India-Japan Ties Set To Deepen: Modi Visit Flies Under Radar

Despite the tough talk of Donald Trump’s aides, there is evidently a recognition here that the country’s long term security interests are best served by remaining close to the Quad. The touchdown in Japan highlighted the fact that China’s aggressive hegemony in the Indo-Pacific region would continue to be resisted by the four-member group which includes the U.S. and Australia. 

Japan-India Ties Reaffirmed 

The Tokyo statement saw PM Modi echoing Prime Minister Shigeru Ishiba’s concern over the situation in the East China and South China Seas where there are territorial disputes between Japan and China. Ishiba has since resigned from the position.

This came just days after Japan protested the erection of a new structure by China in the East China Sea. It is also noteworthy that Japan’s plea to world leaders to stay away from China’s World War II victory day celebration was heeded by the Indian Prime Minister who left Tianjin immediately after the SCO summit.

The economic ramifications of the visit have equally failed to be highlighted at a time when headlines are dominated by the daily rants on India and tariffs by close Trump aides like Peter Navarro.

Japanese Commitment To India's Development 

Amidst this noise, the fact that Japan has made a commitment to invest US$ 68 billion over the next decade has got lost. This may be far lower than the purported US$ 500 billion promised to the U.S. under the latest Japan-U.S. trade pact, but it is much more specific and likely to be more substantial in the long run.

In the case of the U.S., controversy has already arisen over the selection of the proposed investments. Donald Trump claims the decision is entirely that of the U.S. but Japan’s trade negotiators are contesting this view, claiming that a joint committee will be taking decisions on the issue.

In the case of India, however, investments pertaining to specific companies or joint ventures have been outlined in the 170 memoranda of understanding concluded between the two countries. This includes Nippon Steel’s proposed US$ 56 billion investment for an integrated steel plant in Andhra Pradesh, Suzuki’s plans for a US$ 350 billion plant in Gujarat as well as Toyota’s US$ 200 billion greenfield plant in Maharashtra.

This is in addition to the creation of Global Capability Centres by Fujitsu as well as cooperation in the area of rare earths and semiconductors. 

One of the biggest areas of interest for this country has been mobility of talent from India to Japan. The agreements now provide for the exchange of 500000 personnel between the countries over the next five years. 

Some Concerns Remain 

There are undoubtedly some irritants in the economic ties including the delays in implementing the Ahmedabad - Mumbai bullet train project. But a commitment has already been made to upgrade the venture to the latest systems within a fixed time span.

The other concern remains the trade deficit which has been attributed largely to stringent non-tariff barriers. Much greater interaction is needed to ensure that these NTBs are brought down to enable easier flow of goods and services from India. 

The volume of trade is also low considering the size of the two economies. India exports only about 6 billion dollars while importing about 19 billion dollars-worth of goods. This is an abysmally small level considering that both are now among the top four economies in the world, in terms of size.

As far as investment is concerned, however, Japan has forged ahead here becoming the fifth largest foreign source for this country. Foreign direct investment over the period from 2000-2024 is estimated at US$ 43.1 billion. 

Employment Generation 

It must be noted that Japanese Global Capability Centres (GCCs) in India have bolstered employment across IT, engineering, automotive, finance, and design roles. India, currently, hosts around 85 Japanese GCCs employing 180,000 professionals. This number is expected to nearly double to 150 centres with over 350,000 employees by 2028, backed by $2.5 billion in annual investment, industry projections reveal.

For example, the Japanese industrial township in Neemrana (Rajasthan) alone houses 51 companies and provides jobs to over 26,000 people. 

The numbers, however, do not tell the full story. It was Japan’s Suzuki Motor Corporation that took a chance on investing in India’s fledgling automobile industry in the 1980s.

It partnered with the government to form the iconic Maruti Suzuki brand that still retains the biggest share of the market. The first mover advantage enabled Suzuki to spur the creation of a network of auto ancillary units to bring about much-needed indigenisation. It was thus far ahead of the competition when other global auto majors entered the market after the economic reforms of 1991.

Suzuki was followed by Toyota and Honda, among others, while a host of other leading Japanese companies have been among the biggest players in the consumer durables segments for over three decades. 

Strategic And Global Partnership

The evolution of strategic ties has been a more recent development. The first steps in this direction were taken in 2006 when then Prime Minister Manmohan Singh visited Japan and a joint statement was issued on the Japan-India Strategic and Global Partnership. The relationship became even closer in 2016 with the conclusion of a civil nuclear pact between the two countries. 

The revival of the Quad in 2017 has brought Japan and India even closer together on the security front. The grouping was created originally in 2007 but did not emerge as an effective bloc until a decade later. With India set to host the Quad summit later this year, Japan has voiced support for the event despite the uncertainty over Trump’s participation. 

The economic and security partnership between India and Japan has thus seen a sea change over the past two decades. PM Modi’s visit underlined the fact that ties are set to grow despite India’s long-standing friendship with other countries like Russia.

As far as the Quad is concerned also, it looks as if the partnership remains sturdy despite the recent tariff tantrums by the Trump administration. Japan and Australia, for instance, have in recent days held meetings highlighting increased defence and security cooperation.

Given the complementarity in outlook of all four members as far as the Indo-Pacific region is concerned, it is clear that the Quad is going to remain a viable strategic player in the long run. This is set to become a durable aspect of India-Japan ties in the coming years.