Despite Ukraine crisis, trade will dominate Japanese PM’s meeting with Modi

A cloud the size of Ukraine will hang over Japanese Prime Minister Fumio Kishida’s summit with Prime Minister Narendra Modi on Saturday. However, that may not stop high-level meetings from focusing on business and trade.

Not only is Japan India’s third-largest trading partner (peaking bilateral trade of Rs 13 lakh crore in 2019), but it is also India’s largest bilateral donor. The two countries also have a decade-long free trade agreement, called CEPA or “Comprehensive Economic Partnership Agreement”. Japan was the first country visited by Modi outside the Indian neighborhood after becoming prime minister in 2014.

Kishida, who succeeded Yoshihide Suga as Japanese prime minister in October, will be the first Japanese leader to visit India in nearly five years, following a visit by ‘India’s friend’ Prime Minister Shinzo Abe in 2017. Abe was supposed to visit India for the annual India-Japan Summit in December 2019, but the plan had to be canceled due to nationwide protests during this period against the Citizenship Act (CAA) . Then Covid-19 hit, causing meetings in the digital realm and bilateral trade to plunge.

Kishida’s visit will last barely a day – he is due to fly to Cambodia on Sunday – but will be significant in two respects. One, of course, will be on India’s stance on the war in Ukraine and refusal to act against Russia, which led to cracks in Quad, Japan’s ambitious four-party anti-China initiative. nations (the United States and Australia being the other members). The Japanese prime minister is likely to suggest that India is reluctant to buy Russian oil at a discount, as beleaguered Moscow has suggested, and is being pushed hard by bureaucrats in New Delhi.

However, the other, and most important, item on the agenda will be the long-standing trade partnership between the two countries – in 2006 the countries renamed their ties, which until then had been called “Strategic Partnership and Global” to “Strategic Partnership and Global Partnership” to emphasize the importance of linkages. The ties were further strengthened in 2011 when the two countries signed CEPA, which was the only trade agreement India had signed in over a decade, until that with the United Arab Emirates last month.

A review of Japan’s significant investments in Indian infrastructure projects, including the Rs 1.2 lakh crore high-speed rail project between Mumbai and Ahmedabad, which is largely funded by the Japan International Cooperation Agency, will take place during the meeting. Originally supposed to be inaugurated on August 15, 2022, the project has taken a huge delay, which Japan is not too happy with.

Other major projects include the Delhi-Mumbai and Chennai-Bengaluru industrial corridors. A review of the status of all major projects will likely be conducted at the Summit. It is unclear whether Kishida will raise the delicate issue of India’s exit from the RCEP negotiations – Japan was keen for India to stay in this trade deal to balance out China, considering that the allegiance of the India to the “clear and present danger” that Russia has now become the biggest elephant in the room.

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