India- Japan on Nuclear Energy Cooperation

Context

The India-Japan Agreement for Cooperation in the Peaceful Uses of Nuclear Energy entered into force on July 20, 2017 with the exchange of diplomatic notes between Dr. S. Jaishankar, Foreign Secretary and H.E. Mr. Kenji Hiramatsu, Ambassador of Japan to India.

The agreement

Foreign Secretary S. Jaishankar exchanged the diplomatic notes with the Japanese envoy to India to formalize the completion of the process.
The pact was signed in Tokyo during the visit of Prime Minister Narendra Modi to Japan on November 11, 2016.

Benefits

The Agreement is a reflection of the strategic partnership between India and Japan and will pave the way for enhanced cooperation in energy security and clean energy.
It seeks to promote full cooperation between the two countries in the development and uses of nuclear energy for peaceful purposes on a stable, reliable and predictable basis.
The nuclear deal is essential for bringing a network of nuclear energy cooperation for India, especially with the U.S.
as prominent American nuclear companies are owned by the Japanese nuclear majors like Toshiba.

Background

In the context of 21st Century, among all the bilateral relations, Indo-Japan relations have all the potential to transcend this era into an ‘Asian century’.
This relationship, which incorporates no dispute- ideological, cultural or territorial, was embarked upon in 6th century A.D. when Bhuddhism was introduced in Japan.
Direct exchange in modern times commenced only in Maiji era (1868-1912), when Japan set off the process of modernization. Japanese support and assistance to Netaji and INA continue to persist in popular imagination.
Although diplomatic relations between two countries were established in 1952, it was only in august 2000 when Japanese PM Yoshiro Mori and his Indian counterpart Atal Bihari Vajpeyi set in motion ‘Global partnership in 21st century’.
Commonalities such as shared democratic values, commitment to human rights, pluralism, open society and rule of law are foundation blocks of this global partnership.

Convergence Mutual importance for each other

Varied factors have supported momentum of this partnership viz. India’s economic resurgence, its engagement with USA and its increasing interest and stakes in East Asia in the form of Look East Policy in 1992 and Act East Asia Policy in 2015.
On similar lines, for Japan, India has emerged as an alternative economic partner and important constituent of Asia’s emerging security order.
A transition of power is unfolding in Asian continent and the shape and substance of Indo-Japan relationship is one of its spin-off.
Notwithstanding, strengthening of the Indo-Japan relations is not the only consequence of rise of china and USA’s shifting of regional policy in the form of “Rebalancing of Asia”.
Factors like domestic perception of the alliance partner, which is amicable, have stimulated this relationship.
Japanese perception of India has also been molded by the dissenting opinion of Radha Binod Pal- the Indian judge at famous Tokyo trials – who declined to convict Japan’s top military brass as war criminal proving that Japan’s imperial history has been discounted by Indian consciousness.
In addition to this, personal bonding between Japanese PM and his Indian counterpart, who are leading single party majority government in respective countries, is a class by itself.

Strategic Partnership Increment in china’s military expenditure was almost one and half times bigger in 2014 than defense outlay in 2010. This expansion is a cause of concern for both countries, since both countries are engaged in negotiation with China over Arunachal Pradesh (India) and Shenkaku Island (Japan).

New Delhi and Tokyo are apt to hedge against USA’s possible failure in containing china’s growing assertiveness in the region in the backdrop of this era of power transition. This hedging strategy can be analyzed in three main categories-

Firstly, increasing bilateral defence partnership against fear of American retrenchment,
Secondly, economic engagement against an over-dependence on china and
Finally, multilateral hedge against China’s rising influence in international and regional institutions.

Defense Cooperation

In the sphere of defense, in 2009, 2+2 dialogue (foreign and defense ministerial) were initiated.
India has always supported freedom of navigation and unimpeded lawful commerce in international waters in sync with UNCLOS vis-à-vis South China Sea dispute and East China Sea issue.
India invited Japanese navy to participate in annual Malabar exercise in 2014 with USA in pacific waters, reviving an earlier practice of joint India-USA-Japan trilateral exercise.
Negotiations on possible trade in defense equipment from Japan, as per Tokyo deceleration, are in the pipeline.
Indian interest is in Japanese US-2 amphibious aircraft for surveillance purpose in the Indian Ocean is high.
If this deal is realized, then it will signify for the first time Japanese export of defence goods and technology since World War II.

Economic Cooperation

or 2011-12 India-Japan bilateral trade stood at $18.31 billion. The comprehensive trade pact between India and Japan aims to double bilateral trade nearly to $25 billion.
Japan is looking to boost trade and investment ties with India. The reasons behind this interest in India is obvious. India offers a large domestic market base.
Besides, mutual synergies between businesses in the two countries are driving initiatives-
Firstly, Japan’s ageing population (23% above 65 years) and India’s youthful dynamism (over 50% below 25 years)
Secondly, Japan is a relatively labour scarce, capital abundant country that complements India’s rich spectrum of human capital.
Thirdly, India’s prowess in the software sector lends synergy to Japan’s excellence in the hardware sector 4. India’s abundance of raw materials and minerals matches well with Japan’s capabilities in technology and capital to produce knowledge-intensive manufactured goods 5.
India’s large domestic market has been the main factor for investments by Japanese companies.
The majority of investments are in traditional fields like machinery, automobiles and auto parts 6. Japanese small and medium enterprises have begun to discover India as the new growth market.
Japan and India share a common vision for the world. This is aptly illustrated by the fact that there has been an increase in the number of joint declarations, delegation visits and other business events between the two countries.

India Japan CEPA

The Comprehensive Economic Partnership Agreement (CEPA) between India and Japan came into force in August 2011.Despite this agreement India-Japan bilateral trade stands at measly USD16 billion as compared to Sino-Indian trade amounting to USD 70 billion and Sino-Japanese trade at whooping amount of USD 343 billion in 2014.
The agreement had two major concerns, namely: the infrastructure in India, and non-tariff barriers in Japan.
On the infrastructure front, the two countries are collaborating on the huge, US $90-billion Delhi–Mumbai Industrial Corridor (DMIC) project.
The project agreement appears highly promising in the environment of the new manufacturing policy whereby India is targeting to increase the share of manufacturing in GDP to 25 percent within a decade, potentially creating 100 million jobs.
Japan had invested in dedicated freight corridor west project, strategic port facility in Chennai, development of strategic assets including highways and dams in North East Region where India’s immediate neighbor is eyeing for territorial expansion.
Japan has set up multi product SEZ and clusters, custom free and warehousing zones ( in Neemrana in Rajsthan ) leading to greater economic integration in Asia. In 2014 Kyoto-Kashi pact was signed between two countries wherein Kashi became as popular as ‘city of ten-thousand shrines’ in ‘land of rising sun’.
Under this agreement Kyoto and Kashi will prepare a detailed roadmap for making Kashi a ‘smart city’, retaining its rich culture,tradition and heritage.

Tariff & Non-Tariff barriers – an obstruction?

An important factor affecting Indo-Japan trade is the tariff and non- tariff barriers imposed by both countries.
Japan has placed import prohibitions and quantitative restrictions on imports from India, for example, on fish and silk items.
Japan’s Sanitary and Phytosanitary Measures(SPS) are major barriers to Indian exports of poultry, meat, shrimps and fruits like mangoes and grapes.
This issue highlights the need for sharing and facilitating the exchange of technology under the agreement to promote Indian exports to Japan.
Engaging Japan economically is important as India is biggest recipient of Japan’s ODA.
India is also premium destinations for foreign direct investment from Japan.
Attracting Japanese investment, technology and business is crucial for transforming India into Asia’s new production line.
There is a strategic rationale behind economic engagement of India with Japan.
India is far more comfortable with Japanese businesses investing in development of strategic assets of infrastructure but Chinese investment in infrastructure is seen with concerns and suspicions due to security reasons and mistrust, even when such investment can resolve some of the trade imbalance of India with china.
For Japan economic partnership is shaped by realpolitik too.
Japanese investment was very vital for Chinese miracle as china has been highest recipient of Japanese aid between 1980-2003.
Greater economic integration with china has not translated into political trust between two countries, hence boundary disputes has escalated.
During Indian Pm visit to Japan 2014 two countries have announced ‘India-Japan Investment Promotion Partnership’.
Japan has promised to invest more than USD 35 billion in India.
ODA and private investment is biggest foreign investment by any single country into India.
Substantial contract on export of rare earth minerals from India to Japan is on anvil, which would offset Japan’s reliance on china for supply.
Both India and Japan are concerned that their growing economic interdependence on China might make the Indian and Japanese economies more vulnerable to Beijing’s economic coercion.
Both the nations are exasperated by china’s strategy of deploying surrogates in East and South Asia primarily North Korea and Pakistan, to wear both the countries out.
The China Pakistan Economic Corridor (CPEC) a USD 45 billion project traversing through highly sensitive Karakoram border region of India is one of the examples.

Multilateral cooperation domain:

Despite being benefited by USA’s uni-polarity multilateral-ism has emerged as cornerstone of contemporary foreign policy of both the nations.
Joint statement of 2006 incorporated “cooperation in multilateral forums like UN, SAARC, EAS and ARF”.
The impulse for multilateralism stems for desire to make 21st century as Asian century through working for peace and stability in the region, providing better connectivity and greater regional integration.
Although undercurrent of fears of China’s hegemony in the Asia and USA’s declining clout in global affairs also boost force of multilateralism supported by India and Japan.
Significant agenda for New Delhi and Tokyo is to reform UNSC.
Both demand democratization of UNSC and both claim permanent membership in this regard.
Post WWII international security architecture with Beijing as only Asian representative in UNSC with veto power ensures that China will continue to enjoy extraordinary leverage in the region.
So maintaining a status quo is in favor of china as it does not support claim either by India or by Japan.
China’s opposition has further cemented the Indo-Japanese relationship wherein countries declared solidarity for each-other’s positions demanding permanent membership and formed G-4 including Germany and Brazil too.
India was included into East Asia summit membership (ASEAN 3+3) on behest of Japan along with Australia and New Zealand despite protest by China.
India shows its appreciation for current Japanese PM’s initiative to help Bangladesh in developing the region around the Bay Of Bengal though ” Bay of Bengal Industrial Growth Belt” or BIG -B initiative.
Japan’s active involvement in this region offsets china’s growing economic and strategic influence in India’s neighborhood.
Two course shares similar view of establishing peace and stability in Afghanistan and has invested into Afghanistan’s prosperity and development.
India and Japan institutionalize trilateral strategic dialogue partnership with USA in 2011.
These trilateral initiative has serious potential to transform into ‘Quad of Democracies’ (including Australia) in the Indo-Pacific region.

Nuclear Conundrum

Issue of civilian nuclear technology cooperation remains a constraint in realizing true potential of this strategic partnership. Japan’s anti-nuclear stance often conflicts with India’s aspiration of to be a nuclear power.
Tokyo however has relented and supported India-USA Civil Nuclear Cooperation Agreement at IAEA and NSG, given the responsible nuclear state history of India.
India and Japan has started discussion on a Civilian Nuclear Cooperation Agreement in 2010.
For India, nuclear cooperation with Japan is essential to consummate indo-USA nuclear deal owing to the fact that Westinghouse is Toshiba’s subsidiary and Mitshubishi has a technical cooperation agreement with General Electric.
Even crucial components of nuclear reactors offered by French nuclear consortium -Areva- are manufactured in Japan.
India also needs Japan’s support for NSG membership but later has expressed reservations citing New Delhi’s lack of commitment to nuclear disarmament, especially at CTBT and FMCT.
Nuclear disaster at Fukushima Daiichi plant in 2011 had also derailed ongoing consultations. Japan’s preconditions to such an agreement includes stringent inspections of Indian civilian nuclear facilities, termination of agreement in case of India conducts nuclear test and India’s abdication of right to enrich or reprocess fuel of Japanese origin (rule of origin i.e. fagging and benchmarking).
Tokyo has attached significance to ratification to CTBT and a unilateral moratorium on production of fissile material.
For India, the benchmark for bilateral civilian cooperation deal has been already fixed by Indo-USA nuclear deal and India will not go more than what it has committed to its civilian nuclear pact with USA.
Notwithstanding, having accepted the IAEA’s ‘Additional Protocols’ which allows IAEA to conduct extensive inspection of India’s civilian nuclear programme, India have affirmatively addressed one of the Japan’s major concerns.
With a responsible nuclear doctrine in 1998 itself India had adhered to unilateral moratorium on nuclear test.
In addition to this, China and USA has not ratified CTBT yet, so India has no strategic rationale to move forward and ratify it.