The Hindu Business Line : Moving closer to Japan

Despite his team members saying that they had nothing specific to ask or give, the Prime Minister did carry a `heavy economic agenda' to Japan. He was expected to get some positive signals from Tokyo to help India parley with the Nuclear Suppliers Group.

The Prime Minister, Dr Manmohan Singh, visited Japan for four days, from December 13-16. To the usual clichés of `civilisational neighbours', `Buddha's influence on Japan', and `Jawaharlal Nehru's gift of elephants to Japanese children', was added the so called influence on the Japanese psyche of Tamil superstar Rajnikant's Muthu - the Dancing Maharaja.

Did Dr Manmohan Singh visit Japan with any fixed agenda? In spite of his team members saying that they had nothing specific to ask or give, it is common knowledge that the Prime Minister carried a `heavy economic agenda'. Besides, in the background of the recent India-US civilian nuclear accord, the Prime Minister was expected to sound the hosts and get some positive signals on the deal to help India's parley with the 45-member Nuclear Suppliers Group.

Guarded response

While on the first count, India's efforts to push India-Japan bilateral economic cooperation to meaningful heights was successful in a sense, the official claims of a `guarded positive response' from Japan on the nuclear question sounds a little discouraging. The Japanese are inscrutable — very often when they say `let us see', it could be a polite way of saying `no'. But today Tokyo is as much interested as New Delhi in upgrading bilateral economic relations in the emerging context of India's growing importance. Tokyo needs New Delhi's support to counter the growing influence of Beijing in Asia and a strong and prosperous India is to the advantage of Japan.

But Dr Manmohan Singh's visit was closely watched by China in the backdrop of suggestions about a new order emerging in Asia, and the Chinese media was rife with speculation that New Delhi and Tokyo are trying to get closer to contain Beijing. The main objective for the visit of Dr Manmohan Singh was the exploitation of the vast economic potential between the two countries; it is well below par now. Dr Manmohan Singh and his Japanese counterpart, Mr Shinzo Abe, initiated the first step for working out the modalities for the development of a Comprehensive Economic Partnership Agreement by setting up a Task Force with a time-bound agenda; the exercise is to be completed in two years.

Infrastructure upgrade

Poor infrastructure in India was the most common refrain of Japanese businessmen and the much needed boost to this sector is sought to be given by creating dedicated railway freight corridors between Delhi and Mumbai and Delhi and Kolkata with Japanese assistance in the form of long-term, low-cost government funds and supply of equipment by Japanese firms — reminiscent of Japan's old Foreign Aid Policy; this could also rejuvenate the recession-hit Japanese economy. More interestingly, along the Chennai-Mumbai freight corridor New Delhi will set up industrial parks and export processing zones (EPZs) in which Japanese firms in manufacturing, processing, recreational and service areas will set up units.

With the Centre taking extra efforts to develop infrastructure in these clusters — again with possible Japanese assistance — it appears to have hit on a novel idea to encourage Japan to invest more in India. It is to be hoped that the Finance Ministry will extend all support to the EPZs and the much-in-news Special Economic Zones.

Nuclear issue

On the question of Japan's support to India's civil nuclear energy programme, Mr Abe appears to have reservations on the India-US deal and wants New Delhi to go in for safeguards under the International Atomic Energy Agency (IAEA). But the silver-lining is that Japan may not put any spokes in New Delhi's discussions with the Nuclear Suppliers Group even if it does not actively support India's case. Japan's reluctance to back India on this issue is based more on emotional and sentimental reasons — the usual `one and only victim of nuclear bombs'.

On the other hand, China is more worried and afraid of Japan because of the latter's advanced nuclear technology and its capacity to meet any aggression. Japan has a vast civilian nuclear power programme, but New Delhi will have to wait for India-Japan bilateral civilian nuclear cooperation.

Again, on the issue of lifting of controls against India on a range of dual- use technologies, not much information has come out. Japan, which wants India to cooperate on strategic issues that concern it, is not ready or willing to waive the `catch all' regulation that prohibits transfer of all non-nuclear hi-tech technologies to `potential proliferators'. India is placed in that category and is out of bounds for hi-tech trade with Japan.

Role of SMEs

One area that did not get any attention is the role of SMEs (small and medium enterprises) in both the countries and the enormous scope for cooperation in this sector. About 90 per cent of Japan's manufacturing industry is composed of SMEs, and over 50,000 such units, shattered by the decade-long recession, are looking for opportunities outside the country.

The Japan Chamber of Commerce and Industry president, Mr Nobuo Yamaguchi, who visited India recently with a large delegation, said at a function in Chennai that Japanese SMEs would be very happy to come to India and cooperate with their counterparts, but desired some concessions to set up shop here. India, too, is a land of small and medium businesses and it would be in the interests of both it and Japan if some special efforts, a special formula, could be worked out to bring the two together.

Industrial clusters, sector-specific modules, especially in the South, in cooperation with Japanese SMEs, may be the most effective method of getting Japanese technology and capital. Given the positive political ambience in both the countries, this would help in not only generating more employment but also more income for the thousands of artisans and craftsmen in India.

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

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