Modi Visit Draws Pledges of Support From Japan

By Elaine Kurtenbach 2 September 2014

TOKYO — Japan and India agreed Monday to step up their economic and security cooperation as visiting Prime Minister Narendra Modi won pledges of support for his effort to revitalize the lagging Indian economy.

Modi, who brought a delegation of more than a dozen Indian tycoons to Japan, said he hopes to elevate still relatively low-key business ties with Japan to a “new level.”

In a joint statement issued after their talks, the two leaders reaffirmed the importance of upgrading defense ties, a priority for both given China’s growing assertiveness in the region. Modi also welcomed Japan’s relaxation of restrictions on exports of defense-related equipment and technology.

He and Prime Minister Shinzo Abe “recognized the enormous future potential for transfer and collaborative projects in defense equipment and technology,” the statement said.

As part of their “Investment Promotion Partnership,” the two sides set a target of doubling Japan’s foreign direct investment in India. Abe also pledged to raise public and private investment and financing from Japan to 3.5 trillion yen (US$33.6 billion) within five years and to provide an aid loan of 50 billion yen ($480 million) to the India Infrastructure Finance Co.

Abe said he would work with Modi to “strengthen the cooperative relationship between our two countries.”

The statement listed construction of high-speed railways and other transport systems, cleanups of the Ganges and other rivers, food processing and rural development and construction of “smart cities” as priorities.

In a speech to Japanese business leaders on Monday, Modi promised to set up a team to facilitate trade and investment.

Modi became prime minister in May with pledges to transform India’s troubled economy and is keen to win more support for ambitious energy and construction projects, including high-speed railways.

“When I became prime minister, there were high expectations. Not just high expectations, but people expected speed in decisions,” Modi told leaders of Japan’s five big business groups. “I give you the assurance that what we have done in the past 100 days, the results will be seen very quickly.”

In the joint statement, Abe reiterated his hope India will adopt its bullet train technology, promising Japanese financial, technical and operations support.

Japan and India agreed also to continue joint and Japan-US-India military exercises and to accelerate talks on the purchase by New Delhi of US-2 amphibian aircraft.

The two sides said they would step up talks on nuclear energy cooperation, claiming “significant progress” despite having failed to reach a last-minute agreement on safeguards sought by Japan. The two sides meanwhile pledged to strengthen work on preventing proliferation of nuclear weapons and on nuclear safety.

The statement said Japan and India will cooperate on advanced, clean coal technology, which is expertise sorely needed to help combat the choking pollution in India’s major cities.

The two countries said they are in the process of finalizing a commercial contract on production and export to Japan of rare earths, which are minerals used in mobile phones, hybrid cars and other high-tech products.

During Abe’s first term in office, in 2006-2007, the two countries signed an agreement on cooperating in building an industrial corridor between Mumbai and New Delhi, two of India’s biggest cities. At that time, Modi was chief minister of the fast-growing, business-friendly state of Gujarat.

In a gesture toward his golf-loving Japanese hosts—Abe golfs frequently—Modi boasted of having beefed up the links in Gujarat during his years as chief minister.

Since taking office, Modi has traveled to neighboring Nepal and Bhutan and attended a summit of the BRICS emerging nations—Brazil, Russia, India and China. He helped launch an effort to open bank accounts for the poor in India and has set up an investigative team to look into corruption. Meanwhile, the economy has picked up pace in what some analysts are calling the “Modi bounce.”

Japanese businesses are increasingly looking to expand trade and investment in fast-growing Southeast Asia and India, a market of nearly 1.3 billion people.