Usos y gastronomía

From the above overview a number of issues stand out; 1) structural factors provide the overwhelming reason for Japan’s distance from India. 2) Japan and India have predominantly interacted on an informal level. 3) Economic interests have previously blossomed but been disrupted by external structural events as well as India’s closed economic system. Whilst official Japanese rhetoric speaks of a sense of closeness to India, the reality of relations has depended on pragmatic interests.

As Japan has constantly appreciated since the cessation of its imperialist agenda, historical animosity can place severe challenges on political relations. However whilst the lack of animosity removes one hurdle, it also means that Japan and India without considerable shared experience, falter when seeking common understanding.

India has figured only on the periphery of Japan’s world view. The exchanges of intellectuals and religious ideas whilst useful rhetorically, has not translated into

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Chintamani Mahapatra, ‘Changing Role of Japan and India in International Affairs’, Panda and Ando,

sustainable economic or political partnership due to the absence of a favourable structural environment. The complementarity voiced during the late 1940s and 1950s is often utilised by those keen to augment Indo-Japanese economic contact, as are the spiritual links despite the fact that Buddhism has long been on the decline in India.89

Few in Japan realise the importance of India during the post-war era in particular and few bureaucrats consulted for this study point to genuine episodes of Indo-Japanese partnership as rationale for closer present-day ties. Overall the above outline of Japan’s historical relationship with India points to the pragmatic nature of Japan’s interest which has sought Indian partnership when the economic and strategic benefits have proved attractive.

The remainder of this thesis will concentrate on three primary threads of Japan’s diplomacy towards India. The economic incentive has been considered paramount and will be the focus of the next chapter. How Japan has balanced its traditional ‘nuclear allergy’ when engaging with a non-NPT signatory occupies the following chapter, before analysis of Japan’s security interests in India provide the final case study. By employing NCR and extensive interview evidence, the variety of influences will be made evident with the ultimate conclusion pointing towards the necessity of structural pressures, tempered by unit-level factors.

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According to many Hindu nationalists, the Buddha was merely another incarnation of the Hindu god Vishnu. However, where Buddhism remains strong, particularly in West Bengal, Japan’s relations with India have been strongest

6. Japan’s Economic Interest and Interaction with India

Japan’s limited diplomatic dealings with India cannot easily be delineated from economic initiatives. Japan’s interest in India has been influenced, certainly initially, by economic interest, providing the backbone to Japan-India ties. Japan’s policy choices have not solely been shaped by strategic incentives but in parallel with economic objectives. Whilst at times political strategy has provided the public face of Japan-India cooperation, behind the scenes the economic imperatives of engaging with India have provided another major impetus.

This first case study will analyse the economic dimension of Japan’s interest in India. The chapter will analyse the reasons behind economic indifference during much of the latter half of the twentieth century before looking at the areas in which Japan has recently used economic cooperation in the form of aid, investment and trade to improve relations on a wider scale. Among the additional questions is how India’s economic growth has been interpreted in Japan and how this has translated into policy strategies. Behind the rhetoric of opportunities, it is important to qualify such statements with analysis of how and why cooperation was not possible in the past and how Japan’s economic engagement factors into Tokyo’s wider strategy.

The chapter will begin with an overview of Japan’s historical economic interests before turning to contemporary interaction. Japan’s assistance following India’s 1991 balance- of-payments crisis when the door to greater engagement was opened is then reviewed, followed by the impact on economic relations of the nuclear tests of 1998 which

brought a further dip. The events of 9/11 and subsequent lifting of sanctions are then addressed. A further external stimulus from ROK’s success in India is also identified as an important structural factor behind Japan’s reappraisal of India’s economic merit.

In Chapter 5 it was noted how during the post-war era, the two nations held healthy economic relations. However during the Cold War, Japan and India followed diametrically opposed economic models. Rather than the political affinities explaining Japan and India’s deviation from one another in these decades, differing economic systems provided the major structural obstacle.

Japan has primarily viewed India as an ODA destination rather than trade or investment partner. Indeed ODA has represented the major concentration of Japanese efforts during the period of study. With this in mind the remainder of the chapter divides into two. The first section will explore Japan’s ODA strategy towards India whilst the second looks at private initiatives (supported by the Government of Japan). Regarding ODA the chapter will address how Japan has channelled its ODA to improve the infrastructure and business environment to facilitate the entry of Japanese firms and stronger diplomatic ties which greater interaction might produce. The section will also identify obstacles, successes and the decision-making process.

For the second section, trade, investment (FDI) and projects such as the DMIC will be the focus. Trade has long been one of the weakest areas of interaction but hopes are high following the signing of a Comprehensive Economic Partnership Agreement (CEPA) in February 2011.90 The background to this deal is discussed with analysis of

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This agreement is also referred to as EPA, omitting the ‘comprehensive’ prefix in Japan whilst CEPA is preferred in India.

its likely impact as well as what the signing of the Japan-India CEPA demonstrates about Japan’s approach to free trade and economic diplomacy. The auto industry, pharmaceuticals and IT sector are among those believed to show greatest promise and are examined in detail with special reference to the unique success of Suzuki in the Indian market.

India also acts as an ‘insurance policy’ for Japanese firms wary of China’s long-term stability. Japan’s India’s policy therefore highlights the shift in economic strategy from one dependent on first Southeast Asia, followed by China, to one where multiple emerging markets are wooed. The economic dimension of Japan’s India policy has also gained greater salience as official government rhetoric has retreated from overt political overtones discussed in Chapter 8. The financial crisis from 2007 onwards also shifted perceptions from predominantly political/strategic concerns in light of the post-9/11 era towards one where ‘economic diplomacy’ takes centre stage.

Within the thesis’ NCR framework, the primacy of structural factors is apparent through an examination of the importance of India’s economic stature, the need to diversify from the Chinese market and competitive profile of ROK. Based on these issues Japan’s economic interest appears inevitable and self-evident. Yet despite the rhetoric of matching economies the reality is very different from the hypothetical. Regardless of the existence of structural complementarities, Japan and India have not exploited these chances fully. The reasons for reticence must therefore be traced to additional intervening factors which have challenged structural forces. Primary among these has been the perception of India’s inadequacy as a market for Japanese investment. Japan’s peculiar approach to business which traditionally avoids risk has also played a part, in

addition to several complaints which have not yet been suitably addressed by the Indian government regarding among others; infrastructure, tax and labour laws.

Private firms, METI and JETRO have all been slow to adjust to India’s sustained economic growth. Politicians too have hesitated to see India as an economic partner. Only once this barrier was weakened by reports such as that by Goldman Sachs in 2003 and ever-greater evidence of India’s sustained growth, has economic engagement taken a rising trajectory. The efforts of the Japanese governments have been instrumental nonetheless in alerting the business community, on whom responsibility for improving economic ties lies.