Indo-Japan Bullet Train Project

Context:

The Mumbai –Ahmadabad Bullet train deal presents opportunities to boost up the India-Japan bilateral relations.

About the Mumbai-Ahmadabad Bullet Train Project:

• In December 2015, Indiasigned an agreement with Japan for introduction of a bullet train between Ahmadabad and Mumbai.
• The work is scheduled to be completed by 2023.
• Around 80% of the total cost of the project has been funded by a loan of Rs. 1 lakh crore from the Japan’s International Cooperation Agency (JICA), to be repaid over 50 years at 0.1 % interest
• In India, a national High Speed Rail Corporation (HSRC) has been set up for the smooth development and implementation of the project.
• Task force has been set up to facilitate private sector participation in the project. It includes representatives from Japan External Trade Organization, the Japanese ministry of economy, trade and industry, India’s Railway Ministry and the Department of Industrial Policy and Promotion.

What importance does this project hold for Japan?

• The project is expected to help revitalise Japan’s stagnant economy.
• Japan has struggled to export its bullet train technology.
• Before India, Taiwan has been the only country to have exported bullet train technology from Japan.
• One of the major reasons for is high competition from China. Chinese technology is cheaper, which makes it an attractive choice for the cost-conscious developing and middle-income countries of Asia.
• The competition between China and Japan to export bullet trains is the reflection of broader rivalry between China and Japan for influence in Asia. Therefore, it’s not just about bullet trains but the deal has geostrategic significance too as both India and Japan has common concerns about China.

What importance does this project hold for India?

• The project is expected to revolutionize Indian Railways.
• It is also expected to become an engine of economic transformation in India
• The project is likely to trigger several other manufacturing projects under the Make in India initiative.
• It is also expected to increase India- Japan collaboration for infrastructure development in India
• The project is expected to lead to development in areas adjacent to train stations.
• The project is also expected to mitigate excessive economic concentration in large cities and help India grow in a balanced manner.

What are the major concerns for the Project?

• Prevalence of red tape and bureaucratic delays
• Complicated land and labour laws which is an impediment to business owners
• Railway safety
• Land Acquisition
• Previous abrupt ending of business agreement between Japanese and Indian companies.

Beyond Mumbai- Ahmadabad Bullet Train Deal- What makes India- Japan Bi-lateral ties strong?

Economic Relations:

Trade

• In the Financial Year 2015-16, India-Japan trade reached US$ 14.51 billion, showing a decrease of 6.47% from 2014-15
• India’s export to Japan for 2015-16 was US$ 4.66 billion
• India’s Import from Japan for 2015-16 was US$ 9.85 billion
• India’s primary exports to Japan have been petroleum products, chemicals, elements, compounds, non-metallic mineral ware, fish & fish preparations, metalliferous ores & scrap, clothing & accessories, iron & steel products, textile yarn, fabrics etc and
• India’s primary imports from Japan are machinery, transport equipment, iron and steel, electronic goods, organic chemicals, machine tools, etc
• India-Japan Comprehensive Trade agreement was signed in 2011
• The agreement covered goods and services, free movement of visitors and workers, investments, intellectual property rights, and custom procedures. It also sought to abolish tariffs on over 94% of goods India and Japan were trading in, over a period of 10 years.

Investment

• Japan is the fourth largest foreign investor in India
• The presence of Japanese companies in India has also been increasing steadily
• During Indian Prime Minister’s visit to Japan in 2015, leaders of both the countries had agreed to the goal of doubling Japan’s direct investment as well as number of Japanese companies working in India by 2019.
• India has set up a ‘Japan Plus’ office at the ministry of commerce and industry to serve one-stop window to resolve problems faced by Japanese companies in India.
• India had announced “visa on arrival” scheme for all Japanese travellers, including for business purposes, effective from March 1, 2016

Infrastructure

• Delhi Metro Project has been efficiently executed with Japanese assistance.
• In June 2017, Japan’s Kawasaki Heavy Industries had entered into an agreement with Bharat Heavy Electricals for technical collaboration on the manufacture of steel metro coaches.
• JICA has been working with state governments on urbanization and smart city projects
• JICA has taken up a ‘Comprehensive Traffic and Transportation Study’ for Andhra Pradesh Capital Region.
• It has also approved a loan of Rs. 4,200 crore for Amravati Metro Project

India- Japan Civil Nuclear Deal

• The agreement came into effect from July 2017.
• The agreement has allowed US and French nuclear firms who have alliances with Japanese companies to supply nuclear reactors, fuel and technology to India.

Defence Cooperation

• Defence has emerged as an area of partnership between India and Japan
• In the 2017 India-Japan annual defence ministerial dialogue in Tokyo, India and Japan exchanged views and ideas with the aim to further strengthen defence and security cooperation under the framework of the ‘Japan-India Special Strategic and Global Partnership’
• Japan and India have agreed to collaborate closely in defence production, including on dual-use technologies
• They have also agreed to commence technical discussions for research collaboration in the areas of Unmanned Ground Vehicles and Robotics.
• The recent Malabar Naval Exercise among US, India and Japanese Maritime Self Defence Forces has also strengthened the military ties.

 Way ahead

• The introduction of bullet trains is expected to boost India- Japan bilateral ties.
• The Mumbai –Ahmadabad Bullet train deal has geostrategic significance for both India and Japan as both the countries share common concerns about China.
• Recently, defence has also emerged as a major area of cooperation.