China, Comprehensive Test Ban Treaty, CTBT, defence, electricity, India, Indo-US nuclear deal, infrastructure, Japan, labour, land acquisition, law, Liberal Democratic Party, Manmohan Singh, manufacturing, Narendra Modi, New Komeito Party, Non-Proliferation Treaty, NPT, nuclear, rare earth metals, retroactive taxation, Shinzo Abe
Today, India commemorates its 65th Republic Day today with pomp, fanfare, and a display of its paradomania worthy of any military dictatorship. This year, Delhi’s chief guest to its premier annual function is Japan’s prime minister, Shinzo Abe. Analysts have read much significance into this invitation due to stormy climes in the neighbourhood and several high-level visits between India and Japan over the past couple of years.
Just last week, Japanese Defence Minister Itsunori Onodera made a four-day trip to Delhi and invited his Indian counterpart to visit Japan. Last month, His Imperial Majesty, Emperor Akihito and his wife, Empress Michiko, visited India for a week, and six months earlier, Indian prime minister Manmohan Singh had led a delegation to Japan. Several lower level exchanges have also taken place between the two governments.
The benefits of a symbiotic relationship between India and Japan have been stated often and there is little benefit in repetition. In fact, the more pertinent question is why such a fruitful partnership has not yet materialised. In a 2013 poll in India, 80% said that they saw their country’s relations with Japan as very friendly or friendly; 95% thought Japan would be a reliable friend and desired greater Japanese business presence in India. In a similar poll in Japan, 42% had a positive view of India and only 4% – the lowest percentage anywhere – had a negative image. While the makings of a beautiful friendship exist, Abe and Singh – or whoever is prime minister in three months – have more work to do at home in creating the ambiance for partnership than with each other, both strategically and economically.
While large-scale Japanese investment in Indian industry and infrastructure interests both sides, India’s ability to absorb investments, aid, and technology are in doubt. Delhi’s laws on labour, manufacturing, land acquisition, and foreign investments are a veritable chamber of horrors, not to mention crippling inadequacies in water, electricity, road and rail networks, and legal protections. The eight-year delay POSCO suffered is not an exception but the rule in Indian industry. Vedanta is another cautionary tale to foreign businesses as is the retroactive tax the Indian government slammed Vodafone with recently.
The decades of neglect India has shown its manufacturing sector means that it is ill-equipped to handle any truly transformative economic agenda that may result from an Indo-Japanese romance. Even with technology transfers, India will still have to import machinery and equipment in the near future until it can develop its own capacity. This expansion needs to be sustained by skilled and semi-skilled manpower which India is already struggling with. Japanese companies will be reluctant to invest wholeheartedly in India until these bottlenecks are resolved.
To Japan, India represents not only an enormous market but also another source of raw materials. Japan is particularly desperate to find a reliable source for rare earth metals, vital to its electronics industry, as it currently depends on China for 90% of its supply. Keeping this in mind, optimists point to increasing trade between India and Japan (approximately $18 billion in 2013) as signs of a blossoming relationship but the paltry amount is a better indicator of how badly trade has floundered between the two states. For a country of India’s size and the complementarity of its economy to that of Japan’s, trade ought to have been at least the order of a magnitude higher. The increase in trade more likely represents streamlining and greater efficiency by industry rather than improved relations just yet. Close relations are built on content of trade more than volume; China is a larger trading partner for the United States than Britain is but one would hardly hazard a suggestion that Beijing is close, let alone closer, to Washington. Similarly, India’s $65 billion annual trade with China is also an indicator of economic efficiency without good relations.
Nuclear commerce straddles the strategic and industrial divide, and India stands to benefit greatly with closer ties to Japan’s nuclear industry. Though not a large vendor of complete reactors, Japanese industry has cornered the market on certain key components for Western reactor designs. Japanese cooperation with India would not only simplify nuclear trade with France and the United States (who depend on Japan in their supply chain), but it would also improve India’s ability to design and build safer and better reactors. Collaboration on Generation III and IV reactor designs is another arena for cooperation.
Japan has historically refused to engage in nuclear commerce with states who have not signed the Non-Proliferation Treaty, but the Indo-US nuclear deal in 2008 has carved out a special place for India in the nuclear hierarchy. However, Tokyo wishes for Delhi to accede to the Comprehensive Test Ban Treaty before it concludes a bilateral nuclear deal. This is beyond what the United States demanded of India, and India has used its agreement with the United States as a template for all its other nuclear deals (France, South Korea, Canada, Australia, Russia, Kazakhstan).
Japan would need to accept India’s non-negotiable position on the CTBT and NPT if any deal is to be struck between the two, something unlikely in the near future. There is, however, some hope as the New Komeito Party, perceived to be against nuclear exports to India, recently backed a civil nuclear pact between the two countries and called for a more flexible approach. For its part, Delhi must reconsider its recalcitrance over its nuclear liability law before nuclear trade can flourish between the two states – another difficult needle to thread.
Many analysts point to a strategic imperative for India to develop close ties with Japan. China’s recent belligerence, it is suggested, will push India and Japan closer. Sadly, this is more an expression of desire than any concrete observation. Unlike trade, however, Japan has reservations about strategic relations beyond the US nuclear umbrella and is yet to make up its mind on the role it wants to play in an era of receding US power.
Despite Article 9 of Japan’s constitution which prohibits the maintenance of a military, India’s defence budget of $37.4 billion (2013) is less than Japan’s budget of $45.9 billion (2013). However, Japan’s constitution permits a self-defence force and Tokyo followed an unofficial guideline to restrict defence spending to below 1% of the Gross Domestic Product until 1986.
Due to India’s failures in defence manufacturing, the country has emerged as the world’s largest arms importer. Indigenous production has been the buzzword in Delhi for a while with little to show for it yet. It is hoped that cooperation with Japan in defence research and manufacturing will help India reduce its imports bill while lowering the cost of Japanese equipment due to economies of scale. Contrary to popular perception, the land of the rising sun is hardly the epicentre of high-tech weaponry – corporations and universities have usually shied away from military research. Nonetheless, there is ample scope in application of dual use technologies such as carbon fibre, radar, engines, avionics, and microchips.
However, Japan’s reluctance to engage in substantial military commerce is a hindrance. Yet recent developments in North Korea and China have caused Tokyo to rethink its minimalist stance on security and ruling Liberal Democratic Party is considering major reforms in the country’s defence posture as well as its strict arms export policy. The difficulty in carrying out these reforms should not be underestimated – there is strong opposition to the LDP’s proposal in the Diet (Japanese parliament) as well as among the Japanese citizenry who fear that Tokyo’s arms sales would weaken Japan’s neutrality and make it a seeming participant in conflicts that are not its own. Until Japan pacifies the ghosts from its past, there is little possibility for defence ties to grow much beyond joint military exercises and cooperation on piracy and terrorism.
A thriving relationship with Japan is a commonsensical quest for reasons of trade and security. There exists among some, perhaps, also a sense of civilisational affinity. Though this is superficial and deceptive, it cannot hurt foster better ties. Yet given the difficulties on both sides, strong ties will take time well beyond the tenure of either Abe or the next Indian prime minister to develop. Besides, any lasting relationship must be institutional and not based on personality alone – while Abe appears keen to prioritise India on his agenda, his successor may not have the same patience.
Despite such strong impetus from both sides currently, there are fundamental difficulties that need to be addressed. Japan needs to decide whether the strategies of the past are still relevant to it in a new world order and if it is ready to jettison them if not; India needs to realise that announcing a yojana is not the same as implementing it – for far too long, India has been long on promises but short on delivery. As Thucydides reminds us, one is “convinced by experience that very few things are brought to a successful issue by impetuous desire, but most by calm and prudent forethought.”