Manmohan and Noda will review first-ever India-Japan-U.S. trilateral

India and Japan will firm up strategic ties during their summit meeting next week with a $4.5-billion grant for an ambitious infrastructure project, announcing Tokyo's participation in next year's India-U.S. naval exercises and holding talks on moving ahead with India-Japan-U.S. trilateral cooperation.

Prime Ministers Manmohan Singh and Yushihiko Noda will review the first-ever India-Japan-U.S. trilateral which drew up an agenda “aimed at adding value to the existing bilateral relationships” for the next meeting in Tokyo next year, said government sources.

This strategic proximity will be reflected in Japan's participation in the next India-U.S. Malabar series of joint naval exercises off the Indian coast in April next year. Japan had participated in the 2007 and 2009 editions of Malabar exercises but could not do so this year because of the tsunami.

Talks will also be held on a bilateral civil nuclear cooperation accord. Although Japan will shortly sign similar pacts with Russia, Jordan, Vietnam and South Korea, prospects of an accord with India, a non Nuclear Non-Proliferation Treaty (NPT) signatory, sailing through the Japanese Diet are dim.

South Block feels there would be no problem in Japanese companies supplying components to French and U.S. civil nuclear companies despite the absence of an India-Japan civil nuclear agreement. “Our understanding is that an agreement is required for a comprehensive partnership. But individual items can be sold by Japanese companies [which have a near monopoly on reactor vessels and its parts] to companies such as Areva under a licence from the government,” said sources.

Rare earths

Discussion on rare earths will be held for the second summit meeting in a row. The decks have been cleared with the removal of Indian Rare Earths Limited (IREL) from the Japanese End Users List in August this year. The Prime Ministers are likely to discuss this sensitive subject that entails a joint venture between IREL and Toyota Tsusho for a plant in Orissa. India stopped exporting rare earths seven years ago to stop depletion of mineral resources at a time when international prices were weak.

The summit meeting will give an impetus to the infrastructure sector with Mr. Noda likely to announce long-term Japanese financing for the Delhi-Mumbai Industrial Corridor (DMIC). Delhi has already set aside Rs. 17,500 crore for the project in addition to Rs. 5,500 crore for land acquisition.

India and Japan have already decided to complete the Delhi Freight Corridor (West), the main transportation artery along the DMIC, by the end of 2016.

At a meeting with Prime Minister Manmohan Singh on Friday, the country's top industrialists had highlighted this problem of infrastructure bottlenecks which Japan has agreed to address. The Japanese financing commitment will come on top of the Overseas Development Assistance (ODA), which at one stage was to be slashed due to Japan's focus on reconstruction after the tsunami and the nuclear reactor meltdown. While Japan reduced the ODA for several other countries, it took a strategic decision of pegging India's ODA at previous year's level, said officials.

The number of Japanese companies operating in India has risen from 725 last year to 850, a fraction of 10,000 Japanese companies operating in China.

But South Block is satisfied with this steady progress and hopes governmental support from both sides would encourage more Japanese companies to look at India for long-term investment.

The India-Japan Comprehensive Economic Partnership Agreement went into effect from August 1 this year and officials say it is too early to analyse the trends.

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