The atmosphere for India-Japan business ties is continuously improving, Japanese Ambassador to IndiaKenji Hiramatsusaid, although he does agree that it is investment, not trade, that is increasing at present .
PM Abe will be visiting India later this year as part of our annual high-level exchanges. What will be the focus of bilateral ties this year?
The important thing is to diligently follow up on what we have already agreed. Japan’s continuous focus is on doubling investments as our PMs agreed a few years ago, and we have pledged about 3.5 trillion Japanese Yen in public and private financing coming to India, so we have to take every possible measure to ensure our targets will be achieved.
In 2014, the government announced a special desk to streamline the way for Japanese investment. Has that worked? Also, despite the levels of investment, there is a sense that the pace of Japanese decisions on investment is slow…
Japanese investors understand the importance of the rapidly growing Indian market, and we have excellent engineers and workforce and hi-tech and finance possibilities. You may think that Japanese companies sometimes take time in reaching a decision, are cautious.
This is not just for the Indian market, but globally, there is this kind of tendency. But if they promise, they keep their promise. I hope Indian business leaders understand this, but I do agree that we should take some risks and have more speedy decision-making.
What about projects themselves? Is land acquisition the biggest issue on this side?
I think the situation is improving, but when we try to implement large projects we do find that land acquisition is the biggest problem. So we recommend that Japanese companies should look at “investment township” projects directly with state governments who can then facilitate the land acquisition, for SEZs. For huge infrastructure projects like Railway projects too, it is for the state governments to ensure that land acquisition goes ahead smoothly.
Specifically on the Delhi Mumbai Industrial Corridor, Japan decided to focus on individual projects rather than fund the corridor as a whole due to land acquisition issues along the way. Has that slowed down the DMIC?
Yes. On the DMIC we had expected the projects to be implemented more rapidly. Some of the investors are interested in township projects facilitated by the government, some in the dedicated freight corridor project. We encountered difficulties in acquiring land, but after a lot of discussion we could come up with some solutions. In the last 1-2 years, the DMIC project is getting energised.
You sound optimistic, but if I may speak about trade figures, which have declined since a peak of $18.5 billion in 2012 to about $15 billion today. If things are getting better, why is trade declining?
Firstly, investment figures are clearly increasing, and they help to make in India and with employment in India as well as in transferring technology.
I think there are many products, spare parts that are now increasingly being made in India, which is why trade is declining. Nevertheless the increase in investments from Japan is dramatic and Japan is the biggest investor in the manufacturing sector. In service and retail sectors, the investment is expanding.
Will there be more opportunities for Indian IT professionals in Japan?
Japan is now a declining population, and ageing population. We would like to attract a well-qualified workforce from overseas, like Indian IT professionals, and we welcome them. We are trying to bring some new policy measures to bring more foreign workforce and Indian IT workers will be particularly welcome.
The India Japan civil nuclear cooperation was signed last November, but we are yet to see it being taken up in the Diet, the Japanese parliament. Will it be ratified in time for the June deadline?
It has already been taken up, in that it was presented to the lower chamber on April 12th, so the process of discussion has started. But it is up to the parliament to decide when it will be ratified, as I am from the executive side of government, I cannot tell what will happen with parliamentary deliberations. But we hope they will approve it as soon as possible. We have presented it to the current session (that ends on June 1). After the agreement was started in November, the Diet session began with the budget discussion. After that, in March they discuss new laws, and so now that it has been presented in April, it is normal procedure and it means there are no delays. There should be no misunderstanding about that.
The Japanese nuclear cooperation agreement is a lynchpin for India. If it doesn’t go through, then the agreements with the US, France etc also will be stalled, as they depend on Japanese parts or the reactors are owned by Japanese companies, is that correct?
I don’t know if everything depends on the ratification by the Diet, as I am not sure if any other countries can provide these parts. I do understand that Japan will play a very important role in India’s (nuclear energy) programme, as Japan is involved in construction of many plants around the world. So I do know that India is looking very carefully at this ratification process.
One particular Japanese company they are also looking at is Toshiba-owned Westinghouse. The Japanese government has said they will not bail out Toshiba-
Westinghouse from its current financial difficulties and there is even some talk of Chinese companies acquiring it. Is there a discussion between the Indian and Japanese government over the future of Toshiba-Westinghouse, because this is the company who is expected to sign a commercial deal with India in June 2017…
We are watching carefully, what is happening to Westinghouse. They are now restructuring the company under Chapter 11. As soon as they make a decision on nuclear power plants construction, we will know what happens to the agreements that were announced by PM Modi and President Obama last June. Toshiba is also watching very carefully, but they are separated from Westinghouse, so Toshiba isn’t part of the decision making.
You mentioned Japan joining the Malabar trilateral with India and the US. Australia has also asked to join the exercises as a quadrilateral. Where do you see this going?
This trilateral cooperation just started on a regular basis, and we would like to see how it develops. Last year we had a very good exercise off Okinawa, and we would like to see how it goes this year in India. Of course, we cherish the cooperation with Australia, and we have just had a Japan-Australia-India strategic dialogue and a political dialogue between these three countries, and we will have to see how it develops. I think this multifaceted, multilayered cooperation is very important- bilateral, trilateral and quadrilateral. So we will see what’s best for India-Japan and for the security of the entire region.
This week, US media reports said the US navy may be withdrawing from aggressive patrolling of the South China Sea. Do you see this emerging trilateral of India Japan and Australia replacing the role that the US had held with its “pivot to Asia”?
The US-Japan security relationship is vital for the whole region and this was confirmed by the two leaders when PM Abe visited with President Trump in the US a few weeks ago. I don’t think the US is changing its pivot or rebalancing policy regarding the western part of the Pacific. PM Abe’s policy is called the “Free and Open Indo-Pacific Strategy”, which means not only are we watching the situation in the China Sea but also we see the two oceans as connecting. So when we speak of the security of the region we have to see how the Indian Ocean and the Pacific Ocean can be maintained with navigability and overflight. So we are supporting all countries of the region together with India. India plays a vital relationship as it is in the middle of our strategy, and we are looking to engage together in Africa as well.
One of the other projects spoken about is Chabahar in Iran. Could you confirm that Japan is interested to collaborate with India on Chabahar, and how soon could we see an agreement?
We are interested in connectivity projects and to make sure that this region is free and open and an important port like Chabahar is good for the regional connectivity. So we have started a discussion with the Iranian side on how Japan can collaborate together with India which has already committed financing to it. We have also started a dialogue with the Indian side. I can’t tell when it will materialise, but for sometime in the future we have expressed our interest.
How much of a challenge is China’s Belt and Road initiative to India and Japan’s plans for connectivity projects and freedom of movement?
We continue to make sure that (China’s) projects will be implemented in a transparent and equal-footing manner. We are also providing rather generous financing to these countries as well, to enhance prosperity and stability. Our projects are based on these principles, and we hope many of these countries will also choose our projects, some of which we can do in collaboration with India. So we are doing our job, we are doing our business based on our philosophy and our global values shared with India of democracy, freedom, navigation, open markets and rule of law.