Mega Indian welcome for
Japan By Siddharth Srivastava
NEW DELHI - The Indian government formally
approved the US$100 billion Delhi-Mumbai
Industrial Corridor (DMIC), the country's largest
infrastructure project, ahead of the three-day
visit of Japanese Prime Minister Shinzo Abe this
week.
Japan was made the official partner
in the DMIC project during a visit by Prime
Minister Manmohan Singh to Tokyo last December.
The Japanese government and corporate sector are
expected to provide up to $30 billion in loans and
investments to support the initiative, in what
would be one of Japan's biggest financial
contributions to a single
foreign project of this nature.
The first
phase of the 1,500-kilometer project from next
January to 2012 will include six investment
mega-regions of 200 square kilometers each. The
second phase will span 2012-16 and will aim to
strengthen the industrial hub and integrate the
areas further.
The Congress party-led
federal government is rolling out the red carpet
for Abe, recognizing the growing strategic and
business importance of Japan to India. Abe, who
arrived in the country on Tuesday, is scheduled to
address a joint session of the two houses of
Parliament, a courtesy not even extended to US
President George W Bush when he visited India in
March, because of opposition by the left-wing
parties. Abe met with Manmohan on Tuesday evening.
Abe, like Manmohan, faces serious domestic
political problems, but it is strongly believed
that a momentum in India-Japan relations has
already been established. New Delhi sees Japan as
a natural ally, given mutual historical suspicions
about China and close workings with the United
States. Abe has said that Japan's relations with
India may become more important than with the US
or China.
Abe heads a strong delegation of
senior executives from companies that include
Toyota, Canon, Mitsubishi, Matsushita Electric,
Hitachi, Fujitsu Ltd, Suzuki Motor Corp, Japan
Airlines and the Japan Bank for International
Cooperation. Most of these companies are looking
to tap the growing Indian market further.
On the agenda is a Japan-India
comprehensive economic-partnership agreement,
including free trade in goods and services and
investment-promotion measures that the two
governments are looking to fast-track and
implement in the near future. Manmohan and Abe are
scheduled to take up the issue in detail. When
Manmohan visited Tokyo in December, the two
countries spoke about a free-trade agreement
within two years.
"Our goal is to try [to]
increase our trade volume considerably," Foreign
Secretary Shiv Shankar Menon said this week.
According to the Confederation of Indian Industry
(CII), Japan's trade with India was $6.5 billion
in 2006, less than 4% of its trade with China.
India too generates far higher trade figures with
China and the US. Between 1991 and 2006, Japanese
companies invested $2.15 billion, or just 6% of
the total foreign direct investment into India.
The $100 billion investment in the DMIC is
a big chunk of the estimated $320 billion in the
short term and more than $500 billion in the
medium term that India needs in the infrastructure
sector and that the government has committed to
generate. New Delhi has been keen to support
infrastructure projects, including facilities for
manufacturing.
The Japanese have been shy
of investing in India, given its weak
infrastructure that includes power, ports,
airports and roads. Japanese institutional
investors have been actively involved with the
Indian stock markets, but direct investment has
not been substantial.
However, with the
Indian economy clocking more than 9% growth for
the past few years, and prospects of improved
infrastructure, Japanese industry and investors
are in serious rethink mode. The CII has predicted
that two-way trade between India and Japan could
double to $14 billion by 2012 from an estimated $7
billion in 2007.
And certainly, the DMIC
is one big area of involvement. The DMIC will run
through the northern states of Delhi, Uttar
Pradesh, Haryana, Rajasthan, Gujarat and
Maharashtra, following a proposed Delhi-Mumbai
dedicated rail freight corridor and an Arabian Sea
port.
The corridor envisages a freight
rail network, industrial parks, special economic
zones, airports, seaports, power plants,
food-processing parks and other infrastructure
along the stretch between the two major commercial
hubs of Delhi and Mumbai.
This year, an
Indian delegation led by Commerce and Industry
Minister Kamal Nath visited Japan and had talks
with potential investors such as Mitsui,
Mitsubishi, Itochu and Suzuki. Most of the
infrastructure work connected to DMIC will be
executed in public-private partnership format.
A corporate entity, Delhi Mumbai
Industrial Corridor Development Corp, is to be
formed to implement planning of the project,
development of its various segments, coordinating
with all investors and the two governments,
monitoring of implementation, and raising funds.
Business apart, India and Japan are also
seeking each other as strategic partners in making
a combined pitch for a permanent seat at the
United Nations Security Council and military and
security cooperation in East Asia to check the
influence of China. Beijing has been anxious about
the "Quadrilateral Initiative" (Quad) involving
India, the US, Japan and Australia.
India
is looking to host its biggest multilateral
exercise with navies of the four countries as well
as Singapore in the Bay of Bengal next month.
Twenty-five warships will include the
nuclear-powered aircraft carrier USS Nimitz and
the US nuclear submarine SSN Chicago. The US,
Japan and India held similar exercises off the
Japanese coast last year; this is the first time
that the Australians will take part.
Chinese Foreign Minister Yang Jiechi has
conveyed Beijing's concerns to Indian Foreign
Minister Pranab Mukherjee over China not being
kept in the loop about a forum that will relate to
issues in East Asia.
Though the four
countries in the Quad have said disaster
management remains the focus of the Japan-promoted
exchange, China is anxious that such dialogue
could broaden into a deeper military and security
cooperation among the four "democracies".
New Delhi is also looking at Tokyo to back
its civilian nuclear deal with the US in
international forums such as the International
Atomic Energy Agency and the Nuclear Suppliers
Group, which need to endorse the pact. Japan's
support could tilt the balance, since it is a
major civilian atomic power and the only nation to
have been attacked with nuclear weapons.
Tokyo is also considering the possibility
of a nuclear-energy cooperation with India, with
the business potential of setting up nuclear
plants in India estimated at $100 billion.
Accompanying Abe are top executives from
Mitsubishi, Hitachi and Toshiba, deeply involved
in the global nuclear-power business.
Siddharth Srivastava is a New
Delhi-based journalist.
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2007 Asia Times Online Ltd. All rights reserved.
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