The Hindu Business Line : Little beyond platitudes

BY ALL ACCOUNTS, the Japanese Prime Minister, Mr Junichiro Koizumi's maiden visit to India has not broken any new ground in any direction. All it has done is re-state the objectives of the India-Japan Global Partnership (in its fifth year). This is quite clear from the joint statement which calls for a "reinforcement" of the "strategic focus" of the partnership. More specifically, the statement says, the effort has to be in "adding greater substance to bilateral relations and deepening the partnership in view of the "far-reaching changes" happening globally, particularly "the new surge of change... in Asia". But on how to go about it, Mr Koizumi's visit offers nothing concrete.

Indeed, one would have expected a spate of agreements, particularly in trade and business, which would send a message to the world that the two countries are laying the foundation for a closer bilateral relationship. Instead, there has been a profusion of polite platitudes and statements of intention capped by an eight-fold initiative to realise the "full potential" of the partnership. One initiative relates to a "comprehensive economic engagement through expansion of trade in goods and services, investment flows and other areas of economic cooperation" as well as "exploration" of an "economic partnership agreement" between the two countries. But they may have to wait for the Joint Study Group, to be set up in June, to report (within a year) before getting down to broadening and deepening economic ties. Interestingly, the statement has no mention of any free-trade initiative — the flavour of bilateral economic relations in Asia. The closest the document comes to this is when it says that the Study Group will consider "moving towards a liberalised and upgraded framework for economic engagement, including an India-Japan economic partnership agreement". There is a continued harping on old themes: The exalted place of Official Development Assistance in India-Japan ties and a re-commitment to cooperating on specific projects such as the "freight corridors" between Mumbai and Delhi, and Delhi and Kolkata.

Clearly, the India-Japan economic relationship requires a major refocusing if it is to get out of the rut. In fact, the stagnation of economic ties is well reflected in the trade figures, which show a gradual deceleration over the years. Thus, while India's exports to Japan (as a percentage of total exports) declined from 4.58 in 1999-2000 to 2.68 in 2003-04, the corresponding import non-performance was 5.10 and 3.41. Trade with Japan (as a percentage of total Indian global trade) declined to 3.08 in 2003-04 from 4.88 in 1999-2000. This has happened over time and it does not speak well of the authorities if they have not zeroed in on the reasons for the deterioration. Mr Koizumi spoke of 300 Indo-Japanese joint ventures and of India being the third largest investment destination for Japanese companies after China and Thailand. But the fact remains that the Japanese ODA overshadows the private investment performance, which is not a healthy sign for economic interaction. The joint statement says that a "special effort" will be made to push up private investment. Indeed, this is the key to a more fruitful India-Japan economic dialogue.

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