In recent years, India-Japan relations have improved significantly both economically and strategically. July provided two important examples of how strategic links have improved tremendously. First, there were the week-long trilateral naval exercises between India, Japan and the United States, which took place this year amid the standoff between India and China on the plateau of Doclam. Then on July 20, the landmark India-Japan Civil Nuclear Agreement entered into force. The pact was signed in Tokyo on November 11, 2016, during Prime Minister Narendra Modi’s visit to Japan. According to the agreement, six new nuclear reactors will be built for the production of electricity. India and Japan are also working on Asia-Africa Growth Corridor (AAGC)which was unveiled on 23 May 2017 during the 52nd Annual Meeting of the African Development Bank (AfDB) held in Gandhinagar, Gujarat.
Also in the area of ââinfrastructure, India is seeking to benefit from Japanese expertise. Japan is already associated with the assistance and know-how it provided for Phase 1 of the Delhi Metro. Now, according to some media, the Mumbai-Ahmedabad High Speed ââTrain The project will be launched during Japanese Prime Minister Shinzo Abe’s visit to India from September 12-14. The Japanese are also involved in other megaprojects, such as the Delhi-Mumbai Industrial Corridor, which started a decade ago.
Over the past decade and a half, Japanese investment has played an important role in India’s growth story. The Japanese have invested more than 25 billion dollars in different sectors across India during the period 2000-2017. Currently, Japan is the third largest investor in India, and investment from Japan increased significantly in 2016-2017. Japanese investments in India during this period reached $4.7 billion, an 80% increase from $2.6 billion in 2015-2016. More importantly, Japan pledged investments of around $35 billion for the period 2014-2019 to boost the manufacturing and infrastructure sectors in India. The Japanese government even specifically instructed Mizuho Financial Group with the search for investment opportunities in India.
Previous Japanese investments were mainly concentrated in a few sectors such as automobiles, telecommunications and electrical equipment. But in recent years, FDI from Japan has increased both vertically and horizontally. According to Economic period, “Investment from Japan is diversifying, and sectors that received FDI during 2016-2017 include retail, textiles, consumer durables, food and beverages, and banking (services credit card).”
Interestingly, according to a survey conducted by the Japanese government, the northern Indian state of Haryana received the most investment. Japan has also planned to set up around 12 industrial parks across India in different states including Tumkur in Karnataka, Ghilot in Rajasthan, Mandal in Gujarat, Supa in Maharashtra, Ponneri in Tamil Nadu, Neemrana in Rajasthan, Jhajjar in Haryana and the integrated industrial township of Greater Noida.
Neemrana, about a three-hour drive from New Delhi, home to major Japanese companies such as Toyota Motor Corp., Daikin Industries Ltd and Hitachi Ltd on a 1,100 acre industrial complex dedicated exclusively to Japanese companies. The complex provides direct employment to approximately 10,000 people.
Interestingly, Japanese investments and industrial parks are spread all over India except for East and North East India. This may change. Lately, growing importance is being given to the role of the northeast in India’s opening up to Southeast Asia. Modi stressed that “we must make the northeast a gateway to Southeast Asia.”
President Pranab Mukherjee also pointed out, âThere is little time to lose. Given the immense reservoir of natural resources and the quality of its human resources, North East India has the potential to be an important investment destination and a center of trade and business.
Japan also plays an important role in infrastructure development in the northeast. In April 2017, the Japan International Cooperation Agency (JICA) signed an agreement with the Union Government in New Delhi to provide more than 67 billion yen ($610 million) for Phase I of the improving the connectivity of the North East road network, which will see the improvement of important projects in Meghalaya and Mizoram.
But the demand for infrastructure development and investment across a range of sectors is still huge. According to a report by Price Waterhouse Coopers (PwC)an investment of 3.06 trillion rupees ($48 billion) is needed to develop the region’s road networks.
For some time, Northeastern states like Assam engaged directly with Japan. Japanese Ambassador to India Kenji Hiramatsu visited Manipur in May 2017, to commemorate the 73rd anniversary of the Battle of Imphal. Between the battles of Imphal and Kohima, 70,000 Japanese soldiers lost their lives. The ambassador said his country would build a war museum in the state.
Japan should consider increasing its presence in the northeast by investing in its infrastructure. Greater Japanese cooperation with India to develop infrastructure and improve connectivity to Southeast Asia through Myanmar will also send a clear message to China – that New Delhi’s approach to its northeast cannot be dictated by Beijing, which has little respect for New Delhi’s concerns about China. -Economic Corridor of Pakistan.
Tridivesh Singh Maini is a New Delhi-based policy analyst associated with Jindal School of International Affairs, OP Jindal Global University, Sonipat.
Sandeep Sachdeva is an independent political analyst.