BANGALORE - While Japanese Prime Minister
Shinzo Abe preferred to remain noncommittal during
his just concluded three-day trip to India
regarding his country's support for India in the
Nuclear Suppliers' Group (NSG), Japanese business
has indicated its yen for engaging with India's
nuclear-energy sector.
Kazuo Furukawa,
president and chief executive officer of Hitachi,
Japan's third-largest builder of nuclear reactors,
said on Wednesday that his company will consider
investing up to US$1
billion for nuclear power
generation in India. "Japanese companies in
nuclear-power generation are waiting for the
outcome of the India-US nuclear deal, and once
there is international consensus over the issue,
the Hitachi Group may invest in the nuclear-power
sector," he said.
The Japanese premier was
more circumspect on the matter. In his speech to
Parliament, Abe avoided any reference to the
India-US nuclear deal or Japanese support for
relaxing NSG rules to allow nuclear trade with
India once the deal has finally been ratified by
India and the United States.
At a
subsequent press conference, Abe said Japan will
decide its position in the NSG only after studying
the still-to-be-negotiated safeguards agreement
with the International Atomic Energy Agency
(IAEA). Japanese officials said Japan will closely
watch the "trend" at the NSG and make its decision
accordingly. It will not stand in the way of India
seeking a change in the NSG rules, Japanese
officials told the media.
Abe's visit came
even as the Indian government is battling
opposition to the nuclear deal it finalized with
the US recently. India's left-wing parties -
bitter opponents of the deal and of the
government's warming to the US - have threatened
to pull support out of the coalition government if
it goes ahead with talks with the IAEA, the next
step in the process to have restrictions on
nuclear trade with India lifted.
Indian
Prime Minister Manmohan Singh has said that his
government will press ahead with taking the deal
further. On Wednesday, Manmohan reiterated India's
request for Japan's support for the nuclear deal
in the NSG.
Japan is an influential member
of the NSG. Securing Tokyo's support in the
45-member body is vital for India, not only
because it needs unanimous support to get NSG
rules changed but also because Japan is the only
country against which a nuclear bomb has been
used. Japan's backing could get India the support
of some fence-sitters. Besides, Japan has
cutting-edge technology to offer India's nuclear
power plants.
Indeed, Japan is well placed
to benefit from nuclear trade with India. "The US
has lost the technological edge for nuclear power
plants. The world leaders in this technology now
are Japan and France," a senior Japanese official
said on the eve of Abe's visit. Unlike the US,
which hasn't built nuclear reactors over the past
three decades, Japan has the technology to install
the next generation of nuclear plants and is among
the few countries where new nuclear plants have
been built recently, he said.
Among those
in the huge business delegation that accompanied
Abe to India were representatives of Japan's top
nuclear companies - Toshiba (which owns the US
company Westinghouse Electric), Hitachi and
Mitsubishi.
Economic engagement between
India and Japan is set to grow in the coming
years. The two countries are looking to triple
bilateral trade from $6.5 billion last year to $20
billion by 2010. They are hoping to conclude a
comprehensive economic partnership agreement soon.
The agreement proposes to make nearly 90% of trade
duty-free. The two countries are also looking to
finalize a bilateral currency-swap agreement. Such
an agreement would enable them to help each other
in times of balance-of-payments crises or to
counter any speculative attack on their respective
currencies.
Japanese companies have been
reluctant to invest in India because of its
abysmal infrastructure. Japan accounts for a
fraction of foreign direct investment (FDI) into
India. According to the Federation of Indian
Chambers of Commerce and Industry, total FDI from
Japan into India from August 1991 to March 2007
amounted to $2.21 billion - 5% of total FDI into
India in the period.
During Abe's visit,
Indian Commerce Minister Kamal Nath sought FDI to
the tune of $5 billion from Japan in different
sectors of the Indian economy, especially in the
infrastructure sector. Japan, which helped India
with the construction of the Delhi Metro, is the
main foreign financial backer of the $100 billion
Delhi-Mumbai Industrial Corridor project.
Except for Japan's opposition to the
Indian nuclear tests in 1998, which put bilateral
relations in deep freeze for a while, India-Japan
ties have been largely free of irritants. This is
not the case with their relationship with China.
Both countries have bitter historic memories of
their relationship with China and unresolved
disputes that cloud the interaction. Yet their
trade with China is far more robust then it is
with each other. Japan's trade with India, for
instance, is a meager 4% of what it is with China.
India's trade with China last year was four times
that with Japan.
An economically and
militarily rising China and anti-Japanese riots in
Chinese cities have triggered anti-China sentiment
in Japan. This has prompted Japan to look to
diversifying its trading partners in Asia and
reducing its dependence on China.
India is
increasingly registering on the radars of Japanese
manufacturers that are considering shifting base
from China to India. Japanese automotive majors,
for instance, view India as a potential
manufacturing center that could offer labor costs
lower than those in China.
"It will not be
surprising if in 10 years' time, Japan-India
relations overtake Japan-US and Japan-China
relations," Abe wrote in his book Towards a
Beautiful Country: A Confident and Proud Japan
published last year. A rather excessive assessment
perhaps, but Abe has been taking steps toward
achieving this. He has been encouraging Japanese
businesses to look beyond China to India. In the
year since he became premier, the number of
Japanese companies that have set up shop in India
has grown significantly. A third of the
approximately 475 Japanese companies in India were
set up after Abe took charge in Japan.
The
growing economic engagement between India and
Japan is not ruffling feathers in Beijing as much
as the growing security cooperation is. Even that
would not have unsettled China if it were limited
to the two countries. It is not.
In April,
India and Japan, along with the US, participated
in joint naval exercises off the Japanese coast.
Two weeks from now, the three will be joined by
Australia and Singapore for a massive naval
exercise in the Bay of Bengal.
Japan has
been at the forefront of a "Quadrilateral
Initiative" (Quad) and has been reaching out to
the US, Australia and India to make this happen.
The Quad has met several times over the past few
months. All four of its members insist that the
initiative is not an attempt to contain China. But
China is not convinced.
Abe reasserted his
vision of a "democratic" Quad during his India
trip. In his address to Parliament on Wednesday,
he spoke of a "broader Asia" partnership of
democracies. Elaborating on this, Abe said the
India-Japan partnership would "evolve into an
immense network spanning the entirety of the
Pacific Ocean, incorporating the US and
Australia".
India and Japan must join
forces with "like-minded countries", Abe said, to
ensure the security of sea lanes through which
most of the world's trade in oil passes. The
"like-minded countries", Abe clarified, "share
fundamental values such as freedom, democracy and
respect for basic human rights as well as
strategic interests".
Abe's "broader Asia"
partnership made no mention of China, a fact that
has not gone unnoticed in Beijing. Chinese
scholars have warned that the Quad initiative is
not conducive to regional peace.
Such an
alliance resurrects a "Cold War mentality" and is
designed "deliberately" to divide Asia, Hu
Shisheng, an expert in South Asian studies at the
China Institute of Contemporary International
Relations, was quoted as saying by China Daily.
Clearly, China is not amused.
Sudha Ramachandran is an
independent journalist/researcher based in
Bangalore.
(Copyright 2007 Asia Times
Online Ltd. All rights reserved. Please contact us
about sales, syndication and republishing.)
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
