The Hindu Business Line : Japanese thrust

Late last year, when the Prime Minister, Dr Manmohan Singh, went to Tokyo, he discerned an interest in India among Japanese businessmen that he thought could be the chance to take bilateral ties to a new level. Among other things, he said he found a “new enthusiasm” which he had never seen before, his conclusion being that the “new synergy” was most favourable as far as trading with and investing in India were concerned.

Coming from the Prime Minister, these observations are important because what they imply is that the time is ripe for forging new, long-term economic ties between New Delhi and Tokyo which, unlike in the past, will be of value to both sides. Indeed, the visit this week of the Japanese Prime Minister, Mr Shinzo Abe, could turn out to be a good opportunity to cement the new approach, the initiative for which, however, must come from Tokyo because, among other things, it was Japan which put the lid on bilateral economic cooperation in the wake of India’s nuclear test in the late 1990s. This in fact is an opportune moment for Tokyo to extend support to New Delhi on the latter’s nuclear policy, keeping in mind the current controversy raging on the nuclear deal with Washington (Japan is a world leader in nuclear reactor technology). Embodying the renewed interest shown by the Japanese in partnering India economically is the proposal for the Delhi-Mumbai industrial corridor, offering scope for massive investment by Japanese companies, many of which wish to hedge the large investments they have made in China in recent years. Undoubtedly, the Indian economy has much to gain from this effort, but the responsiveness of the bureaucracy and the political class in New Delhi and in the States concerned will be on test as the project unfolds.

There is no mistaking the fact that the Japanese are hard-nosed businessmen. The fact that India has not been an attractive destination till now is a comment on Indian business conditions, which will have to be taken note of by New Delhi if the promise of a more fruitful trade and investment regime is to be fulfilled in practice. Last December, Dr Manmohan Singh told Japanese businessmen that they should weigh the initial problems faced by them on entry “against the long-term profitability and stability of doing business in India”, which is sound advice provided the opportunity cost for the Japanese are not too big and there is evidence on the ground that New Delhi is doing its best to rectify the identified problems. It is only the Japanese who can say whether conditions today are substantially better than in the past to justify a long-term foray in economic cooperation with India.

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