Japan-India

Noda's recent visit to China after the death of North Korea's leader Kim Jong Il was an exercise in political diplomacy. His visit to India, on the other hand, was clearly focussed on economic ties. As Noda told a business audience in India's capital on Wednesday: "I am convinced we need to strengthen the economic partnership…We can achieve greater trade volumes," as Noda told business leaders in New Delhi.

The bilateral trade between the two countries stands at around 14 billion US dollars. The target is to raise it to 25 billion dollars by 2014. Even then it will be a fraction of Japan's trade with China, which amounts to 300 billion dollars.

'Complementarity'

Noda gave an indication of India's long-term importance in Tokyo's eyes by mentioning that "Japan has technology and capital while India has a young workforce as well as abundant demand for infrastructure." He also said that the "complementarity" of the two economies was "unmatched."

As Japan's population ages and growth in China slows down, India has become all the more attractive for Japanese investors. Apart from its large and youthful population, India's middle class is set to be "the driving force if the manufacture sector grows in India," as Noda remarked.

Currency, infrastructure

The rapid withdrawal of funds by overseas investors amid global financial turmoil has hit the country; India has been facing an industrial slowdown in view of the eurozone crisis affecting its exports, while the rupee has taken a tumble, losing almost 15 percent against the dollar this year and raising concern about India's fiscal and current account deficits.

Japan and India signed a 15 billion dollar currency swap deal after a meeting between Noda and India's Prime Minister Manmohan Singh on Wednesday. A three billion dollar swap agreement between the two countries expired in June.

"Amid global uncertainties, ensuring the stability of the financial markets is all the more important for the stable economic development of the two countries," Noda and Singh said in a joint statement.

Noda announced a 4.5-billion dollar investment in a 100 billion dollar project to create a 1,483-kilometer long industrial corridor between New Delhi and the financial hub of Mumbai in the west. The plan envisages a manufacturing and freight corridor with 24 new cities. Noda also promised loans in yen to the tune of 1.7 billion dollars for expanding the Delhi metro railway as well as for a conservation project.

Civil nuclear cooperation

India's hopes of buying civil nuclear technology from Japan found no encouragement during Noda's visit. Japan's worries regarding India not having signed the Nuclear Non-Proliferation Treaty, nor having committed to a moratorium on nuclear weapons tests apparently remain untouched by the fact that Japan's security council eased a decades-old arms exports ban just hours before Noda left on his India visit.

In their joint statement, Noda and Singh said talks on nuclear deals were moving "in the right direction" and that they had asked their negotiators to step up their efforts, but no timeline was given for further negotiation.

Author: Arun Chowdhury (Reuters, AFP, dpa, PTI)
Editor: Sarah Berning