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28 December 2012,

Enhancing Japan-India exchanges

Although there has been a steady growth of the India-Japan bilateral relationship, the full potential of this association remains untapped. Why is it increasingly imperative for New Delhi and Tokyo to enhance their bilateral relations for mutual benefit? Sanjeev Sinha blogs

President, Sun and Sands Group, and Sun and Sands Advisors

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On December 16, Japan re-elected Shinzo Abe as its seventh prime minister in six years.  This coincided with the Japanese firm Hitachi holding its first board meeting abroad, in India – where it announced plans to invest $853 million in the host country.

On a previous visit to India during his brief term as prime minister in 2007, Abe had expressed an interest in expanding Japan-India relations. He took initiatives to concretise this interest and signed agreements involving Japanese investments worth several billion dollars for the Delhi Mumbai Industrial Corridor (DMIC).

Indian Prime Minister Manmohan Singh and Japanese Prime Minister Shinzo Abe during the latter’s visit to India in 2007. (Source: PMO)

Although this project is considered significant by the Japanese, not many in India know about it. Two months ago, while speaking with the president of an Indian logistics company about a potential collaboration with Japan, I was asked, “What is the DMIC?”

On the other side, until the late 1990s, when I took a taxi in Japan, talkative drivers would sometimes ask at which restaurant I worked as a cook. After 2007-08, when I take taxis, other talkative drivers usually ask at which investment bank I work. The image of India among the Japanese is clearly changing.

The changes have taken time and work. In 2007, as the head of the IIT Alumni Association in Japan, I organised a conference on ‘India-Japan Partnership: New Global and Strategic Perspectives’. Initially, a representative of Keidanren, the largest industrial association of Japan, said, “India is a matter for the Japan Chamber of Commerce and Industries,” but eventually agreed to support the conference, along with the Japanese Ministry of Economy, Trade and Industry, the Japanese Ministry of Foreign Affairs, and the Japan External Trade Organisation. This, I believe, was a turning point for Japan’s interest in India.

People in Japan have for long respected India as the source of Buddhism and Mahatma Gandhi, and for Justice Radhabinod Pal’s role on the Tokyo Tribunal (Justice Pal was the Indian member appointed to the International Military Tribunal for the Far East after World War II). New Delhi receives the largest Official Development Assistance from Tokyo, targeted at grassroots development and environmental causes in India.

But the full potential of the India-Japan bilateral relationship remains untapped. With the West now occupied with tackling several economic issues, India cannot depend solely on western nations for investments. Fortunately, New Delhi seems to be serious about its ‘Look East’ policy.

India however has many competitors in “looking East.” China too has been taking steady steps in that direction. At present, there are almost a million Chinese in Japan – a huge number compared to the 22,000 Indians living in Japan. Almost every middle-to-large company in Japan has one or more Chinese employees, who act as a natural bridge for the company’s business dealings with China. As the foreign employee in the office, the Chinese person is also usually put in charge of the company’s transactions in India. Similarly, compared to the number of Indians, there are many more people from Vietnam, Indonesia and Thailand in Japan.

Unlike India, the rest of Asia has worked quickly to build people-to-people exchanges, including student exchanges, with Japan. The slow-moving people-to-people contact between India and Japan is a significant bottleneck in the bilateral relationship. Although Japan is keen to have more Indian students, when an Indian considers studying abroad, it is likely that she/ he will have a relative who lives in the U.S., UK, or Australia, but not in Japan. This works as a deterrent.

The untapped potential of the bilateral economic relationship is also a result of differing approaches. Japan’s approach to economic growth is methodical, with a focus on long-term planning – it is not forceful and not adequately savvy in terms of public relations to be able to work with the political volatility in India.

Japan is used to a highly-organised domestic environment and to customised red-carpet treatment in most countries in Asia. High-end Japanese industries require high-end infrastructure, services, and a skilled workforce. These are not always adequate in India. Besides, Japanese investors are more comfortable following Japanese companies that go abroad.

Both Japan and India stand to benefit greatly from enhanced bilateral ties, and these blockages have to be addressed with strategic efforts. A customised package approach for Japan can be a good way to break the ice. Japan-focused industrial zones, which facilitate the entry of Japanese technology, infrastructure, educational institutions, and investments in a coordinated manner, can be a good start.

The DMIC is based on this concept, and parts of this project, like the Neemrana Industrial Zone, have already been successful. Gujarat is now interested in similar projects and bilateral collaboration on ports.

Today when I take a taxi in Japan, a driver sometimes exclaims about India’s population of 1.2 billion and says that Japanese companies must grow by tapping this large market. Japan has great technology, best practices and capital. However, growth is slow and there is a shortage of human resources. To fill these gaps and meet mutual needs, Japan and India can be ideal business partners.

Sanjeev Sinha is President, Sun and Sands Group and Sun and Sands Advisors . He is the Country Representative in Japan for Tata Asset Management and Tata Realty and Infrastructure; Advisor, Indian Scientists Association in Japan; President, Japan India Auto Components Association; Japan Director, Global Association for Risk Professionals. Sinha was formerly with UBS, Mizuho Securities, Goldman Sachs, Gentech Corp.

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