It’s been a month of hectic high-level diplomacy. The back-to-back exchanges with the Prime Ministers of China and Japan underscore the opportunities opening up for India. We seem to be at a rare moment when these two Asian giants are simultaneously desirous of moving closer to India. Their motivations for doing so are diametrically opposed. Yet, they present us with the possibility of expanding India’s strategic and economic footprint in Asia.

Let’s start with Japan. Prime Minister Shinzo Abe has been a champion of strategic ties with India since his first tenure in 2006-07. He is back in office now with a clear plan for jump-starting Japan’s economy and beefing-up its military muscle. The backdrop to this is, of course, the sustained rise of China and the increasing toughness in Beijing’s approach to dealing with maritime disputes.

Japan’s strategies

Tokyo has already announced dramatically expansionist monetary and fiscal policies. Abe is also resolved to raising the long-run rate of economic growth. Towards this end, he has signalled his willingness to take on powerful lobbies in agriculture and pharmaceuticals and to spur investment and innovation. He is also keen to negotiate Japan’s entry into the Trans-Pacific Partnership (TPP), a new free trade agreement being pushed by the US.

Economic ties with India have assumed greater importance in this context. The Japanese are eager to diversify their foreign investments to destinations other than China. Over the past couple of years, it has become clear to Japan that the web of economic ties with China, especially their massive direct investments, are working more to Beijing’s advantage. India is already the largest recipient of Japanese overseas development aid. And Tokyo wants to give a major boost to economic relations with India. Apart from announcing a slew of grants for infrastructure and educational initiatives, the Japanese have expressed their desire to build high-speed rail networks in India. A joint feasibility study will soon be underway.

All of this presents an excellent opportunity for India. For one thing, we should push for redressing the current imbalance in trade with Japan. Indian companies that have a competitive advantage should have greater market access in Japan. Non-tariff barriers that hinder Indian exports — of shrimp, for instance — need to be removed.

Boost to infrastructure

On the flip side, we need to give a fillip to Japanese investments in India. The Japanese are particularly concerned at the lack of progress in introducing the Goods and Services Tax. At this point, Japanese equity inflows to India remain a ridiculously small percentage of the total foreign direct investment by Japan. Similarly, we need to expedite large infrastructure projects where Japan is the key contributor: The Delhi-Mumbai Industrial Corridor, the Dedicated Freight Corridor, and the Chennai-Bengaluru Corridor.

The Japanese have been admirably patient, but this should not be taken for granted. Japan’s eagerness to bolster economic ties also presents us the best opportunity to become part of the integrated supply chains of Asia, and so give a strong economic basis to our “Look East” policy.

On the security front, too, Japan is keen to give real content to the relationship with India. The two sides are already engaged in a range of bilateral Defence and strategic exchanges at various levels. There is an opportunity now to make substantial progress. Tokyo has expressed interest in boosting cooperation in Defence and dual-use technology.

The Japanese have offered the state-of-the-art US 2 amphibian surveillance aircraft to India. The Indian Government wants to encourage this not as a direct sale, but as part of Japanese FDI in the Defence and aviation sectors in India.

The Abe government also wants to push ahead with civilian nuclear cooperation — an issue of considerable interest to India. This is likely to happen after the elections in the Upper House of the Japanese parliament.

Promoting investments

New Delhi, for its part, has worked to deepen cooperation in security and Defence. The joint statement issued at the end of the visit, both sides, addressed regional security issues of concern to the other. Japan acknowledged the challenges confronting Afghanistan after 2014 as well as terrorism in South Asia. And India agreed with Japan’s concerns about North Korea’s nuclear programme and called on Pyongyang to adhere to UN resolutions as well as the understandings reached in the six-party talks.

Bilateral exchanges on Defence have also been stepped up. Last year, the two Navies held a joint exercise off the coast of Japan. The next round will be conducted in the Indian Ocean. India has also been engaged in trilateral discussions on security matters with Japan and the US.

At the same time, New Delhi seems conscious that the Defence relationship with Tokyo should not be seen as being driven by Washington. This is as it should be. It is certainly not in India’s interest to convey an impression that its security partnerships are subordinate parts of the US “pivot” to Asia.

In fact, this balanced posture works to India’s advantage in its dealings with China as well. It is no coincidence that the Chinese Premier Li Keqiang went all out to impress upon his Indian interlocutors the importance that Beijing attached to the relationship with India.

For China, too, believes that it faces an unfavourable international environment. The heating up of its various maritime disputes, the American efforts to strengthen its strategic presence in Asia, and bold measures being initiated by Japan: All seem to have given pause to Beijing. In consequence, the new Chinese leadership wants to keep relations with India on an even keel.

Beijing is apparently serious about taking steps to reduce its trade surplus by allowing greater market access to Indian firms and by promoting investment in India. What’s more, it has indicated its willingness to move ahead on the negotiations for a framework to resolve the boundary dispute.

New Delhi should actively leverage these attempts by both Tokyo and Beijing to improve ties with us. Above all, we must avoid making sharp choices or premature commitments in our dealings with either country.

(The author is Senior Fellow, Centre for Policy Research, New Delhi.)

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