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Mega Indian welcome for Japan
NEW DELHI - The Indian government formally approved the US$100 billion Delhi-Mumbai Industrial Corridor (DMIC), the country's largest infrastructure project, ahead of the three-day visit of Japanese Prime Minister Shinzo Abe this week.Japan was made the official partner in the DMIC project during a visit by Prime Minister Manmohan Singh to Tokyo last December. The Japanese government and corporate sector are expected to provide up to $30 billion in loans and investments to support the initiative, in what would be one of Japan's biggest financial contributions to a single foreign project of this nature. The first phase of the 1,500-kilometer project from next January to 2012 will include six investment mega-regions of 200 square kilometers each. The second phase will span 2012-16 and will aim to strengthen the industrial hub and integrate the areas further. The Congress party-led federal government is rolling out the red carpet for Abe, recognizing the growing strategic and business importance of Japan to India. Abe, who arrived in the country on Tuesday, is scheduled to address a joint session of the two houses of Parliament, a courtesy not even extended to US President George W Bush when he visited India in March, because of opposition by the left-wing parties. Abe met with Manmohan on Tuesday evening. Abe, like Manmohan, faces serious domestic political problems, but it is strongly believed that a momentum in India-Japan relations has already been established. New Delhi sees Japan as a natural ally, given mutual historical suspicions about China and close workings with the United States. Abe has said that Japan's relations with India may become more important than with the US or China. Abe heads a strong delegation of senior executives from companies that include Toyota, Canon, Mitsubishi, Matsushita Electric, Hitachi, Fujitsu Ltd, Suzuki Motor Corp, Japan Airlines and the Japan Bank for International Cooperation. Most of these companies are looking to tap the growing Indian market further. On the agenda is a Japan-India comprehensive economic-partnership agreement, including free trade in goods and services and investment-promotion measures that the two governments are looking to fast-track and implement in the near future. Manmohan and Abe are scheduled to take up the issue in detail. When Manmohan visited Tokyo in December, the two countries spoke about a free-trade agreement within two years. "Our goal is to try [to] increase our trade volume considerably," Foreign Secretary Shiv Shankar Menon said this week. According to the Confederation of Indian Industry (CII), Japan's trade with India was $6.5 billion in 2006, less than 4% of its trade with China. India too generates far higher trade figures with China and the US. Between 1991 and 2006, Japanese companies invested $2.15 billion, or just 6% of the total foreign direct investment into India. The $100 billion investment in the DMIC is a big chunk of the estimated $320 billion in the short term and more than $500 billion in the medium term that India needs in the infrastructure sector and that the government has committed to generate. New Delhi has been keen to support infrastructure projects, including facilities for manufacturing. The Japanese have been shy of investing in India, given its weak infrastructure that includes power, ports, airports and roads. Japanese institutional investors have been actively involved with the Indian stock markets, but direct investment has not been substantial. However, with the Indian economy clocking more than 9% growth for the past few years, and prospects of improved infrastructure, Japanese industry and investors are in serious rethink mode. The CII has predicted that two-way trade between India and Japan could double to $14 billion by 2012 from an estimated $7 billion in 2007. And certainly, the DMIC is one big area of involvement. The DMIC will run through the northern states of Delhi, Uttar Pradesh, Haryana, Rajasthan, Gujarat and Maharashtra, following a proposed Delhi-Mumbai dedicated rail freight corridor and an Arabian Sea port. The corridor envisages a freight rail network, industrial parks, special economic zones, airports, seaports, power plants, food-processing parks and other infrastructure along the stretch between the two major commercial hubs of Delhi and Mumbai. This year, an Indian delegation led by Commerce and Industry Minister Kamal Nath visited Japan and had talks with potential investors such as Mitsui, Mitsubishi, Itochu and Suzuki. Most of the infrastructure work connected to DMIC will be executed in public-private partnership format. A corporate entity, Delhi Mumbai Industrial Corridor Development Corp, is to be formed to implement planning of the project, development of its various segments, coordinating with all investors and the two governments, monitoring of implementation, and raising funds. Business apart, India and Japan are also seeking each other as strategic partners in making a combined pitch for a permanent seat at the United Nations Security Council and military and security cooperation in East Asia to check the influence of China. Beijing has been anxious about the "Quadrilateral Initiative" (Quad) involving India, the US, Japan and Australia. India is looking to host its biggest multilateral exercise with navies of the four countries as well as Singapore in the Bay of Bengal next month. Twenty-five warships will include the nuclear-powered aircraft carrier USS Nimitz and the US nuclear submarine SSN Chicago. The US, Japan and India held similar exercises off the Japanese coast last year; this is the first time that the Australians will take part. Chinese Foreign Minister Yang Jiechi has conveyed Beijing's concerns to Indian Foreign Minister Pranab Mukherjee over China not being kept in the loop about a forum that will relate to issues in East Asia. Though the four countries in the Quad have said disaster management remains the focus of the Japan-promoted exchange, China is anxious that such dialogue could broaden into a deeper military and security cooperation among the four "democracies". New Delhi is also looking at Tokyo to back its civilian nuclear deal with the US in international forums such as the International Atomic Energy Agency and the Nuclear Suppliers Group, which need to endorse the pact. Japan's support could tilt the balance, since it is a major civilian atomic power and the only nation to have been attacked with nuclear weapons. Tokyo is also considering the possibility of a nuclear-energy cooperation with India, with the business potential of setting up nuclear plants in India estimated at $100 billion. Accompanying Abe are top executives from Mitsubishi, Hitachi and Toshiba, deeply involved in the global nuclear-power business. Posted by: john frum 2007-08-22 |
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