India and Japan broke through their deadlock about nuclear co-operation, as Japanese PM Shinzo Abe visited India with promises of first high-speed train, defense pacts that will enable Japan to sell weapons to India, a rare event given Japan’s reluctance and India’s notorious policy paralysis. These deals were announced following a meeting between Japanese Prime Minister Shinzo Abe and Prime Minister Narendra Modi in New Delhi, both of whom know each other personally for over a decade due to previous business dealings, and share a strong rapport. Politically they are both center right nationalist leaders with a strong economic boost and security focus.
Abe’s visit to India was full of pomp and pageantry, as any state visit in India is. Abe visited the ancient Eastern Hindu religious city of Varanasi, known for its thousands of Hindu and Buddhist temples, as well as extreme poverty. Both Modi and Abe performed Aarti, in the holy river Ganges. Abe declared that a strong India is good for Japan and vice versa, in a hinted verbal rhetoric to the other regional powers. The estimated deal of 12 billion dollars would strengthen the hyper speed bullet rail network, in the westernized and industrialized Western India land corridor between Mumbai and Ahmedabad. Japan and India also agreed to share intelligence and technology.
The biggest breakthrough was however in nuclear energy. Japan is skeptical of nuclear trade with India especially due to the fact that India never signed a nuclear non-proliferation treaty, or Comprehensive test ban treaty and is still open about testing and developing nuclear weapons, even though, alongside China, is only the second country in the world to have a nuclear no first strike policy. Japan however mentioned that it holds the unilateral right to review its nuclear trade with India, given any hint of Indian nuclear weapons testing. They also mentioned that Japan doesn’t however see India moving in that direction anytime in the future. The Economic Times reported that since Japan is a major player in the nuclear energy market and an atomic deal with it will also make it easier for US-based nuclear plant makers Westinghouse Electric Corporation and GE Energy Inc to set up atomic plants in India, apparently as their investments have significant Japanese contribution and shares. To take part India’s new ‘Make in India’ initiative, Japan has created a fund of about USD 12 billion which will be provided to Japanese companies for manufacturing in India. Japan has also pledged USD 5 billion as part of its Overseas Development Assistance to India.
The reason behind Japanese sudden change in line is not that sudden, if one considers that Japan and India has political alignment for over a year now, with similar governing parties, with similar ideological bend, and rapport. Also, both Japanese PM is facing pressure at home, due to its change of the pacifist constitution, and Indian government being unable to control its extreme right wing turn by the fringes of the governing party and growth of intolerance. The economic growth of Japan is also stagnating for a long time, whereas India is the second largest growth economy in the world after China.
But there is a deeper calculation which prompted this change of heart, for lack of better word. Japan’s own nuclear commerce has stopped considerably after Fukushima. Significantly during the same time, PM Modi and President Xi has developed a pragmatic relationship, with potential of greater commerce, and Chinese help in Indian development model. The balancing China project with Japan, India, Australia and United States has also stalled, as even though India takes part in all military drills and exercises, it has shown unwilling to join any alliance balancing China officially, charting an independent non-aligned foreign policy. In fact in a subtle hint to Chinese law makers, India hinted that the priority of India lies in internal development, and China is more than welcome to help India in urbanization process. China’s development of bullet train in Pakistan was also another factor that tilted Japan’s calculation, as they realized, if they are too stringent about nuclear trade, then they might lose every trade with India.
However, real concerns remain. India is notoriously slow and bureaucratic when it comes to decision making, and one signing of MOU doesn’t mean the projects are finalized. Also, many foreign backed projects have been stalled in India due to India’s divisive federal structure, including South Korean steal development and Russian nuclear power plants, due to protests. With the growing intolerance and partisanship within India, there is a likely chance of policy paralysis in the near future. Japan and India has to come a long way to solve these issues.
So to all the starry eyed analysis, thinking there will now be a boom of Japanese FDI in India, without understanding the inherent structural flaws in the Indian society and central administration, good luck from a cynical Indian.