India, Japan ink pacts on civil nuke, bullet train, defence cooperation

NAYANIMA BASU New Delhi | Updated on January 22, 2018

Narendra Modi, Prime Minister, exchanging documents with Shinzo Abe, Prime Minister, Japan, after signing MoUs at the Hayderabad House, in New Delhi, on Saturday. – Photo: Kamal Narang

Japan-India Make in India Special Finance Facility announced

In a significant outcome, India and Japan on Saturday signed a range of important deals ranging from civil nuclear cooperation, high speed railway (HSR), industrial towns and transfer of defence equipment and technology.


These agreements were signed during the Annual Summit meeting between Prime Minister Narendra Modi and Japanese Prime Minister Shinzo Abe.


This was PM Abe’s fifth summit level meeting with Modi. The last Annual Summit meet was held in Tokyo in September 2014.


The agreements that were signed today marked the elevation of Indo-Japanese ties to a ‘Special Strategic and Global Partnership.’


Civil Nuclear Deal


Both sides reached an agreement to finalise the civil nuclear cooperation agreement under which Japan will build nuclear reactors here and set up nuclear power plants. However, the deal will now have to be negotiated between both sides. Post which, the final deal will be subjected to ratification by the Japanese Diet.


“The Memorandum we signed on civil nuclear energy cooperation is more than just an agreement for commerce and clean energy. It is shining symbol of a new level of mutual confidence and strategic partnership in the cause of a peaceful and secure world. I know the significance of this decision for Japan. And, I assure you that India deeply respects that decision and will honour our shared commitments,” Modi said after his summit-level meeting with Abe.


Abe, on the other hand, lauded India’s commitment to maintain “unilateral and voluntary” moratorium on nuclear tests.


Japan also expressed its intentions to enhance cooperation in the areas of nuclear disarmament and non-proliferation. However, Japan made it clear that it would like to see early commencement Fissile Material Cut-off Treaty (FMCT).


According to the joint statement, PM Abe stressed the importance of early entry into force of the Comprehensive Nuclear Test Ban Treaty (CTBT) which should lead to nuclear disarmament.


High Speed Railways  


India and Japan today also signed an agreement to set up a high speed railway (HSR) network, which is popularly referred as ‘bullet train’, based on Japanese Shinkansen technology between Mumbai and Ahmedabad.

“We greatly appreciate Prime Minister Abe's extraordinary package of approximately $12 billion dollars and technical assistance, on very easy terms, for this project. This enterprise will launch a revolution in Indian railways and speed up India’s journey into the future. It will become an engine of economic transformation in India,” Modi said.


Total cost of the project – Mumbai-Ahmedabad High Speed Rail Corridor (MAHSR) - will be $15 billion. Japan will fund around 80 per cent of the project; it will also offer a concessional loan to India with repayment period of 50 years and 15 year moratorium based on an interest rate of 0.1 per cent, according to Foreign Secretary S. Jaishankar.


Although both sides did not put a timeline by when the network will start operating, but according to the feasibility study conducted it will take seven years to execute the project. A separate technical committee will be set up to finalise the modalities of the deal, which will have representatives from both sides.


Defence Deals


Under this, both countries agreed to transfer of technology in defence equipments and classified military information. However, the pending $1.6 billion deal to buy a fleet of ShinMaywa US-2 Amphibian Aircraft for the Indian Navy was not concluded.


“The issue (sale of amphibious aircraft) was discussed by both leaders. There discussions are still under consideration,” said Jaishankar.


Japan has also expressed interest in participating in the India-US Malabar Exercise on regular basis in order to create stronger capabilities to deal with maritime challenges in the Indo-Pacific region, including through enhanced disaster response and mitigation capacity, according to the joint statement on India and Japan Vision 2025.


Trade and Economic Issues


In an unprecedented move, Japan announced the creation of a ‘Japan-India Make in India Special Finance Facility’ with a corpus of $11-$12 billion by Nippon Export and Investment Insurance (NEXI) and Japan Bank for International Cooperation (JBIC).


This funding will be provided to those Japanese companies who will manufacture their products in India thereby supporting the ‘Make in India’ campaign.


Japan today also expressed its intentions to set up ‘Japan Industrial Townships’ (JITs) which will be given same tax sops and incentives in line with special economic zones (SEZs) and National Investment and Manufacturing Zone (NIMZ).


Companies investing in these JITs will also be given additional “special packages” to attract big-ticket investment deals, the joint statement said.


According to the Jaishankar, these JITs will initially come in Maharashtra, Rajasthan and Madhya Pradesh.

India has also agreed to grant visa-on-arrival to Japanese businessmen and tourists with effect from March 1, 2016.  This facility will be given separately from the e-visa facility offered to a few countries at present, including Japan. Besides, this will be done on a non-reciprocal basis.


Key Documents Signed:


1.      MoU in Cooperation in the Peaceful Uses of Nuclear Energy

2.      Memorandum of Cooperation (MoC) on High Speed Railways (HSR)

3.      Agreement concerning transfer of Defence Equipment and Technology Cooperation

4.      Agreement concerning security measures for the protection of classified military information

5.      Agreement on Amendment Protocol of Double Taxation Avoidance Agreement

Published on December 12, 2015

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