EFSAS Study Paper; Shaping Indo-Pacific Strategy | The Quad and India-Japan Relations Introduction

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The funeral of former Prime Minister Abe Shinzo in late September 2022 sparked significant controversy in Japan. Abe had been assassinated during a campaign rally for the Liberal Democratic Party (LDP) in Nara in July 2022 and was the first Japanese Statesman to receive a State funeral since Yoshida Shigeru (Cohen, 2022). Yoshida had decisively shaped Japan’s post-World War II role in the international system by developing what became known as the ‘Yoshida Doctrine’, which reduced Japan’s defense expenditures and installed the United States as Japan’s net security provider (Hughes, 2015). In Japan and other East Asian countries, Abe has frequently been viewed as a right-wing nationalist who sought to normalize Japan’s security posture by reinterpreting the pacifist mandate of the Japanese constitution. Abe also routinely expressed controversial views regarding the WWII legacy of the Imperial Japanese Army in wider East Asia (Park, 2022). During his two stints as PM (2006-2007 and 2012-2020), Abe embodied the contentiousness linked with discussions surrounding Japan’s potential return as a ‘normal’ security actor.

 

Abe’s death evoked widespread commemoration for Abe’s political role from Japan’s international partners. US President Joe Biden (2022) described himself as “stunned, outraged, and deeply saddened” by the death of his “friend”. Australian PM Anthony Albanese (2022) said that “Abe was a remarkable leader, a catalyst for change in Japan and the region, a true friend of Australia”. Prior to his death, Australia had awarded Abe with a Companion of the Order of Australia for his service to the bilateral relationship (Department of the Prime Minister and Cabinet, 2022). The Indian response was notably vocal as well.  PM Narendra Modi (2022) of the Bharata Janaya Party (BJP) suggested that “Japan and the world have lost a great visionary” and that he had lost “a dear friend”. To commemorate Abe’s passing, the Modi government declared a national day or mourning (Ministry of External Affairs, 2022).

 

The reactions in Australia, India, and the US highlight the important role Abe played in bringing the four countries together in an effort to shape the developing security architecture in the Indo-Pacific. Abe developed the vision of the ‘Free and Open Indo-Pacific’ (FOIP), which has since been adopted by a series of regional actors (Heiduk & Wacker, 2020). During Abe’s first stint as PM, Japan played a key role in the creation of the Quadrilateral Security Dialogue (Quad) between Australia, India, Japan, and the US. Initially established in response to the tsunami of December 2004, the Quad practically fell apart in 2007 but has become reconsolidated after 2017. Since Abe left office again in 2020, the Abe-driven shifts in Japanese foreign policy have been broadly continued by his successors Suga Yoshihide and the current PM, Kishida Fumio (Ciorciari, 2021). Japan’s relationship with India (as well as Abe’s personal relationship with Modi) has been of particular importance, both within the framework of the Quad and outside of it. Driven by converging concerns regarding Chinese conduct in the Indo-Pacific, India and Japan have significantly deepened and expanded their economic and strategic ties throughout the 21st century.

 

This paper examines the development and trajectory of the India-Japan strategic relationship, initially discussing the notion of the FOIP and the role of the Quad. The paper then examines the bilateral relationship outside of the Quad, focusing on (1) relevant diplomatic agreements, (2) trade relations, and (3) defense and security cooperation. The last section arrives at some conclusions on the present and future prospects of the partnership. 

 

 

 

The FOIP and the Quad

 

The concept of a ‘free and open’ Indo-Pacific, facilitated by enhanced quadrilateral cooperation between Australia, India, Japan, and the US, is embedded in the broader evolution of Japanese geostrategic thinking in the 21st century. Abe played a central role in advocating and pursuing closer strategic relations with new partners in addition to Tokyo’s security relationship with the US. The understanding of the Indian and Pacific Oceans as strategically interlinked spaces implies a reimagination of maritime security dynamics and the geographical space in which China’s ‘rise’ and the response of others thereto plays out. This section initially links the emergence of the FOIP as a strategic concept to previous trends in and manifestations of Japanese strategic thinking before examining how the FOIP vision has become linked to and institutionalized via the Quad. 

 

Developing the FOIP vision

 

The concept of the FOIP, first introduced in 2016, is linked with previous attempts by Abe to frame the Indian Ocean and the Pacific Ocean as strategically connected spaces. During his times as PM, Abe criticized China and North Korea as revisionist powers, accusing them of seeking to restructure the post-1945 regional order in East Asia, defined primarily by a heavy US military presence and the US functioning as the de facto guarantor of Japan’s national security (Magcamit, 2020). Abe’s focus on the threats emanating from Beijing and Pyongyang decisively shaped his emphasis on restoring Japan as a ‘normal’ security actor. Abe primarily envisaged this restoration to be facilitated by a reinterpretation of Article 9 of the Japanese Constitution, which enshrines pacifism as the central principle of Japanese foreign policy. Shifts in Japanese foreign policy in the 21st century, including its continued focus on the US and its broadening of other partnerships, are thus inherently tied to increasingly negative perceptions of China in Tokyo.

 

Abe had discussed the notion of Indian and Pacific Oceans as interlinked spaces as early as 2007. During a visit to the Indian Parliament, Abe spoke on the “confluence of the two seas” that “are now bringing about a dynamic coupling as seas of freedom and of prosperity”. India and Japan “have the ability - and the responsibility“ to “nurture and enrich these seas to become seas of clearest transparence”. Abe’s ‘confluence’ speech stressed the role of India as a key security stakeholder in this emerging strategic framework. This emphasis persisted following Abe’s reelection in 2012. Following the start of his second term, Abe published an essay titled ‘Asia’s Democratic Security Diamond’, in which he advocated for the deepening and formalization of security cooperation frameworks involving Australia, India, Japan, and the US (Heiduk & Wacker, 2020, p. 17). The idea of the Democratic Security Diamond (DSD) reasserted the ideas first expressed during his speech at the Indian Parliament as Abe (2012) contended that “peace, stability, and freedom of navigation in the Pacific Ocean are inseparable from peace, stability, and freedom of navigation in the Indian Ocean”. This reinforced the idea that the two seas constitute the new center of global prosperity, with prosperity enabled by peace, stability, and freedom of navigation (Lee & Lee, 2016, p. 286). The concept of the confluent seas and the DSD intrinsically linked political security to economic security, reflecting a continuous emphasis in Japanese strategic thinking on the centrality of open sea lines of communication (SLOCs). The confluence speech and the DSD identified the Indian Ocean as a key space for these networked structures.

 

Abe’s growing emphasis on security cooperation coincided with China’s increasingly muscular posture in the East and South China Seas from the late 2000s onwards. In 2010, a Chinese trawler had collided with vessels of the Japanese Coast Guard in the waters surrounding the Senkaku/Diaoyu Islands in the East China Sea, which are claimed by China and Japan but have been held by Japan after WWII. Growing intrusions by Chinese vessels into Japanese waters resulted in Tokyo nationalizing the islands in 2012, causing uproar in Beijing (Green et al., 2017). The incidents in the East China Sea tied in with increasingly aggressive Chinese conduct over disputed formations in the South China Sea (Hayton, 2018). For Abe, Chinese aggression surrounding vital SLOCs endangered the ’arc of prosperity’ that maritime trade had created in Asia over the past decades. Japan’s first National Security Strategy (NSS), published in 2013, suggested that “unprecedented shifts in the balance of power” have fostered a great risk to the global commons (Lee & Lee, 2016, pp. 287-290). The DSD’s more explicit focus on security cooperation consequently came in direct response to China’s surging usage of military means to assert pre-existing claims in regional waters. 

 

The concept of a ‘free and open’ ‘Indo-Pacific’ became a key component of Tokyo’s strategic nomenclature in 2016. That year, Abe named the FOIP as the core of Japanese foreign policy, with the ‘free’ in FOIP referring to the idea that regional States can exercise sovereignty without foreign interference and ‘open’ describing guaranteed access to international waters, airspace, digital space, market access, and fair reciprocal trade (Heiduk & Wacker, 2020, pp. 12-13). The FOIP essentially frames and understands regional waterways as public goods that must be regulated and protected for the benefit of all in accordance with relevant international legal frameworks, most notably the UN Convention on the Law of the Sea (UNCLOS). The focus on ‘unprecedented’ power shifts, in combination with the 2016 ruling of the Permanent Court of Arbitration that Chinese conduct in the South China Sea violated Beijing’s obligations under UNCLOS (Hayton, 2018), further indicated that Japan’s focus on a rules-based order viewed China as the main threat to this order. 

 

Over time, components of the Japanese FOIP narrative have come to emphasize connectivity-focused projects in response to the infrastructure development of China’s Belt-and-Road Initiative (BRI). Initially, Japanese policymakers framed the FOIP as a counterweight to the BRI while including explicit normative messaging, for instance by stressing democracy promotion throughout the wider region (Heiduk & Wacker, 2020, p. 18). From September 2018 onwards, Japanese policymakers transitioned from referring to the FOIP as a ‘strategy’ to describing it as a ‘vision’, also toning down the normative dimensions. This shift in discourse primarily stems from pushback in Southeast Asian countries that have remained eager to balance Chinese and non-Chinese investments while being reluctant to pursue democratization at home. Japan’s post-2018 FOIP discourse, Heiduk and Wacker (2020) outline, has moved from a security-focused narrative to one centered on “connectivity, development, and growth”, framing the FOIP in more inclusive terms (p. 19). The FOIP has come to foster a broader framework for Japanese engagement with the wider region.

 

Infrastructure investment has been the most important policy tool for Japan in its promotion of the FOIP vision. The Official Development Assistance (ODA) program, led by the Japan International Cooperation Agency (JICA), has been the key facilitator of Japanese investment throughout Asia since 1945, with the JICA focusing on channeling ODA funds in regional investment projects (Kato, 2018). The connectivity focus of the FOIP reasserts the role of the ODA. Projects funded by the ODA specifically seek to create financial alternatives to Chinese investments in physical infrastructure (including railroads, ports, and urban transport systems) (JICA, 2022). Japan has also repeatedly stressed trade integration and trade agreements as policy tools for rule-making capacities, promoting both the Trans-Pacific Partnership (TPP), signed in 2016, and the Regional Comprehensive Economic Partnership (RCEP), which came into force in 2022. Fair and equitable economic connectivity in line with relevant international legal frameworks consequently occupies a dominant role in Japan’s version of the FOIP. 

 

The concept of the Indo-Pacific and the FOIP has since been adopted and partially modified by a variety of regional and non-regional actors. The US adopted the notion of the FOIP in its 2017 NSS, with the 2017 NSS stressing the importance of enhanced quadrilateral security cooperation (Horimoto, 2020). As discussed above, India has featured consistently in Japanese strategic narratives on the Indo-Pacific (Basu, 2022; Chatterjee Miller, 2022). Indian authorities adopted the Indo-Pacific concept in 2015, when Japan and India announced a Joint Declaration emphasizing the “principles of sovereignty and territorial integrity; peaceful settlement of disputes; democracy, human rights and the rule of law; open global trade regime; and freedom of navigation and overflight” in the region (Ministry of External Affairs, 2015). In 2017, Japan and India announced their cooperation in the development of the Asia-Africa Growth Corridor (AAGC), designed to enhance connectivity between African and other Indo-Pacific economies (Taniguchi, 2020). The conceptual tenets of the FOIP and the understanding of the Indo-Pacific as one interlinked strategic space has found significant traction in India and has emerged as a framework through which policymakers on both sides understand the developments in the India-Japan relationship. 

 

In sum, the strategic ideas of the FOIP have become increasingly important for a series of international actors. Domestically, Abe’s push for a more proactive foreign policy role of Japan in the Indo-Pacific have included the renaming of the Defense Agency to the Defense Ministry, the introduction of steps designed to shore up Japan’s arms-exporting capacities, the release of the first NSS, and efforts to reinterpret Article 9 (Rajagopalan, 2022). India emerges as a crucial partner for Tokyo’s vision of a regional order due to India’s existing naval capacities, its presence in and focus on the Indian Ocean, shared concerns regarding China, and India’s underlying support for existing maritime norms and the opposition to force as a means of resolving disputes (Lee & Lee, 2016, pp. 292-294). The Quad has emerged as the institutionalized embodiment of the FOIP vision.

 

(Re)consolidating the Quad

 

Calls for enhanced quadrilateral security cooperation have prominently featured in Japanese foreign policy doctrines since the mid-2000s and, over time, have gained traction in the other Quad countries. The fostering of closer strategic ties between Australia, India, Japan, and the United States, however, has not been a linear process. While Washington enjoys long-standing strategic ties with both Canberra and Tokyo, India has historically emphasized a policy of strategic autonomy that is deeply shaped by a historic distrust towards the United States. Initially established in the aftermath of the 2004 tsunami, the Quad had also practically ceased to exist by 2007 before policymakers relaunched it in 2017. This section briefly examines the Quad’s initial formation, the reasons for its dissolution, and the drivers of its recent re-consolidation. 

 

Quadrilateral cooperation mechanisms first emerged in the context of the humanitarian assistance and disaster response (HA/DR) to the earthquake and tsunami in the Indian Ocean in December 2004. The naval forces of Australia, India, Japan and the US formed the ‘core group’ of the HA/DR, requiring them to coordinate their HA/DR activities (Envall, 2015). Between Australia, Japan, and the US, coordination was smoothened by the underlying interoperability and pre-existing communication channels between the armed forces, an outcome of Canberra’s and Tokyo’s long-standing strategic relationships with the United States. This interoperability had been boosted further and increasingly made trilateral by the early 2000s. Driven by escalating and converging concerns regarding Beijing’s naval modernization program, the Royal Australian Navy (RAN), the Japan Maritime Self-Defense Force (JMSDF), and the US Navy began bolstering trilateral mechanisms in logistics coordination, anti-piracy missions, and collaboration in HA/DR exercises (Hanada, 2018, p. 4). The first quadrilateral meeting was held in 2006. One year later, the naval forces of Australia, India, Japan, Singapore, and the US collaborated in the Malabar naval exercise, which India and the US have conducted bilaterally since 1992 (Menon, 2021, p. 228). Geared towards enhancing naval interoperability, the participation of Australia and Japan in the Malabar Exercise came to embody the growing security relationship between all four countries in the framework of the Quad. 

 

From the offset, China expressed concerns of the Quad forming an anti-China grouping designed to stifle China’s growing political and economic influence in the wider region. In reaction to the Quad’s formation, Beijing began to leverage the importance of Chinese markets for Australian companies, ultimately leading Australia to withdraw from the Quad in 2007 (Madan, 2017). At the same time, Australia halted its export of uranium to India, which Indian policymakers broadly interpreted as Australia prioritizing its trade relations with China over its emerging security relationship with India (Hanada, 2018, p. 6). Abe’s departure from office in 2007 additionally removed one of the key proponents of the Quad, bringing the first ‘version’ of the Quad (Quad 1.0) to an end. Australia’s exit from the Quad indicated that although all partaking countries shared some converging concerns regarding China, the extent to which they were willing to prioritize their strategic interests over their economic ties with China differed significantly. This was also the outcome of different degrees of exposure to Chinese (military) power: while India and Japan faced potential military confrontation with China in the Himalayas and the East China Sea respectively, China’s pressure on Australia was almost exclusively of a commercial nature.

 

Although the Quad lost its centrality as a forum after 2007, the defense relationships between Australia, India, Japan, and the US broadly continued to deepen and broaden. Australia and Japan deepened their security relationship through the 2010 signing of an Acquisition and Cross-Servicing Agreement (ACSA) regulating the reciprocal provision of supplies and services in bilateral and multilateral exercises, UN-led peacekeeping operations, HA/DR operations, and the evacuation of nationals from volatile security environments (Ministry of Foreign Affairs of Japan, 2010). Two years later, Canberra and Tokyo signed the Information Security Agreement (ISA), facilitating increased intelligence transfers and bolstering existing intelligence-sharing agreements of both countries with the US (Ministry of Foreign Affairs of Japan, 2012). The ISA was followed by further agreements on enhanced economic exchange and the transfer of defense equipment and technology, promoted following Abe’s return to office in 2012 (Australian Government, Department of Foreign Affairs and Trade, n.d.). The Japanese Self-Defense Force (JSDF) and the Australian Defense Force (ADF) also expanded their participation in trilateral exercises with US forces (Hanada, 2018, pp. 6-7). India, in the meantime, deepened its links with US defense firms through the growing acquisition of US defense technologies and the signing of bilateral agreements enhancing coordination on equipment matters (Hanada, 2018, p. 13). The signing of the Communications Compatibility and Security Agreement (COMCASA) in 2018 further enhanced India’s access to US defense technologies (Panda, 2018) and may contribute to India reducing its reliance on Soviet/Russian legacy equipment in the coming decades. In 2015, the RAN and the Indian Navy (IN) launched the first iteration of bilateral naval exercises known as AUSINDEX (Naval News, 2021). Since 2015, the JMSDF have also become a regular participant in the Malabar Exercise (Heiduk & Wacker, 2020, p. 25). Even before Abe’s reelection in 2012 and the formal reestablishment of the Quad in 2017, the four Quad countries had thus continued to deepen their cooperative frameworks, laying the foundation for the second iteration of the Quad.

 

The ultimate reconsolidation of the Quad (Quad 2.0) from 2017 onwards indicates the growing convergence in threat perceptions of Quad countries vis-à-vis China. The Quad was revived on the sidelines of the 2017 East Asia Summit and has come to include meetings between representatives from the foreign and defense ministries as well as annual meetings between the heads of State. The 2022 summit saw the creation of the Indo-Pacific Partnership for Maritime Domain Awareness (IPMDA), which seeks to expand and deepen existing MDA capacities (The White House, 2022). The organization of various naval exercises involving all partner countries seeks to improve interoperability in responses to various maritime security challenges, including non-traditional threats such as natural disasters but also traditional challenges such as anti-submarine warfare (Hanada, 2018, p. 12). Although Quad members have been careful to not frame the Quad as an anti-China alliance, shared concerns regarding China are clearly key drivers in the Quad’s reconsolidation.

 

The Quad 2.0 has emphasized the provision of public goods the Indo-Pacific, echoing the FOIP’s reluctance to frame the FOIP as a broader containment strategy for China’s regional aspirations. The Quad members have focused on the coordinating provision of vaccine production during the COVID-19 pandemic, fostering frameworks for infrastructure investment, facilitating climate change responses, enhancing cyber security, and collaborating on critical and emerging technologies (Solanki & Togashi, 2022). The 2022 leaders’ summit included agreements on the further promotion of health cooperation and vaccine provision, cybersecurity, and climate cooperation, especially in delivering HA/DR (The White House, 2022). There has been a specific focus on providing services and goods to developing economies, many of which have grown increasingly economically reliant on China. The policy scope of the Quad up until this point is therefore consistent with the policy tenets formulated as part of the FOIP vision (Heiduk & Wacker, 2020, p. 16), and proposes a different approach to order-building when compared to China (Hanada, 2018, p. 8), and dovetails Japan’s development-focused approach. The minimalist focus of the Quad up until now reduces the need for confidence-building measures and provides space for more effective policy designation and implementation than more maximalist institutional settings would produce. For countries such as Australia and Japan, the Quad does not serve to replace their respective relationships with Washington but compliments this relationship by expanding the ties with one another as well as India, which adds a distinctly Indian Ocean-dimension to the Quad (Rajagopalan, 2022). The focus on cooperation and an increasingly important role for actors other than the US should, in theory, reduce the outsized dependence on the US as the primary provider of public and military goods in the region.

 

The Quad 2.0 marks and formalizes the growing strategic convergence between its members. This ‘new’ Quad is characterized by the US not performing an inherently leading function, India being and operating as an equal within the grouping, and Australia’s overt and explicit support for the Quad (Horimoto, 2020, p. 147). Quadrilateral cooperation reduces the strategic pressure on the US by diversifying responsibility to traditional (Australia and Japan) and non-traditional (India) partners, which may make this form of cooperation more sustainable at a time when the American commitment to the security of others has become increasingly contentious in domestic American politics. The commitment to the Quad under various Australian and Japanese governments since 2017 further indicates the broad bipartisan support for the Quad in both countries. For India, enhanced security cooperation within the Quad, especially in the South China Sea, is key to concentrate Chinese resources on Beijing’s ‘near seas’ rather than the Indian Ocean, where China has sought to expand its naval presence (Lee & Lee, 2016, p. 297). While rhetorically and practically focused on the provision of public goods in its narrative, the reconsolidation of the Quad is inherently rooted in the converging concerns towards Chinese conduct.

 

 

 

India-Japan bilateral relations

 

While the Quad has been a key framework for the India-Japan relationship, New Delhi and Tokyo have also significantly deepened their bilateral ties outside of the Quad via an emphasis on enhanced economic engagement and closer defense ties. This development, accelerated by Abe and Modi, does not function separately from the Quad but warrants an analysis that does not treat the Quad as the sole pillar of the relationship. This chapter examines the development of bilateral relations in three regards: (1) diplomatic interaction, especially via the signing of treaties and agreements that create structural frameworks for (2) trade relations and (3) defense/security relations. 

 

Diplomatic relations and frameworks

 

The development of closer bilateral ties between India and Japan is a development that is driven by the shifting geostrategic dynamics of the 21st century. Throughout the Cold War, Japan’s security ties with the United States and its security dependence on the US was contrasted by India’s close relationship with the Soviet Union and India’s leading role in the non-aligned movement, with Japan often being viewed as little more than a US-lackey by Indian policymakers (Horimoto, 2020, p. 145). Trade relations initially deepened following the end of the Cold War and the 1991 introduction of structural economic reforms in India (Kojima, 2014, p. 7) that included the liberalization of industrial licenses, facilitated enhanced foreign direct investment (FDI), and corrected the Indian Rupee’s overvalued exchange rate (Mehra, 2021). The initial progress in bilateral trade was largely reversed after 1998, when Japan aligned with the US-led sanctions regime imposed on India in reaction to India’s testing of nuclear weapons (Panda, 2013). By the turn of the millennia, the diplomatic and economic ties remained largely underdeveloped. 

 

Spearheaded by the mutual desire to explore economic opportunities, the bilateral relationship began improving from the early 2000s onwards. In 2000, Japanese PM Mori Yoshirō had visited India to discuss trade opportunities, with Mori’s visit ending in the lifting of the sanctions and the announcement of the India-Japan ‘Global Partnership in the 21st Century’ (Kiyota, 2014, p. 33). The Global Partnership committed both countries to the pursuit of closer ties and stressed the deepening of trade relations (Ministry of External Affairs, 2013). High-level visits became commonplace by the mid-2000s. Following a visit by PM Koizumi Junichiro to India in 2005, Indian PM Manmohan Singh visited Japan in 2006 to meet Abe. Together, Abe and Singh published the ‘Joint Statement Towards Japan-India Strategic and Global Partnership’. The statement stipulated that closer bilateral ties are “driven by converging long-term political, economic and strategic interests, aspirations and concerns and underpinned by a common commitment to democracy, open society, human rights, rule of law and free market economy”, further contending that the evolving partnership would include “closer political and diplomatic coordination on bilateral, regional, multilateral and global issues, comprehensive economic engagement, stronger defence relations, (and) greater technological cooperation” (Ministry of External Affairs, 2006). Bilateral matters were to be discussed during annual meetings between the PMs. The statement reflected the growing focus on India-Japan relations in Japan in the wake of Abe’s election and occurred alongside the growing cooperation within the Quad post-2004.  

 

Bilateral relations followed also after Abe’s exit from office. Abe resigned in 2007, resulting in an LDP leadership contest and the election of Fukuda Yasao, who was succeeded by Asō Tarō in 2008. Asō and Singh signed the ‘Joint Declaration on Security and Cooperation between Japan and India’ in 2008, which institutionalized bilateral dialogues between high-ranking security and military officials (Ministry of Foreign Affairs of Japan, 2010). In 2011, India and Japan signed a bilateral free trade agreement (FTA) known as the Comprehensive Economic Partnership Agreement (CEPA) that aims to eliminate 90% of Japanese tariffs on Indian goods and 97% of Indian tariffs on Japanese imports (Kojima, 2014, p. 8). The signing of the CEPA indicated the growing broader bipartisan commitment to closer ties with India in Japan, with three out of the five PMs that followed Abe after 2007 (Kan Naoto, Hatoyama Yukio, and Noda Yoshihike) belonging to the Democratic Party of Japan (DJP) rather than the LDP. The period between 2007 and 2012 ultimately remained focused on boosting trade.

 

Abe’s reelection and the election of Modi added a growing focus on security collaboration to the relationship. Japan was the destination of Modi’s first foreign trip as PM outside of South Asia, with the subsequently published Tokyo Declaration elevating the ‘Global Partnership’ to a ‘Special Strategic and Global Partnership’ that emphasized enhanced security and economic cooperation, including through an expansion of 2+2 ministerial dialogues between the national foreign and defense ministers (Ministry of Foreign Affairs of Japan, 2014). The Declaration further sought to regularize Japan’s participation in the Malabar Exercise and stressed the role of infrastructure development in the India-Japan partnership. In 2015, two agreements on the transfer of defense equipment and technology as well as the transfer of classified military intelligence followed. A 2016 social security agreement enhanced the protection of Indian workers in Japan’s security system (Ministry of External Affairs, 2016) while a 2017 agreement on nuclear technologies expanded India’s access to Japanese nuclear materials and technologies for its civilian nuclear program (Rodgers, 2017). The nuclear deal epitomized that in the pursuit of closer ties with India, Japan was willing to see past its concerns regarding India’s nuclear program (Chatterjee Miller, 2022). In 2021, the two countries significantly bolstered their defense cooperation through the signing of an ACSA (Ministry of Foreign Affairs of Japan, 2021). The broad sectoral scope of these agreements indicates the expanding width and depth of bilateral relations, covering technology transfers, infrastructure investment, military cooperation, trade interaction, and people-to-people exchanges. 

 

The signing of bilateral agreements from the early 2000s form the overarching regulatory structure for various forms of bilateral cooperation, consolidating the interaction facilitated within the Quad. India’s increasingly important role in Japan’s strategic positioning is consistent with Abe’s focus on India as a strategic partner. For India, this has translated into a slight but notable readiness to partner itself internationally. Japan was the first country with which India established 2+2 ministerial dialogues between the foreign and defense ministers - since then, India has entered these dialogues with Australia, Russia, and the United States (Chatterjee Miller, 2022).  For India, cooperation with Japan has spearheaded a careful reorientation in New Delhi’s foreign policy practices, including the growing cooperation with non-traditional partners. 

 

Economic relations

 

The improvement of bilateral trade relations has been a key focus for policymakers on both sides. Japanese investment in India has been historically concentrated in the infrastructure sector, with ODA investments in India starting from the late 1950s onwards (Baruah, 2016, p. 1). Now, economic interactions are designed to be facilitated and expanded by the CEPA. This section assesses trade links and investment practices pre- and post-CEPA and conclusively discusses the progress and shortcomings of the CEPA up until this point.

 

Trade links between the Indian and Japanese markets initially deepened in line with the broader bilateral rapprochement after 2000. After 2003, the JICA has emerged as the largest bilateral donor agency in India, with India now being the largest recipient for ODA funds (Bose, 2022). By 2014, investments in India alone accounted for 54% of the annual ODA budget (Baruah, 2016, p. 1). ODA funds have specifically focused on infrastructure development, including transport (accounting for 49% of ODA inflows), water (21%), energy (18%), and forestry agriculture (12%) (Kojima, 2014, p. 11). The ODA investments in transport have sought to develop and modernize urban transport systems in major Indian cities such as Bangalore, Chennai, Kolkata, and New Delhi. After 2015, the JICA has come to serve as the primary financier of the Mumbai-Ahmedabad corridor, designed to be India’s first high-speed railway line (Baruah, 2016, p. 2). The signing of the CEPA has further formalized the framework for Japanese infrastructure investment in India. 

 

Prior to 2011, the 2006 Global Partnership Agreement had already successfully stimulated Japanese FDI, especially through the establishment of manufacturing operations of Japanese firms in India.  Japan’s firm presence in India doubled between 2008 and 2013 (Kojima, 2014, pp. 8-9), reflecting the effects of pro-FDI reforms in India since the early 1990s. This corporate presence has mainly focused on establishing manufacturing operations, capitalizing on the growing size and purchasing power of the Indian consumer market and the wide availability of cheap labor. India has emerged as a major production hub for Japanese car companies (Honda, Nissan, Suzuki, and Toyota) and electronics suppliers (including Panasonic and Sony). India, in turn, hopes to profit from the presence of Japanese firms to bolster technology acquisition, enable improved industrial learning, and the general upgrading of the domestic manufacturing sector. In all this, it will remain key for Indian firms (and especially State-linked ones) to expand their innovative capacities and not become overdependent on the technology transfers of upstream Japanese firms. By 2010, the bilateral trade volume had grown to the size of to 13 billion US$ (Taneja et al., 2022). Prior to the CEPA, growing Japanese FDI had thus already emerged as a defining trend in the bilateral trade relationship.

 

The CEPA has thus far failed to significantly stimulate bilateral trade. The agreement specifically aimed to increase investment opportunities, including through improved asset protection and the safeguarding of intellectual property rights, the effective and consistent enforcement of competition laws, and the overarching improvement of the bilateral business frameworks (Ministry of Foreign Affairs of Japan, 2011). In practice, however, the market impact of the CEPA has been relatively limited, even prior to the supply-demand shocks of the COVID-19 pandemic (see Table 1).

 

 

 

Although trade relations registered an upward trend before and in the immediate aftermath of the signing of the CEPA, the FTA has since then failed to significantly bolster bilateral trade. The lackluster economic performance was further heightened by the supply and demand shocks of the pandemic, with supply and demand shocks causing some Japanese firms ceasing their manufacturing operations in India (Singh, 2020). The effects of the pandemic on a variety of global markets have added further strain to a commercial relationship that was already underperforming. It remains worth noting that a variety of other FTAs India has finalized in the past two decades, including with the Association for Southeast Asian Nations (ASEAN) and South Korea, have also failed to meaningfully bolster respective trade (Kesavan, 2020). While positive outcomes can still develop, for instance in regard to Indian firms and deepening their industrial learning, the relative underperformance of Indian FTAs must raise concerns for policymakers in New Delhi and elsewhere. Despite the ambitious narrative surrounding the CEPA and the development of bilateral relations more generally, India is only Japan’s 18th largest trading partner, with Japan being India’s 12th largest partner (Ministry of Foreign Affairs of Japan, 2022). There is consequently significant space for improvement in bilateral trade. 

 

Bilateral trade up until this point has disproportionately favored Japanese exporters, heightening India’s trade deficit with Japan. Since 2011, India’s trade deficit with Japan has doubled from four to eight billion US$, with Indian exports facing both tariff and non-tariff barriers on the Japanese market (Chaudhury, 2021). In September 2022, Indian Commerce and Industry Minister Piyush Goyal promised that he would push for “a long overdue review” of the CEPA in an upcoming meeting with his Japanese counterpart (Pattanayak, 2022). The growing exposure of the Indian markets to foreign goods and the comparatively lower degree of competitiveness of Indian products has subsequently been a growing cause of concern in New Delhi.

 

Although the pandemic has resulted in a natural decrease in FDI, the CEPA has been relatively successful in stimulating FDI from Japan. FDI from Japanese firms has been concentrated in the establishment and sustenance of manufacturing operations for automobiles, telecommunications, petrochemicals, and pharmaceuticals (Kesavan, 2020). By 2020, Japan was the eighth biggest source of FDI in India (Solanki & Togashi, 2022). Despite a decrease in inflows because of the pandemic, Japanese FDI in India has generally gone up (see Table 2). 

 

 

 

The market shocks of the COVID-19 pandemic would invariably have had negative effects on FDI volumes. Additionally, FDI flows require time and space to recuperate corporate losses incurred by the immediate economic fallout of the pandemic. In contrast with bilateral trade, CEPA has thus been comparatively successful in stimulating Japanese FDI.

 

Infrastructure investment continues to be the most important sector for Japanese investments, including in strategically vital geographical spaces. Japan has emerged as a trusted partner for infrastructure development in the insurgency-prone north-eastern states and the Andaman and Nicobar Islands, where India aims to expand its power projection capacities over the Bay of Bengal and the Strait of Malacca (Rajagopalan, 2022). Japanese ODA policy here partially converges with India’s Act East Policy, which seeks to enhance India’s connectivity with consumer markets in east and Southeast Asia. ODA investments have increasingly come to occupy a function that has been framed by Japan in explicitly strategic (rather than merely economic) terms: as early as 2003, Japan began linking ODA spending to foreign and security policy objectives, including the maintenance of “international peace and stability” (Baruah, 2016, p. 1). India-Japan cooperation in infrastructure networks and Japanese financing mechanisms here come to occupy a central strategic role in pushing back Chinese BRI investments. This is particularly visible in Japan’s Partnership for Quality Infrastructure (PQI): launched in 2015, Japan has portrayed the PQI as a high-quality alternative to BRI infrastructure (AIIB) (Baruah, 2016, p. 3). Japan’s focus on financing infrastructure throughout South Asia subsequently manifests a response to the BRI that is consistent with the framing of the FOIP as a development/connectivity-focused initiative rather than a military containment strategy.

 

All in all, the narrative surrounding the growing proximity of India-Japan relations and the signing of the CEPA have raised expectations regarding the performance of bilateral economic exchange. So far, this progress has been limited to a modest increase in Japanese FDI and a mostly one-sided increase in market access. The subsequent trade deficit marks a concern for Indian policymakers. This divergence will have to be addressed more comprehensively in the future, especially as a pro-free trade position is not shared unanimously within the BJP (Chacko, 2019, p. 407). At the same time, Japan’s consistent commitment to closer economic relations inspires confidence: in 2022, Kishida set a 42 billion US$ investment target to be invested in India until 2027, primarily channeled into cybersecurity, clean energy, and development assistance (Pant & Mattoo, 2022). It is also clear that India-Japan economic cooperation is concurrently not merely driven by economic interests but infused with strategic considerations. This plays out in shared initiatives such as the AAGC (despite its limited salience until now) and Japanese investments in areas that India considers geo-strategically important. While bilateral trade should be improved and refined going forward, frameworks developed in the 2010s can provide a beneficial initial base for developing closer economic and strategic ties.

 

Defense and security cooperation

 

Expanded security relations function as the second major pillar of the India-Japan rapprochement. This reflects a broader emphasis on military modernization and expansion in both countries. When adjusted for inflation, Japan’s defense budget has grown by 22% between 1996 and 2017 (Menon, 2021, p. 256), with investments focusing on improved ballistic missile defense systems, upgraded early warning systems, and the acquisition of F-35 fighter jets (Smith, 2021). This focus on enhancing its conventional military capacities dovetails the broader ambition of ‘normalizing’ Japan’s military posture in East Asia. India too has invested extensively in its military, doubling its total military expenditures between 2004 and 2020 (SIPRI, 2022). Table 3 highlights the developments in total and relative military spending in India and Japan throughout the 21st century. 

 

 

 

For India, China’s enhanced presence in the Indian Ocean has additionally motivated a growing operational focus the IN. India has furthermore sought to reduce its dependency on Soviet and Russian defense equipment. Although still tied to the Russian defense industry, Indian policymakers have accelerated their purchase of non-Russian systems from other suppliers, including Israel, France, and the United States (Chhibber & Dhawan, 2013). The development of a more sophisticated indigenous defense industry has also featured prominently in Modi’s ‘Make in India’ campaign that promotes domestic production and manufacturing (Jaishankar, 2019). Although structural issues persist regarding indigenization (Kundu, 2021), India launched its first indigenously constructed aircraft carrier, the INS Vikrant, in 2022 (Prajapati, 2022). This focus on the maritime domain as a crucial space for Indian interests is a relatively novel development in Indian strategic thinking and reflects the effects of China’s growing presence in the Indian Ocean on Indian threat perceptions. 

 

In line with the deepening of military spending in both countries and the explicit focus on enhancing naval capacities, bilateral security cooperation has been primarily focused on enhancing the interoperability of the IN and the JMSDF. In 2012, the two countries launched the Japan-India maritime exercise (JIMEX). JIMEX has been held six times since its launch, with the most recent iteration taking place in the Bay of Bengal in September 2022. The JIMEX puts operational emphasis on bolstering interoperability in surface, subsurface, and air operations (Press Information Bureau, 2022). The impact of the JIMEX further entrenched interoperability as pursued in the context of the Quad from 2007 (Kiyota, 2014, p. 34) and dovetails India’s bilateral exercises with Australia and the United States.

 

The 2021 signing of the India-Japan ACSA marks a significant additional step toward improved logistical coordination and enables improved maritime burden sharing between India and Japan. It remains worth noting that the geographical theater of operations differs significantly for the IN and the JMSDF. While the IN is focused on ensuring India’s maritime posture in the Indian Ocean, the JMSDF is (and will presumably remain) exclusively focused on ensuring Japan’s position in the East China Sea. As discussed above, the ACSA facilitates closer military-to-military cooperation by establishing frameworks for ensuring mutual logistical support during joint exercises and maritime ventures, thus allowing for the deepening of burden-sharing mechanisms. The signing of the ACSA was particularly relevant considering that Japan had already signed ACSAs with Australia and the US, marking another step towards interoperability (Solanki & Togashi, 2022). During the bilateral 2+2 meetings held in 2022, the respective defense and foreign ministers also vowed to enhance bilateral cooperation in the joint development of defense equipment and technology (Asahina, 2022). Cooperation on relevant emerging technologies, including 5G networks, telecommunications, submarine fiber-optic cables, and smart-city technologies have also featured prominently in bilateral conversations, furthering the work of the Quad’s working group on critical and emerging technologies (Solanki & Togashi, 2022). In terms of security cooperation, the bilateral signaling thus remains centered on the pursuit of closer relations. 

 

As is the case in the economic bilateral relationship, however, the relative infancy of closer India-Japan ties also limits the scope of security cooperation at this point. Indian efforts to tap into the Japanese defense industry as an increasingly important supplier of military hardware have been of limited success. The Indian acquisition of the Japanese Shinmaywa US-2 maritime reconnaissance aircraft, for instance, was halted due to the Indian focus on acquiring foreign defense technologies for the purpose of industrial indigenization, which would have required Japan to export defense technologies alongside the equipment (Srivas, 2016). Establishing improved frameworks for hardware and technology transfer would be key to create export markets for the Japanese defense industry, enable enhanced industrial for Indian manufacturers, and reduce India’s reliance on Soviet and Russian legacy equipment. The sanctions imposed on Russia in the aftermath of its invasion of Ukraine will have created major concerns in India, with India’s dependency on Russian technology and supplies potentially exposing it to secondary sanctions. Given the degree of India’s connection to the Soviet and Russian defense industry (Russian legacy platforms are believed to account for up to 85% of all Indian weapon systems (Lalwani et al., 2021)), Quad member States should seek to fast-track legislative changes that allow defense manufacturers from Australia, Japan, and the US to fill the long-term supply gaps that Russia’s global market isolation will invariably produce for the Indian defense sector.  

 

India’s security integration into the Quad also notably lags in terms of reciprocal access agreements. This is natural to a degree given the long-standing strategic relationships the US has with both Australia and Japan. Australia and Japan have simultaneously deepened their bilateral strategic relationship to a level that exceeds India’s defense integration with either country. In 2021, Canberra and Tokyo finalized the signing of the Reciprocal Access Agreement (RAA). Unlike the ACSA, the RAA also provides the facilitation of bilateral training and reciprocal base access, significantly enhancing interoperability and the geographical scope of operations for the RAN and the JMSDF (Wilkins, 2022). The US, meanwhile, continues to operate bases in both Australia and Japan. A lack of basing rights at this point, however, does not mitigate India’s relevance in the Quad and aligns with the Quad’s burden-sharing emphasis that concentrates India’s scope of operations in the Indian Ocean rather than the Pacific and East Asia. The degree of interoperability and defense integration is nevertheless not as pronounced as it is between other Quad members.

 

 

 

Conclusion

 

What is the likely future development of the emerging partnership between New Delhi and Tokyo? The continuity of Japan’s policy towards India after Abe’s second exit from office, reflected in Kishida’s renewed investment pledge, indicates the level of bipartisan political support for stronger relations with India in Tokyo. India’s continuous emphasis on close relations with Japan, in turn, signals India’s commitment to the bilateral relationship. With the Quad as an overarching structure, India and Japan have sought to deepen their economic and strategic partnership. Although both countries are reluctant to explicitly frame this burgeoning partnership as a counterweight to China’s regional aspirations, India’s centrality in the FOIP vision and the vision’s institutionalization via the Quad indicate that shared threat perceptions towards China continue to be the major driving force in the India-Japan alignment. As is the case with the Quad, this has done little to assuage China, with concerns of the Quad forming an ‘Asian NATO’ persisting in Beijing (Hsiao & Kwek, 2022). The broader rapprochement observable between Quad countries subsequently indicates the prevalence of concerns toward China and the continuing shifts in the regional security architecture that seek to respond to a rising China. 

 

Bilaterally, the gains made over the course of the 21st century are accompanied by gaps in the partnership. Despite the CEPA stimulating Japanese investment in India, the performance of the bilateral trade links has left much to be desired, with the CEPA primarily benefiting Japanese exporters. Future negotiations surrounding the CEPA must urgently address this tension considering the deeply ingrained suspicion towards FTAs in Indian politics more generally. Indian companies, in turn, must ensure that they capitalize on opportunities for industrial learning without becoming wholly dependent on joint ventures and ultimately stifling the innovative capacities of Indian firms. Japanese investment and industrial support can be crucial for the creation of a more sophisticated industrial base in India, yet India’s uneasy tension between selective free trade engagement and protectionist measures has thus far failed to harness this potential. The relative lack of progress in closer economic ties is also reflected in the decrease in discussions surrounding the AAGC, which has lost traction in recent years (Pant & Mattoo, 2022). 

 

The relative underperformance in trade furthermore indicates differing policy positions on the role of geo-economic conduct as a means of pursuing national interests. Japan has historically viewed trade and investment as a means of asserting its interests in a non-confrontational, pro-development approach. Japan’s export-oriented growth model has relied extensively on and emphasized the value of FTAs. Now, Japan treats multilateral trading blocs as a means of reducing China’s economic rule-making capacities. As a result, Japan has lamented India’s non-entry into RCEP, which continued the lack of one framework facilitating trade interactions between all Quad countries. The novel Indo-Pacific Economic Framework (IPEF), announced by Biden in May 2022, is the first economic framework involving all Quad members. In a meeting with Indian Finance Minister Nirmala Sitharaman, US Treasury Secretary Janet Yellen recently described both the Quad and the IPEF as key tools “in developing sustainable economies, ensuring global health security, resilient supply chains, clean energy technologies, green infrastructure and climate finance” (Al Jazeera, 2022). The IPEF and its focus on the diversification of international supply chains from China has emerged as another embodiment of the broader political visions of the Quad and the FOIP. It remains to be seen whether the IPEF can significantly improve economic exchanges and reduce supply chain dependencies on China. 

 

Progress has been more pronounced in the security field, both within the Quad and outside of it. Bilateral security cooperation has become closely linked to interactions through the Quad, with both forums being geared toward improving (maritime) interoperability and strategic coordination. The degree of security cooperation has been more limited between India and the other Quad members than it has been between Australia, Japan, and the US. This is mainly a result of the long-term nature of these military-to-military relationships and India’s historical emphasis on non-alignment. With improved interoperability and intelligence sharing, however, the MDA capacities are boosted significantly. India, for its part, can benefit from the presence of Quad countries in the Indian Ocean, most notably in Djibouti, Diego Garcia, and the Cocos (Keeling) Islands. Intelligence sharing will subsequently be a crucial tool to ensure awareness of China’s naval activities in the Indian Ocean.

 

India’s strategic culture on non-alignment continues to shape its foreign policy today. Anti-Americanism on both sides of the political spectrum remains a potent force in India. Although Modi has openly favored closer relations with the United States, an emphasis on an independent foreign policy that focuses on securing Indian interests as the top priority has remained a key component of India’s foreign policy rhetoric and practice under Modi. This continued ambivalence towards the US differentiates India’s posture from Japan’s, with Tokyo still relying on the American military presence as a net security insurance despite its investment in national military capabilities. This relative divergence in foreign policy posture and orientation has been most recently observable in India’s and Japan’s respective positions on the US sanctions policy towards the Russian Federation in the aftermath of Russia’s attack on Ukraine. While Japan has joined the Western sanctions regime, India has capitalized on Moscow’s reduced access to European energy markets to purchase Russian gas and oil at below-market prices. Whilst this initially evoked criticism in Washington and elsewhere, Western narratives have since refocused on India’s centrality in Indo-Pacific strategic frameworks. 

 

India’s centrality for the Indian Ocean dimension of the Quad bestows India with leverage and space to maintain its own foreign policy direction while coordinating anti-China measures in the context of the Quad. Indeed, the broader and more principled alignment seemingly sought by (some) Western States is unlikely to materialize in the near future given the emphasis of India’s strategic culture on non-alignment, India’s direct exposure to Chinese military aggression, and India’s relations with other global partners (i.e., defense-industrial relations with Russia). Although India is thus unlikely to become an ally for Japan (or Australia and the US) in a conventional, Cold War sense, this does not undermine the efficacy of the Quad or the progress that has been made until this point.

 

India’s bilateral and multilateral ties with Quad member States have improved exponentially over the 21st century and the overarching convergence of threat perceptions towards China will produce a continued commitment to a close(r) bilateral relationship in both New Delhi 

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