at the helm of affairs, it may not be business as usual," quipped a foreign policy expert.
