The recent visit to India by Prime Minister Yoshihiko Noda of Japan took place against the backdrop of important developments both in bilateral relations and international affairs. The visit is part of the annual India-Japan summit institutionalised by the strategic partnership launched in 2006. The fact that Japan is one of only two countries with whom India has such regular high-level interaction underlines the growing importance of the relationship.

Mr Noda’s trip to India came at the tail-end of a crisis-racked year for Japan. The natural and nuclear disasters coupled with the continuing economic gloom have made 2011 a veritable annus horribilis. As Tokyo looks to the challenges ahead, the relationship with India is likely to loom large.
The Comprehensive Economic Partnership Agreement (CEPA) that came into effect in August this year could form the economic bedrock of the relationship. Economic ties have been deepening over the past five years, but not adequately. In 2009-10, India-Japan trade stood at $10.3 billion and Japanese investment in India at $1.18 billion. By contrast, Japan’s trade with China in the same year was a whopping $232 billion and investment in China $4.1 billion. It is also worth noting that India’s trade with China during this period was four times that with Japan. Economic ties between India and Japan are well below their potential. After all, the two economies are, in important ways, complimentary. Japan is the third-largest economy, has an ageing workforce and is experiencing prolonged stagnation, while India is a fast-growing economy poised to reap a “demographic dividend”.
The CEPA will hopefully spur bilateral trade and investment. The two countries are also pushing ahead with the $90 billion Delhi-Mumbai Industrial Corridor project. The corridor, spanning six states, is expected to be a global manufacturing and trading hub. The main transportation artery of this project, the Delhi Freight Corridor, is targeted for completion by 2016. Japanese investment will play an important role in other infrastructure projects as well. In particular, the two sides are looking to cooperate on high-speed railways. Investment apart, Tokyo has ensured that development aid to India remains unaffected by recent crises. India is likely to remain the largest beneficiary of overseas aid from Japan.
Civilian nuclear cooperation is an area of obvious interest to New Delhi. But in negotiating nuclear commerce with India, successive Japanese governments have come up against the wall of domestic politics. Given Japan’s tragic history as the sole victim of nuclear weapons, it is not surprising that concerns about non-proliferation have a strong purchase in Japanese politics. In the aftermath of the disaster at Fukushima in March this year, Japanese nuclear industry may well chafe against such constraints and so create opportunities for a breakthrough. For the moment, though, India may have to remain content with ensuring the supply of Japanese components for nuclear reactors being supplied by American and French companies.
The bilateral relationship is also being driven forward by wider, incipient geopolitical changes. Both countries are trying to get the measure of the rise of China and its implications for Asian security. Beijing’s increasing assertiveness over disputes in the East and South China seas have been a matter of concern for Tokyo. Given the uncertainty about China’s intentions, Japan — like most Asian countries — is attempting to hedge its choices. In this context, India is regarded as an attractive partner. But neither country is keen to rock the boat with China, and rightly so. Before visiting India, Mr Noda stopped in Beijing. On top of his agenda was the unfolding situation in North Korea following the death of Kim Jong-Il. Korea is only one among a host of issues in Asia where China plays an important role. The relationship with China, for all its problems, remains extremely important for Japan. Much the same is the case with India’s relations with China.
In his meetings with the Indian leadership, Mr Noda also took stock of the recent meeting between officials of India, Japan and the United States. This trilateral meeting looks set to become a regular event. It affords the three countries an opportunity to exchange views on strategic developments and coordinate their efforts on common problems. The trilateral meeting assumes greater importance against the backdrop of recent moves by the US to accord primacy to the Asia-Pacific region in its foreign policy. The US is apparently seeking to create a new architecture — in economic and security domains — for Asia, thereby softening the impact of its relative decline vis-a-vis China.
The Obama administration has initiated a series of measures towards this end. Washington is promoting the Trans-Pacific Partnership (TPP) as an enhanced and cutting-edge free-trade agreement. The aims of the TPP make it clear that it is in some measure directed against the growing economic clout of China. On the security side, the US will shift some troops from Japan to Australia, which will now house around 2,500 American troops. This move is coupled with an effort to reinvigorate its ties with its former allies in Asia, especially Japan and South Korea. The US is also urging other
important countries, like Indonesia and India, to share some of the “burden” in the Asia-Pacific.
From India’s standpoint, the engagement with the US and Japan is important for responding to the changes underway in Asia. But the challenge for New Delhi is to ensure that its ties with Japan are shaped not merely by Washington’s Asia policy.

The writer is a senior fellow at the Centre for Policy Research, New Delhi