The Japan-India Factor

By+Kerry+Brown

India and Japan at first sight seem unlikely close allies. One， India， is a hugely diverse country， embracing many different languages and ethnic communities， with a modern political system born from colonial occupation under the British. The other， Japan， is an island state highly uniform in language and ethnicity that was largely closed to the outside world till the late 19th century， and which then industrialized rapidly and undertook aggressive colonial attacks on many of its neighbors. How is it possible for India and Japan to forge a common understanding of each other and a framework to cooperate in， in view of all these differences？ Can they really have much in common？

Sharp focus

In fact， the visit by the newly elected Indian Prime Minister Narendra Modi to Japan in September is merely the latest installment in several decades of dialogue and understanding. For a new and ambitious leader keen to energize the economy of his country， and looking for more diverse international partnerships， Japan is not a strange choice for Modi to concentrate his attentions on. Since the late 1990s， Japanese companies have been some of the largest investors in India. The Japanese Government has granted India the largest amount of development assistance they have ever deployed abroad. In 2000， then Japanese Prime Minister Yoshiro Mori undertook a visit to India in which he talked of a closer strategic partnership. This intensified in the 2000s， culminating in the declaration in 2006 under Modis predecessor Prime Minister Manmohan Singh of a “Joint Statement Toward Japan-India Strategic and Global Partnership.”

Unpacking the full potential of the 2006 agreement was Modis primary focus in his 2014 visit. The simple fact is that， as with China， India could do a lot better in what it achieves with the relationship. In 2012-13， India exported $6 billion to Japan， and imported $12 billion. This asymmetry is a problem. For Modi， the best strategic placement would be to have a relationship where more Japanese investment can create jobs in India， and where India is able to figure more prominently in the global supply and manufacturing chain， addressing its poor export position. With an eye to rising wages and associated costs in China， India is aware that it can emulate the Chinese model by competing with it to produce manufactured goods. Hampering this is the poor state of infrastructure that India currently has， and here too Japan can be helpful， supplying investment and know-how.

For the Japanese too， the significance of future growth in India cannot be ignored. With per-capita levels of wealth of under $3，500 at the moment， India is the poorest of the BRICS countries. But Modi made pro-growth policies and addressing rising unemployment a core part of his election manifesto. And one of the best ways of developing this is to improve the transport and business infrastructure. The country is deep within the sort of transition that China has managed before it， lifting people out of poverty， and trying to build the foundations of a more prosperous country. For the rest of the world， that means a major investment opportunity. Growth in India will have to rise. Indian consumers are going to become more important. Partnerships to enter the India market， which is often highly fragmented， are important. In terms of tactical placement， therefore， Japanese Prime Minister Shinzo Abe cannot ignore the potential of this market， and has to build on the Japanese presence and commitment already there.

And that， more than anything else， explains Abes solicitude during the Indian leaders visit to his country. Modi is a new leader. Investing time and effort in him will pay dividends for Abe in the remaining years of his current term of office， with the possibility that the Indian prime minister may well be around for a decade or more. Getting him on his first major visit in the region is a big deal. Abe has also recognized this with the symbolism of the visit， travelling to Kyoto to welcome the Indian dignitary and his delegation， cutting against normal protocol.

Asian geopolitics

Geopolitically， the visit is also very significant. The former Economist editor Bill Emmett in a book from 2007， Rivals， talked of the trilateral relationship of India， China and Japan as one of fierce competition. Each country was looking for advantages in an increasingly competitive global environment， in order to emerge economically preeminent within the region. Chinas performance has been most successful in the last two decades， but India is aware that with a population that is set to overtake Chinas within the next decade， it has to also produce huge amounts of growth. Disappointment in the economic stagnation in the last years of the Singh premiership was one of the key ingredients that helped Modi win his huge victory earlier this year. Unlike Abe， he comes from a non-elitist background. But like Abe， he has made government bureaucracy one of his chief targets. Ideologically， the two are more similar than at first they might appear， fighting against structural problems in their own economies which have proved resistant to change in the last decade and now have to be dealt with. In this context， pragmatic strategic relations with each other make sense.

China， however， has to be wary of this sort of relationship. India is a huge neighbor， and one with which it is still in dispute over two large border areas. Problems with Japan have been ongoing over the last few years， particularly over the disputed maritime issues in the East and South China Seas. President Xi Jinpings visit to New Delhi planned in September， the first to the country since he came to office， is therefore hugely important， because it will set the China-India relationship within the context of that between India and Japan， and highlight the potential for the two countries to work more closely with each other. At the moment， like with Japan， China enjoys a trade surplus with India， largely only importing resources. Seeking a more diverse economic relationship is important， and one that sets out more clearly and powerfully the shared interests between the two countries as the worlds largest developing and emerging powers is immensely important. If both leaders are able to create a bold new vision of the world and their role in it， the potential is almost limitless. As markets， as regional powers， as sources of technology， emerging consumption and finance， the two would have the potential to reshape much of the coming century because of the size of their populations and their current and future economic role.

Abe has pledged $33 billion in public and private investment over the coming five years during Modis visit. Getting pulled into a contest to see who can pledge most， however， would be futile. China can offer India very different things， not least its own knowledge of how to develop human capital in its society and how to build a modernizing transport infrastructure. For all its potential， India still has huge amounts of poverty， with educational and health levels far lower than its large neighbor. Sharing of experience and perspectives here has been ongoing for a number of years， but under Modi， perhaps it can intensify.

Whatever China， India and Japan might feel about each other， they are the key nations in the greater Asia region， and a harmonious relationship between them is important for the stability of the whole region and its future success. In the past， they might never have talked much with each other， and certainly not trilaterally. Perhaps the moment for more talk between each other has come. They have an opportunity now to create a joint understanding of what they want for the future， and how they can best work with each other to optimize this. For India， the fact that it has the worlds second and third largest economies right next to it is a massive asset. For China and Japan， the rising living standards and potential of the 1.2 billion currently in India is also a huge opportunity. This is why the visits between India， China and Japan are amongst the most important diplomatic events taking place at the moment， and ones that deserve close attention from the rest of the world.