What Abe and Modi need from each other

August 30, 2014
Obsession
Modinomics
August 30, 2014

The six million followers of Indian Prime Minister Narendra Modi may have been surprised to see a new language on his twitter feed: Japanese. On August 28, Modi issued seven tweets in Japanese, expressing his admiration for Japanese society and respect for Japanese Prime Minister Shinzo Abe.

A flurry of retweets from Shinzo Abe’s official twitter feed followed. He then expressed his own respect and admiration for India and Modi in a series of tweets. (Abe is not an avid tweeter—he only follows three people, but one of them is Narendra Modi)

The twitter love-fest opened a window into the long-touted Modi-Abe “bromance,” which began when Modi first visited Japan in 2012 as chief Minister of Gujarat. That “bromance” is being elevated this week as Modi makes a five-day official visit to Japan.

Abe plans to host Modi for a rare tea ceremony reserved for only the most treasured guests, and he took the unusual step of flying to Kyoto—Modi’s first stop—to greet the Indian PM.

From Modi, Abe will be hoping for a meeting of the geo-political minds. Japan, after all, is increasingly frustrated with Beijing’s increasing assertiveness in the South China Sea, and Abe sees India as a potential ally in its prickly relationship with its powerful neighbor.

Ahead of the meeting, there were reports that the two sides could sign a historic defense agreement that would mark only the fourth such deal signed by Japan, and the only one with an Asian country (the others are with the US, UK, and Australia). Though only an MoU that includes joint defense exercises and regular strategic and military consultation, it will likely be seen as a victory for Abe at home as he seeks to peel Japan away from its pacifist constitution, and build a stronger alliance with a country that much of corporate Japan sees as fertile investment territory.

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This is going to be a walk in the park.(Reuters/Kyodo)

For Narendra Modi, however, the Japan visit is less about geo-politics and Asian security, and more about geo-commerce and investment. Modi understands his mandate: to grow India’s economy, root out corruption, create jobs, attract investment, expand electricity capacity, build infrastructure, and generally improve people’s lives. The Modi “wave” or “tsunami” or, pick your metaphor, was created on the aspirations of Indians dreaming of a better life and disenchanted with their politics.

Modi knows that his victory had little to do with his foreign policy vision, and everything to do with his campaign as a “can-do” leader that can bring to India what he brought to his home state of Gujarat as Chief Minister: growth, investment, infrastructure, reduced red tape, a sense of optimism, renewal.

For Abe, this will mean redoubling commitments to support Japanese investment. Japan is already a major investor in India, and India’s fourth largest foreign investor. Recent surveys conducted by the Japan Bank for International Cooperation suggest that corporate Japan is bullish on India. The South Asian giant tops the list of most important markets for long-term Japanese investment.

Akihiko Tanaka, president of the Japan International Cooperation Agency, a government-backed aid body, believes Japan can help India grow into a China-like economic power. “India could grow into an economic powerhouse on par with China,” he told the Wall Street Journal. “Japan should help India build a robust economy and become an anchor of the region.”

Still, Japan’s FDI into India fell in 2012-2103, according to the Reserve Bank of India, dropping from $2 billion in the 2011-12 fiscal year to $1.3 billion.

Modi wants—and needs—just about everything, but particularly investments in infrastructure and manufacturing. India’s infrastructure needs are well-known. Nearly one in three Indians have no regular access to electricity—400 million people. Roads are mostly poor, and its railways need dramatic revamping. Ports and airports across the country are also in need of investment. The list goes on and on. The question is, of course, if Modi can “open” India for investment in the same way he “opened” Gujarat.

When he was Chief Minister of Gujarat, his exploits were legendary in the business community: cutting through bureaucracy, lightning speed permits for investors, and an annual investment conference that would have made the World Economic Forum of Davos-fame proud.

In Modi’s Independence Day speech on August 15, he made a passionate appeal for…manufacturing. Yes, manufacturing. In a cinematic scene straight out of Bollywood, the son of the tea-seller who rose to the highest office in the land spoke before tens of thousands and hundreds of millions across the nation from the ramparts of a former Mughal palace, and he said: “I want to appeal all the people world over, from the ramparts of the Red Fort, ‘Come, make in India’, ‘Come, manufacture in India’. Sell in any country of the world but manufacture here. We have got skill, talent, discipline, and determination to do something…Our country is powerful. Come, I am giving you an invitation.”

An effort by Shinzo Abe’s administration to support Japanese corporates to deliver on the goal of manufacturing in India would go a long way toward bolstering Modi’s credibility which, even amid Modi-mania, has already shown signs of faltering as an impatient populace grows hungry for the Modi “miracle” to deliver.

As for Modi, he will need to show Abe that he is more than just a salesman with a briefcase full of India opportunities. He will need to demonstrate a seriousness of purpose in issues related to broader Asian security beyond India’s immediate South Asian neighbors. The defense agreement is a good start.

Shortly after Modi’s visit to Japan, he will welcome Chinese President Xi Jinping to Delhi. Two weeks later, he will visit Washington. September will, thus, be a defining month in Indian foreign policy.

In Tokyo, Modi would do well to speak the language of common Asian security, and seek ways to tamp down tensions in the South China Sea. One avenue would be to convene an Indian Ocean/South China Sea commercial forum. The focus on commerce would fit well with Modi’s mandate, while linking the future of the Indian Ocean to the South China Sea would serve Tokyo’s broader Asian security agenda. It would also get Beijing’s attention in a positive way: commercial security.

By choosing such a path, Modi would be delivering a powerful message to both China and Japan: India is open for business, and commercial security remains, above all, Delhi’s priority.

Such a stance will not substantively reduce Tokyo-Beijing tensions, but neither will it add to them. That, in and of itself, would represent a victory for both men.

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