The Telegraph
Tuesday , September 2 , 2014
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Promises of yen rain, nuke deal not yet
Offer beats global inflow last year

New Delhi, Sept. 1: India has won the promise of investments worth an unprecedented Rs 205,000 crore from Japan, but key deals Prime Minister Narendra Modi had hoped to ink with Shinzo Abe during his Tokyo visit remain trapped in seemingly intractable differences.

Japan will sink the money — 3.5 trillion yen or $34 billion — into infrastructure and development projects in India over the coming five years, Abe assured Modi during today’s summit talks that followed a rare public display of diplomatic courtship over the past three days.

The amount is almost 40 per cent higher than the total investment flow from all countries into India during 2013-14 — Rs 147,518 crore — according to the department of industrial policy and promotion. Japan’s total investment in India from April 2000 to March 2014 was only Rs 80,000 crore.

“Prime Minister Abe has pledged a qualitatively new level of Japanese support and partnership for India’s inclusive development, including transformation of India’s manufacturing and infrastructure sectors,” Modi, who came to power on a promise of economic recovery, said.

“I am deeply grateful to him and the people of Japan. He has expressed strong support for my vision of India’s development and has committed support in all areas of development.”

The two leaders also agreed to enhance cooperation in several specific projects that Tokyo has been eyeing but where India’s infamous bureaucratic delays have frustrated Japanese companies — a problem Modi has promised to rectify.

Modi told the Japan chamber of commerce and industry this morning that he would set up a special team in the Prime Minister’s Office dedicated to “fast-tracking” Japanese investments in India.

Such country-specific monitoring by the PMO is unprecedented. The team may be called “Japan Plus”, an official told The Telegraph.

But a nuclear deal that India and Japan have been negotiating since 2010, and a plan for New Delhi to buy US-2 amphibious planes from Tokyo — agreements Modi wanted to seal on the trip — remain stalled despite the two Prime Ministers repeatedly highlighting their personal bonhomie.

Japan and India continue to differ on the text of the nuclear pact, with Tokyo seeking additional insulation from any future weapons tests New Delhi may want to conduct.

Both leaders have asked their officials to “expedite” negotiations on the nuclear agreement and on the purchase of the amphibious planes — a move seen as significant because Japan has never sold military equipment since adopting a pacifist constitution after World War II.

India and Japan have signed five smaller agreements — one between Kyoto and Varanasi on Sunday, and pacts on health, renewable energy, roads and women’s empowerment.

Abe, who broke with tradition to travel to Kyoto to meet Modi on Saturday, and visited a Buddhist shrine with his Indian counterpart yesterday, hosted a tea for his guest today.

Five senior Japanese ministers met Modi late in the morning after he had visited Tokyo’s Taimei elementary school, rebuilt after being destroyed in an earthquake 91 years ago.

Modi referred to the 2001 Gujarat earthquake, after which he became the state’s chief minister and received praise for his relief and rehabilitation efforts. He said he wanted to understand Japan’s strategies in primary education.

“My intention behind coming to this school is to learn and understand how and what strategies we can use to bring modernity, moral education and discipline to India’s primary education,” Modi said at the school.

India and Japan agreed to enhance student exchange programmes and train more Indian teachers in the Japanese language to encourage its spread in Indian schools.

Japan also declared that it would remove six Indian space and defence-related firms from a foreign end user blacklist.

But it is Japan’s commitment to India’s economy that emerged the biggest takeaway for Modi, after his talks with business leaders, ministers and Abe.

“Commerce and money are in my blood,” Modi had told the commerce chamber, half in jest.

By evening, India had earned the Japanese assurance about the investment hike.

The Rs 205,000 crore worth of investments will finance infrastructure, connectivity, transport systems, smart cities, manufacturing hubs, clean energy technologies, skill development initiatives, Ganga cleaning projects and the farm product processing industry.

Modi also proposed setting up “Japan industrial townships” that will house only industrial projects funded by Japanese companies.

Japan has been keen on selling India its Shinkansen “bullet trains” and had, during Manmohan Singh’s prime ministerial tenure, convinced a reluctant New Delhi to agree to a feasibility study of such a transport system connecting Mumbai and Ahmedabad.

India has so far remained cautious about adopting Japan’s high-speed train technology, which will need money that can be used on many more ordinary trains.

China is offering its retrofitted high-speed trains at a lower price.

Abe again offered the technology and know-how behind the trains today, and said Japan would also help set up Ahmedabad’s suburban Metro network.