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INDIA-JAPAN

Shinzo Abe and Narendra Modi’s flirting needs to move to the next level

By Madhura Karnik

Japanese prime minister Shinzo Abe will visit India today (Dec. 11) on a three-day trip. While the Twitter bromance between Abe and India’s prime minister Narendra Modi is fairly steady, it is time to take the relationship to another level and talk about money.

India needs more investments from Asia’s second largest economy. The South Asian country can also use Japan’s expertise in technology and infrastructure to develop its cities.

There has been some good news in the last few days. On Dec. 10, the Modi government cleared a $14.7 billion Japanese proposal to build India’s first bullet train line. This will be one of the largest foreign investments in the infrastructure sector in India.

The Modi government had also signed a pact to develop the holy city of Varanasi into a smart city in partnership with Kyoto during the Indian prime minister’s visit to Japan in August last year. In fact, on this trip, Modi will take Abe to visit Varanasi.

But, in the 2014 fiscal year, the bilateral trade between India and Japan was $16.31 billion—almost 12% lower than the previous year.

India is not even among Japan’s top 10 trading partners (pdf)—China leads the pack, closely followed by the US.

Investments

Over the last few years, Japan’s investments into India have been falling drastically—mainly because Asia’s third largest economy is a tough country to do business in.

In February, Takeshi Yagi, the Japanese ambassador to India said that firms ”face a series of problems on customs, taxation and infrastructure,” adding that policies and initiatives need to materialise.

But Modi can do a lot to move this relationship to the next level. For instance, he can hire Japanese companies—who have developed one of the world’s best infrastructure systems in their own country— to build roads and rails in India.

“A lot of collaboration can be done in the field of technology, science and research. Japan has one of the most sophisticated industrial structure and if India can adopt this, trade figures can jump,” Neelam Deo, director at Gateway House, a Mumbai-based think tank, told Quartz.

Japan can also help India achieve its nuclear energy ambitions. According to Deo, Japan is one of the largest suppliers of critical parts of nuclear power plants, but the country has been reticent.

In May, Japan signed a pact to double investments into Indian firms over the next five years.

India-Japan love

Modi and Abe have shown great camaraderie since the former came into power in May last year. In fact, Modi was the first world leader Abe followed on Twitter.

But, now is the time to progress from this “flirting” to “commitment,” The Economist wrote recently. It further added:

Mr Abe claims that the Indo-Japanese partnership is the world’s “most important bilateral relationship”. That sounds like flattery. The most important relationship for both Japan and India is obviously with America—not least for countering China. Yet the Indo-Japanese romance is certainly blossoming.

These cordial relations have made China—which has its own set of security-related problems with both the countries—jittery. But India should leverage its relationship with both the countries.

“I think we need both China and Japan. India is at an advantageous position, and we need to play our cards sensibly to tap the available investments, finance and technology,” Dr B R Deepak, a professor of Chinese and China Studies at the Centre of Chinese and Southeast Asian Studies, Jawaharlal Nehru University, told Quartz.

“China should not be concerned as long as India does not gang up with the US and Japan. India does not have the economic or military muscle to pit one country against the another. So it should capitalise on the opportunities these countries present,” he added.