Economy

Modi, Abe may discuss future of bullet train project

Amiti Sen New Delhi | Updated on September 08, 2020 Published on September 08, 2020

India-Japan Summit likely later this week; date yet to be announced

A discussion on the future of India’s ambitious bullet train project being funded by Japan may be on the agenda of the virtual meeting between Prime Minister Narendra Modi and his Japanese counterpart Shinzo Abe at the bilateral summit likely later this week.

The project has been facing delays due to a budget shortfall and land acquisition problems.

The India-Japan Summit is expected to be held on September 10, as requested by Japan, but is yet to be formally announced by either side.

“The meeting may not be as long as originally planned so the agenda could be shortened,” an official in the know told BusinessLine. “While a discussion on the bullet train project will most likely take place, the high-priority military logistic pact, the Acquisition and Cross Servicing Agreement (ACSA), could be either signed on the day of the meet or a day before. A digital partnership is another area of focus.”

Abe’s determination to go ahead with the summit despite his decision to resign as Prime Minister, announced on August 28 citing health, is seen as a reflection of his sustained interest in India throughout his long political career. His successor is likely to be elected next week.

Investment destination

India as an investment destination has become more significant for Japan in the recent years as Tokyo seeks to reduce its dependence on China, one of its largest trade and investment partners. China is engaged in a long-drawn trade war with the US and is also experiencing rising labour costs.

A discussion on the bullet train project being built in India using Japan’s Shinkasen technology is of high priority to both countries because of a budget shortfall (over $4 billion, per Japanese media) that could force a reworking and trimming of the costs involved.

In July, Railway Minister Piyush Goyal had indicated that the financial aspect of the bullet train project between Mumbai and Ahmedabad was being reviewed as the post-Covid world would require ‘a lot of tightening of the belt’.

“Japan wants to discuss how to proceed with the high speed railway project in India because of both the budgetary shortfall and problems with land acquisition,” the official said.

Japan offered a loan amounting to 81 per cent of the cost of the $15-billion project in 2015. Scheduled for completion in December 2023, the high-speed link is expected to reduce the current eight-hour journey between Ahmedabad and Mumbai (a distance of about 508 km) to under three hours.

Trilateral initiative

Abe and Modi are also expected to take note of the trilateral initiative between India, Japan and Australia on strengthening and re-vitalising supply chains in a post-Covid world, the official said.

“Japan’s recent move of including India and Bangladesh in the subsidy programme for Japanese investors seeking to shift their investments from China indicates its seriousness towards a greater partnership with India. This mutual interest is likely to be reflected in the Abe-Modi interaction,” the official added.

Tokyo has indicated a number of areas where India can improve, such as infrastructure, time taken in clearances, quality issues, and policy continuity, in order to attract more Japanese investments.

Japan is the fourth largest investor in India, after Mauritius, Singapore and the Netherlands, accounting for cumulative foreign direct investments of $33.5 billion in the 2000-20 period, accounting for 7.2 per cent of India’s total inflows.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on September 08, 2020
This article is closed for comments.
Please Email the Editor