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India, Japan Sign Deals Worth 35 Billion Dollars

... Business Standard:

Christmas arrived early in India, with Japanese Prime Minister Shinzo Abe on Saturday presenting about $35 billion to take the strategic partnership between the two nations to a new height.

Abe said his country's ties with India had witnessed the dawn of a new era from politics to economy as well as defence ties, as India and Japan inked 16 agreements.

Japan committed to provide a "highly concessional" loan of $12-15 billion at 0.1 per cent interest to help India build its first Shinkansen, or high-speed train, from Mumbai to Ahmedabad. It put in place a 'Make in India' fund of $12 billion for Japanese business persons keen to invest in India. The two sides also signed a broad agreement to cooperate in the civil nuclear energy sector.

At a meeting of the India-Japan Business Leaders' Forum on Saturday morning, Abe lauded Prime Minister Narendra Modi for contributing to "ease of doing business" in India, while the Indian PM thanked his "dearest friend" for assisting the amazing speed with which Japan has undertaken projects to invest in India in the last year.

In September 2014, during the Abe-Modi summit in Tokyo, the two sides had agreed that Japan will invest $35 billion in five years. "The figure had surprised many at that time, but today, within a short time span, unimaginable progress has been made, and the contours of investment are visible on the ground," Modi said.

Abe likened Modi to the Japanese Shinkansen. "PM Modi's speed of implementing policies and reforms is like the Shinkansen and his reform agenda is as safe as the Shinkansen," Abe said in Japanese.

Their delegation-level talks a little later at the Hyderabad House lasted an hour. The 44-point joint statement issued after the meeting focused on strengthening economic and strategic ties. The high point for the Indian side was the memorandum of understanding (MoU), on civil nuclear cooperation.

India and Japan signed 16 pacts, some of which were:

  • Developing Mumbai-Ahmedabad Shinkansen, or high-speed train
  • Comprehensive technological cooperation in railway
  • MoU on civil nuclear cooperation
  • Transfer of defence equipment and technology
  • Cooperation in the energy sector between NITI Aayog and the Institute of Energy Economics, Japan
  • Forest management
  • Japan also expressed interest to develop 11 industrial townships
  • India will offer "visa on arrival" to Japanese citizens from March

Abe told the meeting that "no leader other than Modi" could have accomplished the civil nuclear cooperation MoU. India and Japan have been negotiating a civil nuclear cooperation agreement ever since India got the Nuclear Suppliers' Group waiver in 2008, but the Japanese have had their concerns with India not being a signatory to the Nuclear Non-Proliferation Treaty (NPT) and later because of adverse Japanese public opinion after the Fukushima disaster of 2011. The actual agreement will be signed after "technical details are finalised" and it is ratified by the Japanese Diet.

The Japanese side said it was satisfied with India's assurance of exercising moratorium on nuclear testing, but will have to review its civil nuclear cooperation with India if New Delhi were to conduct nuclear tests. India needs a nuclear agreement with Japan to make its civil nuclear cooperation agreement with the United States more effective, given that nuclear reactor suppliers like Westinghouse and General Electric's parent companies are Japan-based Toshiba and Hitachi, respectively. India's Foreign Secretary S Jaishankar termed the MoU as "a very big step" as India needed at least 40 per cent of its power needs from non-fossil fuels.

At their delegation-level meeting, Abe outlined the India-Japan strategic partnership. He said "a strong India was in the best interests of Japan and a strong Japan is in the best interests of India." He stressed that the close relationship between the two countries was important from the strategic point of view. Without referring to China, both sides underscored the challenges India and Japan face in South China Sea, which caters to most of their oil imports and other supplies. The two sides called for all countries in the region, but what is directed chiefly at China, to avoid "unilateral action" and establish a "code of conduct" quickly. To underline the importance of peace in the region, the two sides called their joint statement as "Vision 2025: Special Strategic and Global Partnership Working Together for Peace and Prosperity of the Indo-Pacific Region and the World".

India and Japan also decided to take forward their defence cooperation by signing an agreement on transfer of defence equipment and technology, decided that Japan will now be a regular feature in India's annual Malabar naval exercises with the United States. Until now, Japan would feature every alternate year in the exercises.

On the economic and infrastructure side, the two sides decided to develop 11 Japanese industrial townships. One each will come up in Rajasthan and Madhya Pradesh and the rest will be decided in due course. Modi announced that all Japanese visitors to India will get visa on arrival from March 1, 2016. As for Shinkansen, the Japanese have expressed the hope that the cooperation will not be limited to just the Mumbai-Ahmedabad stretch.

Modi also welcomed the setting up of 'Japan-India Make in India Special Finance Facility' of $ 12 billion by Nippon Export and Investment Insurance (NEXI) and Japan Bank for International Cooperation (JBIC). Japan announced that its Overseas Development Assistance or ODA loan of $ 5 billion will cover over a dozen projects, including Chennai and Ahmedabad metro projects, road connectivity project in the Northeast, transmission lines in Odisha and Madhya Pradesh, Ganga Rejuvenation and the western dedicated freight corridor project.

Abe accompanied Modi to Varanasi in the evening.

Japan has committed to invest about $35 billion in India over the next 5-7 years

  • $12-15 billion in bullet train between Mumbai and Ahmedabad, at 0.1% interest
  • $12 billion in 'Make in India' fund, from Nippon Export and Investment Insurance and Japan Bank for International Cooperation, for Japanese business people to invest in India
  • $5.5 billion for Chennai-Bengaluru Industrial Corridor (CBIC) project
  • $5 billion Official Development Assistance (ODA), for metro projects in Ahmedabad and Chennai, roads in the Northeast, transmission lines in Odisha

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