Rather unfortunately, the recent visit by the Japanese Prime Minister Shinzo Abe got relegated to the background in the melee over the Indo-US nuclear deal by failing to highlight significant shifts in bilateral relations.

It is true that both leaders are beleaguered in domestic politics — Abe is in trouble after the drubbing his Liberal Democratic Party got in the Upper House elections, losing majority for the first time and Manmohan Singh’s government is teetering in uncertainty — but that should in no way undermine an important relationship that is in the making with far-reaching implications.

Yet, both leaders managed to cover considerable ground in trying to realise the goals the countries have set, ie to build a comprehensive relationship.

India would be wasting a golden opportunity if it failed to take advantage of current pro-India winds sweeping Japan, especially among political leaders. Like his grandfather (and first Japanese PM to visit India), Nobusuke Kishi, Abe is a known Indophile.

And for the first time, most of his cabinet ministers are most favourably disposed towards India. Moreover, devoid of any historical rancour or the strategic divide that characterised the cold war period, India and Japan share many common values, interests and concerns at both regional as well as global levels.

Expectedly, the thrust of Abe’s visit was on strengthening of bilateral economic relations, which fall woefully far short of their potential — Japan as the second largest economy and India as the fourth largest and second fastest growing economy. In order to bolster this weak link, several initiatives have been undertaken that in a few years time will make enormous impact.

It is equally erroneous to infer that Japan’s new-found interest is mostly because of its political problems with China in the past few years. Without understating the political undertones, there is a growing recognition of India’s rise as an economic power and the enormous opportunities it offers.

India’s reputation in IT, biotechnology, pharmaceuticals a few other advanced technologies, its scientific achievements, a vast pool of skilled manpower, and the perceptible contribution Indians are making to the American economy in a variety of ways have in no small measure contributed to the changed Japanese attitude.

There is also growing realisation that Japan as a developed economy but with shrinking population and India as a developing economy but a rapidly expanding market can complement each other. Hence, for the first time heads of several leading Japanese universities  accompanied Abe for tie-ups with IITs with a view to attract Indian students, scientists and engineers.

The proposed 1,500 km Delhi-Mumbai Industrial Corridor (DMIC) project estimated to be built at a cost between $100 and 150 billion covering six states, in which Japanese private businesses are anticipated to participate in a big way, will help realise the “strategic economic partnership” the leaders have envisaged.

Equally important is the Dedicated Freight Corridor (DFC) project linking Delhi and Mumbai and Delhi and Kolkata whose estimated $20 billion funding Japan is footing. Additionally, to avoid the 1997 financial crisis that hit the East Asian region, India and Japan have also signed a currency swap arrangement whereby the stability of the currency is not subjected to speculative attacks.

India has been the largest recipient of Japanese Official Development Assistance (ODA) in the last four years, which Abe has also committed to maintain. Interestingly, whereas allocations for ODA have decreased, India’s share has been increasing. As in China, the Japanese ODA can play a critical role in India’s infrastructure development.

The proposed Comprehensive Economic Partnership Agreement (CEPA), which is being negotiated and likely to be signed by the end of this year, will catapult economic relations to a qualitatively higher plane. As the name indicates, CEPA is indeed comprehensive encompassing trade, investment, services, etc.

Thanks to the concerted efforts, the bilateral trade which used to hover around $4-5 billion a year, a decade ago, is expected to reach $10 billion by the end of this year and may reach the target of $20 billion by 2010. Similarly, Japanese direct investments, which are beginning to steadily rise, will dramatically increase once the above plans materialise.

In the light of intense focus on the Indo-US nuclear deal, there had been considerable speculation about Japan’s position in the Nuclear Suppliers Group, given its nuclear sensitivity and India being outside the NPT framework. The bilateral statement makes a mention of cooperation in this field.

Interestingly, a separate joint statement was issued to underscore the energy security and environmental aspects. India readily endorsed Shinzo Abe’s pet project, the “Cool Earth 50”, which he presented in May 2007 whereby global emissions are cut by half by 2050 but with an important rider added that it should not adversely affect economic and social development of developing countries.

Little wonder, the two prime ministers entitled their bilateral statement as “Roadmap for New Dimensions to the Strategic and Global Partnership”.

(The writer is a Senior Fellow, Institute for Defence Studies and Analyses)