Significance of Okada’s Visit to India

The Foreign Minister of Japan, Okada Yatsuya, visited India on August 21, 2010 as a part of his five-day trip to India and Thailand. During his visit, Okada held important discussions with his counterpart; S.M. Krishna, Prime Minister Manmohan Singh, Deputy Chairman of the Planning Commission Montek Singh Ahluwalia and Environment Minister Jairam Ramesh. Okada had the fourth round of strategic dialogue with his counterpart. However, what emerged as the most important agenda in the dialogue process was the review of the status of negotiations on the civilian nuclear cooperation deal, which was started in June 2010.

Among other issues of mutual concern that both Okada and Krishna discussed were bilateral trade ties and conclusion of the Comprehensive Economic Partnership Agreement (CEPA), and plans to review the bid by G-4 (India, Japan, Brazil and Germany) along with African countries for staking claims for permanent seats in the United Nations Security Council. Early conclusion of a CEPA would facilitate slashing tariff duties on around 9000 products. Some important products that are likely to benefit are steel, pharmaceuticals, apparel and machinery. The CEPA would also give a big boost to bilateral trade, which stood at a modest $12 billion in 2008-09. The range of subjects covered in the talks reflected, as mentioned by Foreign Office spokesman Vishnu Prasad, “the significant and qualitative shift in recent years”.

Both the countries have exchanged drafts on a civil nuclear pact and both are closely examining each other’s version so that differences can be sorted out at the earliest. Indeed, a nuclear deal would further firm up ties in other areas such as defence and economic.

There are two dimensions to the nuclear pact under negotiations. One, it is a very sensitive one in Japan. There exists a strong anti-nuclear domestic constituency in Japan and this constituency has been extremely critical that the Japanese Government has started nuclear negotiations with India, which has stayed away from the Nuclear Non-proliferation Treaty (NPT). Being the only country in history to have suffered the consequences of a nuclear bomb, the anti-nuclear sentiment is embedded in the Japanese psyche. The political leadership cannot ignore easily this sentiment before entering into a deal with a country which has stayed out of the NPT regime. The party in power always fears that if it reverses the established policies, it may face backlash when it faces elections. The Mayor of Nagasaki, a city that was bombed in 1945 along with Hiroshima, upped the ante of anti-nuclear debate when he made a declaration on August 9, 2010 calling for abolition of all nuclear weapons in the world. Therefore, Okada candidly described Japan’s decision to start negotiations on the agreement with India as “one of the toughest decisions, if not the toughest”, since he has taken over as the Foreign Minister.

The other dimension to the issue is the huge economic dividends that would accrue from nuclear commerce, if the deal is inked. If India and Japan conclude the nuclear deal, it will facilitate the General Electric Company of the US and Areva of France to use Japanese suppliers for nuclear projects for India. The Japanese Government is cognizant of this opportunity and therefore keen to accelerate the negotiations. Two major Japanese companies—Toshiba and Hitachi – are too keen to join the race to engage in nuclear commerce with India as the projected trade volume is in the vicinity of $ 150 billion.

Even as India-Japan relations in economic and strategic arenas are firming up, albeit slowly, Japan’s neighbouring country, South Korea, has already marched ahead of Japan by forging closer economic and strategic ties. Both India and South Korea have not only signed the CEPA (entered into force from January 1, 2010) but Seoul has already upstaged Tokyo by launching nuclear negotiations with New Delhi before Tokyo even started thinking about the same. Indeed, there is a virtual competition for a share of the nuclear pie in the Indian market and this works to India’s advantage. Japan probably realises this and is thus handling both the CEPA and nuclear pact issues with a sense of urgency.

Even within Japan, despite the strong anti-nuclear lobby, there is also a constituency that strongly recommends Japan to forge nuclear links with India. For example, the Japan Forum on International Relations (JFIR) has identified specific reasons why Japan should cooperate with India in the nuclear field. The reasons advanced are: (a) political significance of such a cooperation; (b) the need for India to deal with its lack of energy resources; (c) growing threat of global warming; (d) advantages of promoting cooperation in science and technology; and (e) contribution by Japanese corporations involved in nuclear power.

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JAPAN produces technologically the most advanced reactors. Toshiba alone has over 30 per cent of the global civilian nuclear reactor building capability. If the Japanese Government succeeds in taking the domestic constituency on board and concludes the nuclear deal with India, the Indian nuclear market can unfold huge growth potentials to the tune of $ 150 billion within a decade.
Having identified the key deliverables (expedi-ting the CEPA hanging fire since January 2007, and the civil nuclear deal since June 2010) during Okada’s visit, both India and Japan want to finalise these when Prime Minister Singh visits Japan for his first summit meeting with Prime Minister Kan Naoto. Both the Prime Ministers have already met once on the sidelines of the G-20 summit of major and emerging economies in Toronto in June 2010. Both the countries do not want to lose more time. As a result, Prime Minister Singh’s visit is likely to be advanced to October 2010 from December as planned before when Singh is likely to combine his Japan visit with the one for the East Asian Summit meeting in Vietnam. It is expected that the contours of a civil nuclear pact will be finalised in October and the formal signing can take place later. If such a deal is concluded in just two rounds of talks, it would not only show to the world the Japanese confidence in India’s policy but also allow top Japanese nuclear companies such as Toshiba and Hitachi to sell atomic equipment to India.

It is further likely that when the Commerce Secretary visits Japan in September, negotiations for the conclusion of the CEPA would have reached an advanced stage. Indeed, the future of India-Japan economic relations appears bright. Apart from the multi-billion-dollar Japanese loan for the Delhi-Mumbai Industrial Corridor (DMIC) connecting northern cities with the western seaboard ports, Japanese companies are planning big investments in a range of sectors such as telecom, automobiles, pharmaceuticals and power. For example, Japanese acquiring a controlling stake in Ranbaxy and Japan entering the telecom sector with the Tatas are just two instances of huge future Japanese investments in India. It must not be forgotten that the Japan Bank for International Cooperation has already identified India as the top country for long-term investment. A dialogue on Africa that both are planning to embark upon also indicates the convergence of interests in other parts of the globe. The future of India-Japan relations should be seen from this perspective.

Dr Rajaram Panda is a Senior Fellow at the Institute for Defence Studies and Analyses, New Delhi. He can be contacted at e-mail: rajaram_panda@yahoo.co.in