JOIN USBusiness and economic relations have traditionally dominated Indo-Japanese relations. Japanese prime minister Yoshihiko Noda’s just-concluded visit to India for the annual biannual summit and the agreements signed by the two countries underline this.
India’s good relations with Japan preceded the Look East policy initiated in the nineties and have benefited both countries. Japanese companies have found India a good investment destination. Japanese investment and aid have been important factors in India’s economic development and infrastructure growth.
Typically the summit also has concentrated on these areas and the financial relationship in these times of economic strain. The new currency swap deal of $15 billion for three years, raised from the current level of $ 3 billion, will help the rupee to stabilise when it has seen deep value erosion in recent weeks. It should also help to improve trade.
Other important agreements related to the ambitious Delhi-Mumbai and Chennai-Bangalore industrial corridors and the western dedicated freight corridor which may attract large-scale investments. These are important to giving a boost to the stalled economic momentum in India.
The newly conceived national manufacturing zones may also turn out to be magnets for Japanese investments. Japanese companies are looking for alternative investment destinations other than China. India, with a large consumer base and availability of plenty of labour may offer many opportunities to them. The Japanese prime minister has stressed the importance of expanding trade ties.
Civil nuclear co-operation has been a sticky issue in Indo-Japanese relations. The Japanese perception of India’s nuclear status and lately, the Fukushima mishap, have been stumbling blocks. But the summit gave enough indications that the talks on a bilateral civil nuclear deal will continue.
Japan, in spite of its sensitivities about nuclear power, may realise that a deal with India, which has a creditable non-proliferation record, does not undermine the basic principles of its nuclear policy. There is an ongoing strategic dialogue also which, as both have maintained, is not directed against any third country. Overall, the summit has helped to strengthen the ties between the two countries.