RESOURCE PAPER - 16

India-Japan Partnership :A Global Imperative

by
B.S. Raghavan, IAS (Retd.)
Former Policy Adviser to UN (FAO)
Former US Congressional Fellow
Patron, Chennai Centre for China Studies

Japan and India have been great friends from time immemorial, but thedevelopments in bilateral relations in recent years has made significant
impact in the global arena.
Mr. B.S. Raghavan, a veteran IAS Officer, West Bengal-Tripura cadre,
held several senior positions in the Government of West Bengal before
his retirement as the Chief Secretary to the Government of West Bengal.
During his career, he was deputed to the Government of India several
times and had had the privilege of working with great Indian leaders inthe Home, Industry and Food Ministries.
Mr. Raghavan had the honour of being selected as a US Congressional
Fellow for two years during his service and was the United Nations
Policy Adviser to the Food and Agriculture Organisation (FAO) for
three years.
Back in Chennai after retirement, Mr. Raghavan is involved withseveral educational, social and cultural organizations and think tanks.
He is a Patron of Chennai Centre for China Studies, a keen journalist andhas authored several books on Economics and Finance. We are proud tohave Mr. B.S. Raghvan, an intellectual colossus as Advisor to the IndoJapan Chamber of Commerce and Industry. We are thankful to him forthis Resource Paper and are confident that our readers will find it highlyinteresting and informative.
December 2017

Suguna Ramamoorthy
Secretary-GeneralIndia-Japan Partnership :A Global Imperative

I. Introduction
I.1. Japan's rebirth after being left decimated at the end of theSecond World War, attaining the stature of a titan in technologicalprowess, and its rise rivalling the United States as a formidable
economic power has no parallel in world history. Like Phoenix,
Japan has literally risen from its ashes.
I.2. An article by George Friedman in the February 8, 2017 issue
of Forbes says that by 2040, Japan, and not China, will rise as East
Asia's leading power, although Japan's population is a tenth of
China's, and it is just not aging, but shrinking, and its debt-to-GDP
ratio is 229 per cent. The other arguments Friedman advances arethat unlike China, Japan has no land-based enemies. Unlike
5China, the Japanese Government has no concern about its ability
to impose its writ throughout the entire country. Nor does it haveto deal with a huge gulf in wealth disparity between regions.
I.3. These achievements did not come for the asking. Just imagine
the odds stacked against this nation of some 130 million people
spread over 6800 islands, nearly 75 percent of them unsuitable for
agricultural, industrial or even residential use, situated in a
volcanic zone with 108 active volcanoes, and dependent mostly
on imports. It has verily performed a miracle made possible byclear vision, hard work, discipline, a creative and innovative work
culture, a dauntless spirit that triumphs over obstacles, a
synergistic blending of the policies and efforts of the Government
with the willing support of small and big industry alike, and thepeople, putting the interests of the nation first and foremost. It is amodel for developing nations to emulate.

II. Lasting emotional bondII.1. The affinity mutually felt by India and Japan came into being
long ago, when buzzwords such as geo-politics, strategic
partnership and so on were still not in vogue and when diplomacy
itself was in its infancy. It came about not through any calculated
moves but by two events which immediately forged a lastingemotional bond, giving India an iconic status in the eyes of theJapanese people.
II.2. The first was the dissenting judgment given by the IndianJudge, Radhabinod Pal, on the 11-member International Tribunal
for Crimes, acquitting the 25 prominent figures in Government
and the Military brought to trial “of each and every one of thecharges in the indictment”, castigating the Tribunal as a “shamemployment of legal process for the satisfaction of a thirst forrevenge”. The Japanese have erected a monument for him at the6Yasukuni Shrine, and the Japanese Prime Minister, Shinzo Abe,during his visit to India in 2007 paid him high tribute in his
address to Indian Parliament and travelled all the way to Kolkata
to meet his son.
II.3. The second was the gift of elephant Indira by Jawaharlal
Nehru, India's first Prime Minister, to the children of Japan - a
gesture that was hailed as the harbinger of the happy andharmonious relations that were to become the norm between
India and Japan and a symbol of hope for the physicallydevastated and morally dispirited post-war Japan.

III. Comprehensive Economic Partnership Agreement
III.1. The importance attached by India and Japan to thestrengthening and broadening the ties between both countries has
found enthusiastic expression at every summit meeting of the two
Prime Ministers in the form of concrete steps taken to put them ona firm footing.
III.2. The India-Japan Comprehensive Economic Partnership
Agreement (CEPA) is the most exhaustive of all the agreementsthat Japan has concluded with other countries so far. It covers
more than 90 per cent of trade and an incredible range ofprovisions in respect of improvement of business environment
for greater investment, trade in goods and services, removal oftechnical barriers to trade (TBT), sanitary and phytosanitary(SPS) measures, movement of natural persons, intellectual
property-related protocols, government procurement andcooperation on matters of common interest and global
importance.
III.3. The readiness shown by Japan in agreeing to abolish, withimmediate effect, 87 per cent of its tariff lines, relating to 93 per
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cent in volume, compared to India's 17.4 per cent, and inconceding to India's plea for phased reduction of its tariff during aspan of 10 years, on the ground of giving sufficient time todomestic industry to adjust to the trade liberalisation, has been
nothing short of generous.The trade volume of items still
attracting tariff on the Japanese side is only 2.93 per cent, asagainst India's 13.62 per cent.
III.4. Japan has thus opened for unrestricted entry a tremendous
number of items of export interest to India, besides enabling
Indian professionals to set up shop in Japan in information
technology-related services, accounting, research anddevelopment, tourism, market research and management
consultancy.

IV. Japanese involvement with Indian economy
IV.1. In conjunction with the growth of the inter-governmental
dialogue, Japanese corporate presence has since acquired risingvisibility in India what with investments by such Japanese majors
as Suzuki, Honda, Toyota and Nissan and such notableacquisitions as Matsushita Electric, Daiichi Sankyo and
DoCoMo. The target for 2020 for the two-way trade is $50
billion, nearly double from $18.31 billion in 2011-12. While interms of Japanese overseas development assistance, India is thelargest recipient of all countries.
IV.2. But, by far the most significant Japanese involvement with
the Indian economy is in terms of the implementation of theflagship infrastructure projects of the Delhi-Mumbai Industrial
Corridor (DMIC) and the Dedicated Freight Corridor (DFC)
linking the two poles of the country's development. Modelled on
the famed Tokyo-Kyoto Osaka Corridor in its aim of developing
the entire region along the 1,483-km transportation link, the8

DMIC project plans to cover 20 per cent of the Indian population
in a time-frame of 11 years.
IV.3. On the Indian side, the implementation has been predictably
subjected to delays for a variety of reasons, but mainly for want ofproper supervision and regular monitoring. Remembering theirstakes in the projects, and to protect their reputation, the Japanese
Government, business and industry also need to have an eye on
the execution.

V. Democratic Security Diamond
V.0. Japan has only two “special partnerships”. One is with
Australia and the other is with India. The Japanese Prime
Minister, Shinzo Abe, is keen to widen strategic cooperation
among four leading Democracies of the U.S, Japan, India andAustralia in the Asia Pacific region. He has come out with a bold
move in favours of what he calls a Democratic Security Diamondstrategy “whereby Australia, India, Japan, and the US state of
Hawaii form a diamond to safeguard the maritime commons
stretching from the Indian Ocean region to the western
Pacific.”He is prepared to invest, to the greatest possible extent,
Japan's capabilities in this security diamond.

VI. Evolution of scope of Partnership
VI. 1. The most welcome feature of the evolution of closer
relations between the two countries is that it is not contingent on
the nature and complexion of ruling dispensations and Prime
Ministers of either country, but is founded upon an inherent fundof goodwill and respect deriving from shared values such as
democracy and human rights and common goals such as world
peace and prosperity of all nations. What started off as Global and
9Strategic Partnership in 2006, reached a crescendo in 2014 in thename of a Special Strategic and Global Partnership.
VI.2. In between, the two countries bonded together further bymeans of a Joint Declaration on Security Cooperation between
Japan and India, followed up on the occasion of the
60thanniversary by the establishment of diplomatic relations withthe declaration of a Vision for the Enhancement of Japan-India
Strategic and Global Partnership.
VI.3.India has been assigned a pivotal role in the document
expounding Japan's National Security Strategy. The relevant
portion states: “India is becoming increasingly influential, due towhat is projected to become the world's largest population, and tohigh economic growth and potential. India is also geopoliticallyimportant for Japan, as it is positioned in the centre of sea lanes ofcommunication. Japan will strengthen bilateral relations in a
broad range of areas, including maritime security, based on thebilateral Strategic and Global Partnership.”VI.4. Capping it all is the Civil Nuclear Agreement signed during
the November 2016 visit of Prime Minister Narendra Modi toJapan for the periodically held summit. India is the first nonsignatory to the Nuclear Non-Proliferation Treaty (NPT) to havesigned such a deal with Japan. It is not hyperbole on the part of the
Indian Prime Minister Narendra Modi and his Japanesecounterpart, Shinzo Abe, to have described it as a historic step
forward to achieve a clean energy partnership.
VI.5. The nine-page statement issued after the summit ofNovember 2016 gives an idea of the wide-ranging and allencompassing nature of the present state of the relations between
the two countries. It lays the groundwork for what has been calleda Future-Oriented Partnership for Prosperity. Its core objectives
are meant to make the Partnership durable by:
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(i)

Building a Stronger Partnership for Safer and Stable World;(ii)

Working together for a cleaner and greener future;(iii) Investing in people;(iv) Working Jointly for Strengthening Rules-basedInternational Order in the Indo-Pacific Region and beyond.

VII. Core areas for productive allianceVII.0. Exhaustive as the listed measures may be, implementationis the key to ensure that they do not remain mere empty words on
paper. This is where the power structures and official machineryon both sides must display unremitting and careful attention to all
the finer aspects in order to translate the words into action. To citea few areas which are at the heart of a meaningful and productive
alliance:

Increasing the inflow of Japan's direct investment: Bothcountries have agreed that all direct Japanese investments will betreated on par with domestic investment, in respect ofconcessions, incentives and facilities, and application ofregulatory and tax regimes. Japanese investment should be
pushed from the present measly $2.6 billion in 2015-16 to $20
billion by 2020.

Jacking up trade volume: India's trade with Japan is at present
an unmentionable two per cent of its total trade. With the
reduction / abolition of tariff on both sides, it should be possible tojack it up to 10 per cent by 2020, or at least equal to India's total
trade with China (which at present is eight per cent of India's total
trade).
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Raising exports in the domain of textiles:
Japan is today the fourth largest apparel products importer on the
globe, constituting seven per cent of its total imports. India's share inthis sector is barely 0.8 per cent, the lion's share of demand from Japan
going to China, Italy, South Korea, Thailand and Vietnam. Here is achallenge to India's enterprising artisans in Tirupur and Ludhiana. Ifthey bend their energies towards renovating and revamping
production lines, suitably recasting the basket of products andredrawing business plans, they can raise India's share of apparel
supplies to Japan, to at least 10 per cent by 2020. Likewise, though thedemand for knitted garments is very high in Japan, India's share is only
0.2 per cent, leaving it to Bangladesh, China, Indonesia, Italy, South
Korea, Thailand, Turkey and Vietnam to dominate the market. Since,
under the CEPA, Japan has agreed not to levy any import duty on
Indian exports of knitted and woven apparel, it is undoubtedly
possible to raise India's share to 10 per cent by 2020.
Setting up Technical Woking Groups to anticipate and solve
disputes on interpretation:
The CEPA extends to many intricate technical areas such as
intellectual property rights, technical barriers to trade, sanitary andphytosanitary issues, and procedures for procurement. They arelikely to give rise, during implementation, to honest differences ininterpretation. Appropriate Technical Working Groups, constituted
in advance, will help iron out these differences.
Establishing a Joint Ministerial level India-Japan
Monitoring Group to supervise the pace and progress of
implementation:
Apart from the CEPA, the innumerable commitments made in thevarious statements following the summits are likely to be lost12

sight of unless their implementation is reviewed periodically andstragglers are pulled up. This is best assured by establishing astanding Joint Ministerial Follow-up Group.

VIII. Adaption of model to new era
VIII.1. India-Japan Partnership model is a sound and tested one
and lends itself for adaption to an era in which kaleidoscopicchanges are taking place in the world. They are getting to be mostpronounced in resurgent Asia which is building new pathways toprogress and prosperity. Indeed, the world's political andeconomic centres of gravity are shifting to Asia, thanks to thevibrant presence and impressive success stories of Japan, China
and India. Their inter se ranking are liable to shifts, but, on present
showing, there will never come a time when the world, in general,
and Asia, in particular, could afford to ignore their combined
impact.
VIII.2. There are reports to the effect that at current growth rates,
both India and China will get ahead of the US almost at about thesame time (around 2040), with the quadrupling of India's GDP by
2020. The breath-taking forecasts of the famous Goldman Sachs'
BRIC report are that China and India will be the first and thesecond largest economies by 2050 in terms of GDP, and that
China would become “the industrial workshop of the world”
while India would stand out as “one of the great service societies”
and “a motor for the world economy, and a key contributor to
generating spending growth”.

IX. Leveraging complementarities
IX.1. Although Japan's economic performance in recent years has
been uneven, it still remains an economic power. Its basic
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economic and social strengths are still intact and it has lost noneof its capabilities of playing a conspicuous role in world affairs. If
only India and Japan leverage the striking complementarities
between the two countries, they can provide the necessary
stimulus to the Asia-Pacific region's overall progress.
IX.2. Some of these complementarities that have alreadyimpressed themselves on discerning observers are: (i) Japan's
ageing population (23 percent above 65 years) and India's
youthful dynamism (over 50 percent below 25 years); (ii) India's
rich natural and human resources and Japan's advanced
technology; (iii) India's prowess in services and Japan's
excellence in manufacturing; and (iv) Japan's surplus capital forinvestments and India's large and growing markets thanks tothe
burgeoning middle class.

X. Forming regional troika
X.0. There is a strong case for India and Japan along with China
forming a regional troika rather than the hypothesised
Quadrilateral Axis with the US and Australia. The achievementsof such a troika bound by affinities could be mind-boggling andbeneficial to the entire human race. But, for this to happen, it was
imperative that Japan showed the determination to come out of
the shadow of the US and the three countries sorted out theirdifferences and disputes among themselves.

XI. United States of Asia
XI.1. Korea and Taiwan are the other luminous stars giving Asia
its distinctive edge over the rest of the world. The performance ofAsia's other notable countries such as Indonesia, Myanmar,
Philippines, Pakistan and Thailand may not place them in the14

same league, but they too hold the potential of joining the big
league in due course, provided they attune the politicalunderpinnings of their systems and institutions to modern
requirements and harmonise their policies and approaches withthose of the heavyweights of the region.
XI.2. Here is a chance as well as a challenge for India, China andJapan, as Asia's three leading players with political and economic
reach, to link arms and use their combined resources andinfluence to spearhead a supreme effort for fusing all the existing
multifarious, mutually debilitating outfits into a new architecture,say, of a United States of Asia, in order that coopetition(cooperation and competition blended together) among theminvests the 21st Century with the character of an Asian Century.
XI.3. This will essentially involve distilling the essence of thecharters of all the existing more than a dozen regional
associations such as ASEAN, SAARC, SCO and the like into a
unified and integrated mechanism, building into it functional,
financial, commercial, trade, investment and security protocols
for mobilisation of resources, talents, techniques and facilities forpromoting economic development, broadening areas ofcooperation, resolving conflicts, combating threats to security,
stability and independence, and maintaining peace and harmony.
XII.4. The essential pre-requisite for this is for India, China andJapan themselves to set an example as responsible members of theworld community which put a premium on the solemnly binding
attributes of vision, values, friendship, understanding andaccommodation.
XII. Conclusion
XII.1. While India and Japan are getting closer on the political,
economic and security planes, the social and cultural sides,
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continue to be blind spots in the relationship. For instance, thenumber of Japanese tourists to India is very meagre (only some
250,000 out of 20 million Japanese tourists favour India as theirdestination).
XII.2. According to Japan International Cooperation Agency,
Indian students in Japan number only 500, which is less thanthose from much smaller countries such as Nepal and
Bangladesh. As regards Japanese students in India, Jyunichi
Kawaue, Consul and head of the Consulate of Japan, Bengaluru,
bluntly stated in February 2016 that they don't prefer pursuing
education in India due to security concerns and most opt for
English courses in the US and Australia.
XII.3 The numbers of cultural exchange programmes and events,
centres teaching Japanese language and culture, and academic
centres for Japanese studies are also sparse.
XII.4. A Partnership takes roots, flourishes and is sustained not byparleys and declarations at the Ministerial and official levels alone, but
by extensive people-to-people contacts, cultural exchanges andstudents and youth participation. Deficiencies in these respects willneed to be remedied by making vigorous efforts to that end.

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