The strategic alliance fostered between India – The rising Asian star & Japan – The Asian counterpart of developed western economies has far-reaching political and economic implications. Prime Minister Narendra Modi’s unusually long five-day visit to Japan in September is a manifestation of the surging opportunities in India, simultaneously sending assertive signals to counterweight Chinese influence in the South Asian subcontinent.In order to fast track negotiations, Modi has instituted a team, directly under the PMO, which includes Indian ministers & nominees from the Japanese Cabinet. These administrative changes emphasize the gravity of Modi’s vision of fostering political and cultural ties with Japan. Asserting India’s geo-political presence across Asia, whilst driving opportunities for technological and economic progress is the crux of Modi Government’s foreign policies.
The official objective of the visit was to promote bilateral trade relations, while the underlying motive was ensuring strategic political ties. For a developed yet debt-faced nation like Japan, business incentives lie in fostering closer ties with one of the fastest growing emerging markets across the globe. The Japanese government through ‘Japan Special Strategic and Global Partnership’ has agreed on investing $ 36 billion across a span of five years supplemented with a two-fold increase in FDI. This budget will be chiefly allocated to build smart cities, construct bullet train network and develop infrastructure in India. Modi draws a parallel between Kyoto, Japan’s oldest city, and Varanasi, envisaging a remodel framework for Varanasi on lines of the former. Mapping bullet trains across the seventh largest country in the world, is indeed a breakthrough project for the Japanese economy stumbling with deflation. Japan, along with a few other developed economies, has been ailing a claustrophobic market with an alarmingly high debt-to-GDP ratio of 240%. The government bond yields were anticipated to rise, however market trends represented a different picture altogether. The consistently low yields for the past 2 decades signify that though the investor confidence remains high, the constrained Japanese markets need a makeover. Needless to say, this breath of fresh air was provided by the opportune arrival of PM Narendra Modi
As I mentioned earlier, the underlying objective of the visit was to develop stronger geo-political ties in the Asian sub-continent. The ASEAN summit validated the rising influence of China in matters of regional stability, and to counterweigh their stance, India looks for an ally in Japan. During the tour, PM Modi through his speech, blatantly insinuated the involvement of China in border conflicts, by referring to their expansionist ideology as encroaching upon other’s territories. Like border disputes over Arunachal Pradesh and Bhutan, Japan also faces an issue with China over Sentaku Islands. To promote dual interests, the PM has appealed for investments in the defense as well. The amphibian aircraft is one of the first technologies being sold to India, as a mark to secure stronger ties in this sector. The easing of Japan’s defense exports rules will allow Japanese defense firms to participate in India’s huge weapons market.
The amiable relationship shared between Shinzo Abe and Narendra Modi extends beyond the diplomatic realm. They shared cordial ties from the pre-electoral period of Modi, the erstwhile Chief Minister of Gujarat. The deep-seated connection between the two prime ministers is also due to the similarity of political environment in the parent country during their general elections. Shinzo Abe, who assumed office in 2013, was elected in political turmoil after decades of ineffective government. Through the three arrows of Abenomics, aggressive monetary policy & expansionary fiscal policy he has managed to deliver results to the Japanese democracy. The growing desire among Japanese public for visionary risk taking and a departure from conventional politics is why Abenomics earned high approval nods for administration. However, his third strategy of structural reform, which marks the break-even point for his economic legacy, is dependent on bilateral trade ties with emerging economies.
Meanwhile in Delhi, the Narendra Modi and his cabinet Babus are busy capitalizing on this opportunity bringing in yen to the country. And of course, also devouring delectable sushis & traditional tea
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