Emperor Akhito and Empress Michiko visited India as the then Crown Prince and Princess in 1960 for their honeymoon and one hopes that their recent 6-day visit has brought them just as much joy, even while serving as a stabiliser of stronger links between India and Japan.
Unlike as with China, India has no dispute with Japan and indeed Indo-Japanese relations have been more than cordial. It will be remembered that in August 2000 Japanese Prime Minister Mori visited India, followed by India’s Prime Minister Atal Behari Vajpayee visiting Japan in December 2001 when a joint Indo-Japan declaration was signed leading to high-level dialogue, economic cooperation and military and anti-terrorism cooperation. Since then there have been more top-level visits between Delhi and Tokyo leading to greater economic cooperation.
In recent year Japan has assisted India in infra-structure development projects such as the Delhi Metro Rail. In October 2008 Japan had signed an agreement with India under which it would provide the latter a low-interest loan worth 4.5 billion US dollars; to construct a railway project between Delhi and Mumbai. This is the single largest overseas project financed by Japan. India is also one of the only three countries in the world with whom Japan has a security pact, the other two being Australia and the United States. As of March 2006 Japan was the third largest investor in India with an estimated total investment of 2.12 billion US dollars.
Kenichi Yoshida, a Director of Softbridge Solutions, Japan stated in late 2009 that Indian engineers were becoming the backbone of Japanese IT industry and that it is important for Japanese industry to work together with India.
Japan has invested heavily in China but it is now realising that it is not prudent to put “all the eggs in one basket”. China and Japan have been lodging protests with each other over the holding of naval exercises in the East China Sea as their dispute over tiny islands show no sign of a resolution. Reports indicate the heightening tensions have negatively affected economic relations between the region’s two most important countries which are also the world’s second and third largest economies. It is reported that the dispute has resulted already in a 3.3 per cent drop in overall trade for the year to 333.6 billion US dollars. Furthermore it is claimed, just as in the first half of this year, the drop in trade shows that China is no longer Japan’s biggest export market, having dropped behind the United States for the first time in five years. Significantly, Japan is likely to be replaced by South Korea as China’s second largest trading partner after the US, according to a well-known political analyst.
The beneficiary of Japanese largesse, if so it can be called, would be ASEAN, most notably Malaysia, according to the same expert. The fact remains that as many as 14,000 Japanese companies have investment in China which must be a record of some sorts. Most or many of them would be happy, it is claimed, to leave China if they can, but apparently Chinese laws do not permit it. If only they did, one can be sure India would also be a happy beneficiary.
India, it is now becoming clear, has become an attractive investment market with relaxation in FDI (Foreign Development Investment) norms to boost investor sentiments; thus emerging as the most attractive investment destination surpassing both China and the US.
Earnest and Young, the global survey of leading consultancy firms, in its report called Capital Confidence Barometer has ranked India as the most attractive destination, followed by Brazil in the second position and China in the third.
Interestingly, the top three investing countries in India turn out to be the US, France and Japan. FDI from these three countries from April 2000 to August 2013 amounted to Rs 53,673 crore, Rs 17,718 crore and Rs 71,870 crore. According to the E and Y Survey, 38 per cent of the respondents felt merger and amalgamations volume in India would improve over the next 12 months.