Immense potential

Although prime minister Manmohan Singh’s visit to Japan has not culminated in a nuclear pact between the two countries, there is reason for quiet satisfaction. Economic relations are poised to expand with the conclusion of a bilateral Comprehensive Economic Partnership Agreement (CEPA). The agreement covers trade in goods, investment, trade in services, movement of persons, etc. It is expected to boost India’s services sector and the pharmaceutical industry in particular. Tokyo is hoping that access to the huge Indian market will help its recession-hit economy recover. India is eyeing much-needed Japanese investment in infrastructure.

India-Japan trade currently stands at $10 billion and is expected to double in the next two years. While the successful conclusion of a CEPA is reason for satisfaction, – Japan is the third country with whom India has signed a CEPA -- much work remains to be done. Japanese businessmen have often complained about corruption and bureaucratic hassles that trip up their business ambitions in India. India will have to address these problems to be able to reap fully the benefits of CEPA. India must find a way to correct the huge trade deficit with Japan.

Much of the media discourse in the run-up to the prime minister’s visit to Japan focused on the China threat that India and Japan share and how this will be an important factor in burgeoning co-operation.This is a flawed perception. If it were, how is China Japan’s leading trade partner, even as India ranks 27th? India must understand that improved trade ties depend on ease of doing business. The immense potential that CEPA holds out must push Delhi to address red tape and corruption.

That a nuclear deal was not clinched during the prime minister’s visit is disappointing. While India has other options, Japanese companies are at the forefront of nuclear power generation technology and several American companies too are now partially or wholly Japanese-owned. Thus, a nuclear deal with the Japanese is imperative for India. However, Tokyo continues to insist on India signing the NPT. This will mean that Delhi must step up its efforts to ease Tokyo’s worries. If Delhi wants to reap the full benefit of the NSG’s rewriting of its rules of nuclear commerce with India, it will have to get Japan on board.

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