INTERNATIONAL RELATIONS
Reaching out to AFRICA
o Something that form the core of India Africa relationship is India-Africa forum Summit
o The idea of the India-Africa summit started — the 2008 New Delhi and 2011 Addis Ababa summit -- 2015
o India has offered a new line of credit worth $10 billion to strengthen economic cooperation
o Unified stance for the reform of the UN Security Council.
o Africa is an important trade partner for India.
§ India-Africa trade was worth almost $70 billion in 2014-15, and Indian companies invested some $30-35 billion in the continent over the past decade. While trade has improved in these ten years, it is still much less than Africa’s trade with China, which was $200 billion in 2014-15.
o Indian energy companies have assets in African countries, and New Delhi exports consumer and capital goods and medicines to the continent.
o China has invested more than $180 billion in Sub-Saharan Africa alone in areas ranging from energy to infrastructure during the period 2005-2015.
§ India may not have the resources to beat the level of Chinese investments, but it can certainly do a lot more with proper policy approaches, faster project execution and improved bilateral relations.
o The goodwill India enjoys in the continent is a result of the principled anti-colonial positions the country took in the post-Independence era.
o India should cash in on that goodwill to build a stronger economic and political partnership with Africa in the new century.
Kenya-India
o Kenya staked claim for Africa to a seat at the proposed expanded UN Security Council, even as it supported India’s campaign for U.N. reform.
o Investment in the agriculture, security and health sectors of Kenya.
o Invited India to engage more intensely at COMESA (Common Market for Eastern and Southern Africa). Reciprocating, India invited Kenya to participate in the International Solar Alliance.
o Both sides sealed an agreement on a Line of Credit of $100 million for agricultural mechanization. Agricultural mechanization project would open a new dimension of opportunities for bilateral ties.
o Both sides agreed to enhance cooperation in areas of maritime surveillance, maritime security, sharing of white shipping information and joint hydrographic surveys.
o India has also invited Kenya to participate in exhibitions like Aero-India and DEFEXPO. A joint statement issued during the visit announced a number of security-related measures including the likely meeting of Joint Working Group on Defense and Maritime Cooperation.
INDIA-JAPAN Relations
History of relations:
· In the late 1980s, with the cold war fading, Japan-India relations again looked promising. It is worth noting that even during the cold war period; Japan’s Overseas Development Assistance (ODA) was still active in India.
· The landmark event which signalled the high point of the relationship in that period was the joint venture between Maruti Udyog and Suzuki Motors in 1984 to produce small cars in India.
90’s preferences
· India’s nuclear tests in 1998 again led to severe condemnation and harsh sanctions by Japan and the relations moved to a low keel.
· The current NDA government’s focused efforts in this regard seem to stem from awareness of the fact that the economic value created by way of trade and investment between the two countries is significantly lower than the potential.
· As per data from the Japan External Trade Organization (JETRO), Japan’s aggregate outward investment in China during the period 1996-2015 was $116 billion and in India was $24 billion.
· China has received close to 5 times more investment than India.
o The stock of Japanese foreign direct investment globally is $1.3 trillion. The annual outward flow of Japanese FDI is about $130 billion and the U.S. gets about $40 billion annually. India should target at least $25 billion annually for the next 10 years.
FDI patterns
Challenges to partnership
· There are three main challenges which have constrained the Japan-India partnership from achieving its full potential.
o First, India’s complex regulations, red tape, ad hoc nature of state-level interventions.
o Second, Japanese companies face considerable logistics challenges and non-availability of uninterrupted power supply constrains their manufacturing plans in India.
o Third, while India can emerge as a large market for Japanese infrastructure system exports, there have been incredible delays in the commencement of the projects.
· In order to facilitate investment from Japan, the union government has set up a Japan Plus committee which comprised four senior bureaucrats from the government and three Japanese officials chosen, one each from Japan’s Ministry of Economy, Trade and Industry (METI), Japan External Trade Organization (JETRO) and the Aichi perfecture to deal with all aspects of investment mainly challenges faced by Japanese companies post investment.
· Japan International Cooperation Agency (JICA) has funded the Tamil Nadu Investment Promotion Program for strengthening policy framework and urban and industry infrastructure to facilitate foreign investment.
· Japan is working on developing 12 Industrial townships called Japan Industrial Townships (JITs) which will operate like Little Japan with all the infrastructure to support the operations of Japanese companies.
· JITs face challenges from access to ports, lack of uninterrupted power supply and poor level of benchmarking to global best standards as applicable for industrial parks.
· India can be one of the largest markets for Japanese infrastructure systems exports (one of the core components of Abenomics) in transport, water, energy and logistics. While there is the shining example of the Delhi Metro Rail, the delays with Delhi
· Mumbai Industrial Corridor (DMIC), which was set up in 2007, and the pace of the ongoing feasibility studies of Chennai Mumbai Industrial Corridor (CBIC) are disappointing.
Tokyo Declaration metrics
· The Tokyo Declaration of November 2014 sets a target for doubling Japan’s foreign direct investment, the number of Japanese companies operating in India and an ambitious investment target of JPY 3.5 trillion ($33.5 billion) within a five-year period. The doubling of foreign direct investment seems unlikely unless some dramatic revival happens.
· The number of Japanese companies in India in October 2014 was 1,156 and by October 2015 it was 1,229, an increase of 6%, much lower than the needed growth to achieve the target.
· The cumulative Overseas Development Assistance disbursement by Japan (India is the largest recipient of Japanese ODA) in 2014 was JPY4.6 trillion and in FY 15-16 only JPY 185.6 billion was disbursed.
· Given the under-performance on all the benchmarks set up under the Tokyo Declaration, timely intervention from the highest levels of both governments can still ensure that the ambitious metrics can be achieved.
· The Japan-India relationship is at a unique juncture as Asia is emerging as the powerhouse of the world. The Japanese government must play a more active role in building India’s infrastructure, which will serve as a foundation for sustained economic growth.
· Both Japan and India must aspire for two-way trade of $100 billion, annual investment by Japan in India of $25 billion and at least 100 joint manufacturing/research and development centres on a global scale within the next ten years.
