With trade relations between China and the West deteriorating, Japanese companies are looking to India as an alternative supply chain destination amid the South Asian giant’s rapid development, ongoing economic reforms and increasingly close ties with Japan, according to New Delhi’s top envoy to Tokyo.
“We see Japanese prefectural governors leading a growing number of business delegations to India, sometimes 100-member strong, as they look for skilled manpower and new investment opportunities,” Indian Ambassador Sibi George told The Japan Times in an interview.
“Whether it is Gujarat, Odisha or Tamil Nadu, things are moving pretty fast,” the 57-year-old career diplomat said, noting that the prefectural-level push reflects growing interest by small and midsize Japanese companies to explore India’s rapidly developing business environment, especially as rising geopolitical tensions prompt countries like Japan to redirect supply chains away from China.
Japanese firms “are realizing the importance of engaging with a like-minded country like India,” said the envoy, who has traveled throughout Japan, visiting all 47 prefectures since assuming his post last year.
“The whole world is looking to do business with India as our government is focused on turning the country into a manufacturing hub,” he said.
This shift will benefit not only India, but also Japan and other nations as they address some of their supply chain challenges, he added, indicating that several countries have already begun relocating their distribution channels to India.
One of his main tasks as ambassador, George said, is to boost Japanese public and private investments in India, which saw its gross domestic product grow at a rate of 8.2% last fiscal year, cementing the country’s status as the world’s fastest growing major economy.
“There are 1,500 Japanese companies today in India. These are 1,500 success stories, but I would like to see this number grow tenfold to 15,000,” George said, adding that 12 “Japan Industrial Townships” — industrial parks across the country dedicated to helping corporate Japan tap the Indian market — are “ready to welcome more Japanese firms.”
The diplomat said that there are Japan-focused desks at both the state and federal levels of the Indian government.
“I don’t see us doing this with other countries, so Japan gets special treatment,” he noted, adding that any investment in India “is an investment in the strategic depth of Japan.”
Prime Minister Fumio Kishida shakes hands with Indian leader Narendra Modi ahead of a family photo on the second day of the Group of Seven summit at the Borgo Egnazia resort, in Savelletri, Italy, on June 14. | REUTERS
The ambassador’s remarks come after Indian Prime Minister Narendra Modi pledged to continue prioritizing ties with Japan in his now third consecutive term at the helm of the world’s most populous country. Both direct investments and trade from Japan to India have been on the rise in recent years, with the latter reaching ¥2.3 trillion last year.
The two strategic partners collaborate in several key economic areas, including large infrastructure projects such as the construction of India’s first high-speed rail line linking Mumbai — the country’s financial hub — with Ahmedabad, the largest city in western Gujarat state.
They also have a “competitiveness partnership” aimed at promoting industrial cooperation, and set a Japanese public and private investment target for India of ¥5 trillion for the 2022 to 2027 period.
This comes as Tokyo is considering boosting support for Japanese firms looking to expand operations overseas, including through greater information-sharing.
During a meeting with Prime Minister Fumio Kishida in mid-June on the sidelines of the Group of Seven summit in Italy, Modi emphasized the countries’ commitment to further deepen cooperation in traditional areas such as infrastructure development and cultural exchanges but also in emerging sectors like semiconductors, clean energy and digital technologies.
But as George pointed out, the relationship is about much more than merely business.
Indian Ambassador Sibi George has visited all 47 of Japan’s prefectures, meeting with top officials including Shizuoka Gov. Yasutomo Suzuki. | INDIAN EMBASSY
As members of “the Quad,” which also groups the United States and Australia, Japan and India have not only been enhancing their own defense capabilities but also deepening security cooperation as the international security environment deteriorates.
Not only have they stepped up the number and complexity of bilateral and multilateral drills, such as the Malabar and Dharma Guardian exercise series, they have also kicked off new ones such as the Veer Guardian fighter aircraft drills.
For George, the reason behind the rapidly expanding defense and security ties is simple: “Peace and stability in the Indo-Pacific is crucial for India’s journey to become a developed country by 2047, so we will cooperate with all like-minded countries to maintain this in the years to come,” he said, calling Japan a critical partner in this endeavor.
The two countries, which hold regular foreign and defense minister meetings, have also launched talks between the Japan Joint Staff and the Indian Integrated Defense Staff.
In a bid to take the relationship a step further, they are also considering defense-industrial cooperation.
India, which relies heavily on Russian-made equipment for its military, is seeking defense-industrial collaboration with technologically advanced countries to help reduce materiel imports.
The country agreed last year to a landmark defense-industrial cooperation roadmap with Japan’s sole treaty ally, the United States, that will allow India to fast-track high-priority co-development and co-production defense projects.
The Indian Navy destroyer Chennai fires its close-in weapons system during a live-fire exercise as part of the Malabar joint naval drills in the Arabian Sea in November 2020. | U.S. NAVY
George says New Delhi would welcome similar cooperation with Tokyo.
“U.S.-Indian cooperation in the defense sector is now going quite well and this has opened up a huge opportunity with Japan,” the ambassador said.
“I would not like to go into specific areas, but Japan is an industrialized nation that brings key technologies to the table — technologies we are also working on,” he said.
New Delhi, he added, would also welcome Japanese defense companies setting up shop in the country and playing an important role in its “Make in India” initiative.
Under Kishida, Japan has boosted military spending, while aiming to support the country’s struggling defense industry by promoting certain materiel exports or signing defense-industrial cooperation deals with countries such as the U.S., Australia, the U.K. and Italy.
Tokyo also revised its strict defense export guidelines earlier this year to increase the international scope of operations for Japanese defense companies, including the export — under certain conditions — of lethal weapons they co-produce.
George said he is “confident” that Japan’s shift on “defense-technology collaboration with the rest of the world will help us expand cooperation in this very important sector.”
But while Modi secured his third term as India’s’ leader last month, Kishida’s future as prime minister is less certain as his ruling Liberal Democratic Party prepares to hold a presidential election in September.
From New Delhi’s perspective, the outcome of the LDP vote, which will almost certainly decide who will be Japan’s next leader, shouldn’t impact the growing momentum in bilateral relations.
“Our bilateral ties are the result of a time-tested relationship,” George said.
