The Hindu Business Line : New agenda for old friends

The challenge for Japan and India is to strengthen bilateral cooperation further, keeping in mind the Asian and the global contexts. The proposed economic partnership agreement between Japan and India can be expected to strengthen age-old bonds. And for that the two nations must understand each other better and develop mutual trust and confidence, says N. KRISHNASWAMI.

The Prime Minister, Dr Manmohan Singh, is in Japan with a high-power delegation of officials and business leaders for two days — December 14 and 15. The visit is a continuation of the programme initiated in 2000 by Mr Yoshiro Mori, then the Japanese Prime Minister. Mr Yoshiro Mori's visit was followed by the visits to Japan of Mr Atal Bihari Vajpayee, and to India of Mr Junichiro Koizumi. Now Dr Manmohan Singh's visit may well be followed by Mr Shinzo Abe's.

In fact, statistics-conscious Japanese are proud to announce at every opportunity the number of visits by Prime Ministers, Ministers and officials from both sides in recent years. Dr Manmohan Singh has enjoyed great respect in Japan from the time he was Finance Minister in the P. V. Narasimha Rao Cabinet.

A young and dynamic Shinzo Abe meeting an erudite and clear-headed Manmohan Singh augurs well for both the countries, for despite the over 50 years of diplomatic engagement, the relations between Japan and India continue to be ephemeral, because of historical, economic and psychological cobwebs; the last, the most. But necessity has brought the countries closer and there is a greater realisation now than ever before that India and Japan must work together in shaping the destiny of Asia and the world in the 21st century.

Japanese mindset

Japan is a `unique' country. In the Japanese psyche there are only two sets of people in the world. One, "We Japanese", and the, other, "the rest". Their thought, will and action are conditioned by this mindset. Mr Yoshiro Mori's adumbration of a "global partnership" agreement with India for the 21st century was suspect in the eyes of a large section of people even in Japan. It began and ended, without proper preparation in either country, with an apparent boost to Information Technology industry in both nations.

Mr Koizumi came to India with an eight-point "strategic partnership" agenda that centred around "security" — of energy security, nuclear security, environment security, security from religious fundamentalism and so on, besides "beneficial, economic relationship and promotion of human exchanges".

This time, Japan is clear on what it wants. Thanks to the Goldman Sachs report, Japan knows that India is an emerging great power. Seeing vast technical potential and a huge consumer market, Japan would very much like to enter into a Free Trade Agreement (FTA) with India as it has with over ten countries. It has however settled for an Economic Partnership Agreement (EPA) to promote investment and trade from Japan. In the wake of the Koizumi visit to India, a Joint Study Group was set up in both the countries to explore the modalities and guidelines for facilitating this agreement.

But India's business leaders are still thinking at micro level — pushing exports of auto-components and substituting azo-dyes by some other chemicals for the Japanese market, and so on. There is a need for India and Japan to come together "at the global level" in terms of investments and trade. Further, Japanese joint ventures pre-suppose a total awareness of their manufacturing practices, techniques and ethics by Indian businessmen.

Though there is greater awareness today in India, especially Tamil Nadu, of Japanese human resource development and quality improvement practices, there is still a long way to go to make these into mass movements and, more importantly, make them acts of faith — absorb, assimilate and make it part of the Indian business culture. Only then would Japanese businessmen part with their capital or technology.

Economic lure

Still, Japan has economic lure for India. The number of Japanese companies in India has steadily been increasing. Today, there are over 300 companies — trading houses, joint ventures, subsidiaries, big and small, etc., and the number is expected to increase by 50 per cent within a year. But the need of the hour today is identifying the right areas of cooperation. At the political level Japan and India could cooperate in the following areas: Protection of sea lanes; restructuring of international order, in particular the expansion of the UN Security Council; ensuring peaceful growth of China; and prevention of proliferation of nuclear weapons.

In the economic sphere the two countries can engage in a mutually beneficial relationship, especially in the energy sector, environmental protection, infrastructure development and promotion of human exchanges in educational, cultural and business fields.

The two areas where Japan and India could profitably cooperate are solar and civilian nuclear energy. While Japan may be coaxed into assisting in solar energy development, it may be reluctant to come forward to help in the nuclear energy. But the recent signing of the India-US nuclear agreement should reassure Japan of India's credentials and potential.

Small is big business

Another area of considerable relevance to both the countries is cooperation among Small and Medium Enterprises of the two countries. Tens of thousands of SMEs of Japan were the worst affected by a decade-long recession that is just ending. The possibilities of cooperation between the SMEs of the two countries exist in IT (software and hardware), auto-components, biotechnology, food processing, textiles and leather.

Unlike bigger companies that can fend for themselves, the SMEs need help to find the right match. The challenge for Japan and India will be to strengthen bilateral cooperation further, keeping in mind the development of the global partnership.

The proposed economic partnership agreement between the two old friends, Japan and India, can be expected to strengthen the age-old bonds. And for that the two nations must understand each other better and develop mutual trust and confidence.

(The author is Secretary-General of the Indo-Japan Chamber of Commerce and Industry.)