Abe visited India from 11–13 December 2015 as part of a series of annual summits since 2007. During the visit, the leaders signed a number of new agreements and memorandums of understanding. Some of these agreements were expected, but there were also some surprising significant announcements.
The landmark agreement is Japan’s pledge to fund the first bullet train project linking Mumbai — India’s financial capital — with Ahmedabad, a trading centre on the west coast in Modi’s home state of Gujarat. Under its yen loans program, Japan will provide a highly concessional, long-term credit loan of US$12 billion over the life of the project. The project is likely to start in 2017 at a total cost of US$15 billion.
The loan will be provided through Japan’s aid agency, the Japan International Cooperation Agency, under its official development assistance program. Under the agreement, a Japanese contractor will be responsible for the mammoth project. The entire loan will be tied to Japanese technology and Japanese corporations. Tokyo employed the tied aid model for most of its aid projects in the 1960s and 1970s, but it later switched to untied aid models. Tied aid has reappeared as Japan’s economy struggles and Japanese corporations need government-funded projects for their financial flow.
While the project is economic in nature, it has deep political connotations. Tokyo was extremely disappointed when Jakarta granted its fast train project to Chinainstead of Japan. This was a huge blow to Japan economically and was perceived as a failure of Japan’s engagement with Asia. The Abe administration did not want to lose out this time since India is emerging as a key strategic partner for Japan. For India, the project sends strong signals nationally and internationally that the Modi government is committed to developing infrastructure and modernising to achieve the ‘Make in India’ campaign.
Abe offered further yen loans for infrastructure projects including road links in India’s undeveloped northeast — most notably in Arunachal Pradesh, which China claims as its territory. This is definitely a strategic as much as an infrastructure project.
But most surprising was a framework agreement on civil nuclear energy cooperation. A proposal began to take shape in 2010 but stalled after the Fukushimanuclear disaster amid strong anti-nuclear protests in Japan. The proposed agreement would allow Japanese companies to directly export nuclear plants. A final agreement has not yet been signed, as the proposal needs further technical and legal negotiations as well as approval from the Japanese parliament But the framework agreement paves the way for third country suppliers (with Japanese investment) to export nuclear technology to India. This is a big breakthrough for India as it aims to expand its nuclear energy program.
While Japan does export nuclear technology and equipment to many countries, India is exceptional as New Delhi has not signed the nuclear non-proliferation treaty. The countries agreed to the framework on the condition that Japan would suspend nuclear cooperation if India carries out further nuclear tests or reprocesses spent nuclear fuels for military purposes. The agreement means Japan has acknowledged India’s status as a nuclear weapons state and is willing to do business even though it is not a party to the non-proliferation treaty.
There is a strong anti-nuclear lobby in Japan and opposition to the India deal has already appeared. But Abe wants Japan to be a nuclear export super power in order to give a much-needed boost to its nuclear industry, which has suffered immense financial hardships after the Fukushima nuclear accident.
The third highlight of the visit was a framework agreement on defence technology transfer and cooperation. Japan and India have been negotiating the sale of the Shin Maywa US-2 amphibious aircraft to India for many years. Although the sale has not yet happened, it’s now a matter of when, not if. Japan has lifted decades of bans on arms sales and India is emerging as an important market for Japan. The sale of this aircraft will signify a landmark development in Japan’s postwar arms policy.
It is clear that Japan and India are emerging as key strategic partners. Japan has joined the Malabar naval exercises with India and the United States. Japan and India already hold joint dialogues involving high-ranking officials from both countries’ defence and foreign ministries.
Japan–India relations remained underdeveloped for a long time and only recently have the two discovered the potential benefits of closer relations. But if India and Japan are to ensure a stable and mature bilateral relationship, bilateral ties need to develop beyond defence and infrastructure into the realms of grassroots and people-to-people contact. Modi and Abe should now work towards a more rounded relationship.
Purnendra Jain is a professor in the department of Asian Studies at the University of Adelaide and is currently visiting Japan.