Since 2003-04, India has been the biggest beneficiary of Japan’s official development assistance (ODA) policy. After a brief lull in economic and political ties following India’s nuclear tests of 1998, relations were back on track. Propelled by regular summit exchanges and interactions on the margins of international forums, bilateral ties surged ahead. The two sides regularly consult on key issues like disaster management, climate change, maritime security, energy security, non-proliferation and disarmament.

Several mega infrastructure projects, most notably the Dedicated Freight Corridor and the Delhi-Mumbai Industrial Corridor are being developed with partial Japanese funding. The Indo-Japan Strategic and Global Partnership of 2006, based on mutual interests and shared concerns, laid out co-operation in 5 areas: political, defense and security, economic, S&T (science and technology) and people-to-people exchanges.

During the Annual Summit of 2010, there were 2 major policy announcements; that of the end of negotiations for a comprehensive economic partnership agreement (CEPA) to boost bilateral trade and economic relations and the beginning of talks on an inter-governmental agreement (IGA) for co-operation in the peaceful uses of the atom. Tokyo’s consent is needed if GE-Hitachi and Toshiba-Westinghouse are to sell nuclear reactors to India. For the Japanese leadership, nuclear commerce could mean political harakiri. But sensing the long-term gains of a civilian nuclear co-operation and nudged by South Korea’s pact with India to sell nuclear reactors, Tokyo was set to expend political capital but following the Fukushima disaster, the process is now on hold.

According to  a study conducted by the Foundation for National Security Research and reported by The Hindu, India signed strategic partnership agreements with over a dozen countries, but in an appraisal of the benefits that  such partnerships have accrued to India in 3 key areas of co-operation—politico-diplomatic, defense, and economic—Japan ranks last  among the 6 countries that the study focused on viz. US; UK; Germany; Japan; Russia and France. The report adds that Japan’s support for India in international forumshas varied. Japan lacks interests in India’s core concerns over Kashmir, terrorism, and civilian nuclear co-operation. It has shown alimited sympathy for India’s UN Security Council bid. The assessment may be disturbing but not disheartening as Indo-Japan strategic co-operation will gain traction in the face of pressing geopolitical developments like the Iranian oil embargo, Chinese adventurism, and North Korean provocations, which pose a common threat to both.

Japan in a historic move decided to open the door to Delhi for expansive defense co-operation, which was limited to military exchanges and co-operation in maritime security.  Tokyo has offered to sell the US2, a multirole amphibious aircraft, to India. It is a military platform of dual use which could be deployed on search and rescue operations and humanitarian and disaster relief missions.A joint naval drill will be held this year. The Indian Navy will have a memorable experience in learning from the Japanese Maritime Self Defense Force (JMSDF), a reputed naval force known for its anti-submarine and anti-air warfare skills derived from years of training with the US. The US and Japan’s decision to include India in the territorial security discussions underscores the strategic importance of India in the Asia-Pacific.

Both Japan and India are major buyers of Iranian crude. The Iranian oil embargo has put the two countries in a tight spot. Disrupted supplies could not only imperil the two economies but stir worldwide economic chaos. Triangular consultations between the US, India and Japan could open ways for India and Japan to continue receiving supplies of Iranian oil; atleast until alternate arrangementsare made and in limiting the potential for friction on the Iranian nuclear issue.

Japan is aware of US efforts to work with India in dealing with threats emanating from North Korea. India and the Democratic People’s Republic of Korea (DPRK) established diplomatic relations in 1973 and have maintained embassies in each other’s capitals. India has advised North Korea on setting up Special Economic Zones (SEZs) and trained its people in information technology (IT) and S&T. In March 2011, India responded with alacrity to a food crisis by routing $1million through the World Food Program (WFP). A thaw in Indo-DPRK relations under the leadership of the young Kim could pave the way for halting the transfer of missile technologies to Pakistan and breaking the deadlock over the denuclearization talks.

The “Arc of Freedom and Prosperity”—a strategy enunciated by the then Foreign Minister, Taro Aso in 2007, has become a guiding principle of Japan’s foreign policy to counter China by pitching in with countries like India and Australia. Japan and India are courting ASEAN nations with trade agreements and talk of a “circle of democracy”.

The strategic partnership with India brings Japan closer to another nuclear umbrella, that too a regional one, from threats across the Sea of Japan. Arms sales to India will prop up Japan’s cash-strapped military industries. The recent deal of a currency swap to the tune of $10 billion indicates a growing economic interdependence between the two nations to blunt the damaging consequences of the Eurozone crisis,and it comes at a time when the Iranians are likely to accept a part of their oil payments from India in yen.

Delhi’s plans to further reform the economy and escalate infrastructure development opens up new vistas for Japanese investments. Tokyo can clearly see the returns from such a vast and booming market. India is a member of the East Asian Summit (EAS) and has growing economic stakes in the Western Pacific. As Delhi expands its energy footprint, it will inexorably be drawn into the conflicts of the South China Sea (SCS) and East China Sea (ECS), through which most of Asia’s sea-borne trade passes. Delhi has played a significant role in guarding the Malacca Straits, a chokepoint that lies between the SCS and the Indian Ocean and is of paramount importance for global maritime trade. However, this is not to discount the fact that Japan, in Indian perception, has been held in high esteem given the level of its ODA to India over the last 3 decades.

Japan also has great importance in India’s strategic calculus. Like Tokyo, Delhi is confronted with Beijing’s rapid and unexplained military build-up. Fears of a two-front war and China’s plans of bottling up India’s power projection capabilities by the so-called ‘String of Pearls’ strategy may be overblown, but nonetheless exists in India’s security discourse. Like India, Japan has territorial disputes with China. Diaoyu Islands in the ECS, also known as Senkaku in Japanese, is a major bone of contention between the two. The area is a rich fishing ground with substantial deposits of oil and gas. Then there are competing claims over the Chunxiao gas field that lies north of Senkaku Islands. After China took the Paracel Islands from South Vietnam in 1974, it built an airbase on Woody Island that can be used to launch bomber aircrafts to Japan and Taiwan. On the other hand, China is troubled by regular US-Japan joint anti-submarine warfare exercises staged from an American naval base in the Okinotori Island in the Philippine Sea. Enduring memories of the excesses committed by the Japanese on unarmed Chinese civilians during World War II and the ritual of Japanese ministerial visits to the Yasukuni shrine in Tokyo roil the collective Chinese psyche. In China, speculations are rife that Tokyo supports the Dalai Lama and endorses Tibetan separatism.

Japan, known as a “donor great power”, can play a meaningful role in promoting democracy and prosperity and enhancing security and stability in India’s volatile neighborhood through its ODA policy. There are other areas of bilateral co-operation as well. In Afghanistan, an Indian consortium, AFISCO, has bagged the rights to develop the iron ore mines of Hajigak in Bamiyan province. Coal mines, oil blocks, gold mines and copper deposits could also come along India’s way. But setting up processing and transportation facilities could be technologically challenging. Here, there is a scope for Japanese assistance.

During Wen’s visit to Kathmandu, plans to expand the Lhasa-Shigatse railway line to Nepal were discussed. Such projects will widen the disparity in infrastructure across the Himalayas. Not to be outdone, Delhi can also expand the Indian railway network to Nepal with assistance from Japan. Realizing the flipside of kowtowing to the Chinese, the Myanmarese junta initiated democratic and economic reforms. Both India and Japan are wary of China’s intentions to devour Myanmar’s resources. Close on the heels of U.S. Secretary of State Hillary Clinton’s visit to the country, Japanese Foreign Minister Koichiro Gemba visited Naypitaw to discuss Japan’s ODA for sustainable development including the formulation of projects in various areas.

Such steps will incentivize the civilian government to further liberalize and level the playing field for all investors. India and Japan can jointly outbid the state-run Chinese mining behemoths, undermining Beijing’s strategic clout. India and Japan could rein in on Naypitaw to roll back its secret nuclear co-operation and illicit missile trade with North Korea. As part of the ‘Look and East’ policy, Delhi had proposed the Indo-Burma-Thailand trilateral highway project. Given India’s dismal record of failing to complete infrastructural projects in a time-bound manner, Delhi can engage Tokyo in such a daunting transnational venture across a harsh terrain.

Japan was the first developed country to recognize Bangladesh on February 10, 1972. The hijacking of the JAL flight by the Japanese Red Army to Dhaka in 1977 and the role played by the Bangladesh government in the safe release of the passengers made the Japanese people sympathetic to that country. Japan has offered over $10 billion as ODA in areas like human resource development, poverty alleviation, disaster management and environment protection. Tokyo is well placed in strengthening democracy in Bangladesh. Recent reports of an aborted coup in Dhaka are a stark reminder of Bangladesh’s tottering democracy.

Relations between Japan and Sri Lanka date back to the Imperial Family visits to Colombo and Kandy. Sri Lanka is a major recipient of Japan’s ODA, often routed as grants through the Japan-Sri Lanka Friendship Cultural Fund established in 1993. Japan is known to have considerable goodwill not only among the Sinhalese but also among the Tamils for the slew of projects it has funded in the Tamil dominated areas. Tokyo also has a measure of influence on the powerful Sinhalese Buddhist clergy. Delhi can impress upon Tokyo of the need tobuild up pressure on Colombo and the clergy for a lasting resolution of the vexed ethnic problem.

India and Japan can work more closely on issues discussed in the ASEAN Regional Forum, EAS and the Manama Dialogue for regional security. Japan’s support for India’s membership to the Asia Pacific Economic Cooperation will give a fillip to existing ties.