A strategic framework that works for Japan and India

BY BHARAT R. JOSHI

NEW DELHI:  Analysts often use the military-derived term “VUCA” — volatile, uncertain, complex and ambiguous — to explain the perplexities of present times. If there is one geographic construct that could personify VUCA, it is the Indo-Pacific. My attempts to coax a definition of “Indo-Pacific” out of experts have resulted in a range of answers, from the creative “its Hollywood to Bollywood” (from the western United States to western India) to the evasive “how would you define Asia-Pacific?” and expansive “includes Africa, as the Indian Ocean touches East Africa.”

Beyond the complexities of trying to define the Indo-Pacific, the Free and Open Indo Pacific (FOIP) is a strategic framework that is less about defining geography and more about shared values and interests. It is a concept that is still evolving, but as the name suggests it signals a tectonic shift toward India’s immediate neighborhood and places critical importance on the maritime environment, and places Japan in the center as a key development partner.

Therefore, despite the ambiguity of this VUCA region, one of the clear messages to those of us observing the evolution of the FOIP is the implicit agreement that India, as the geographic anchor, and Japan, as the development anchor, are key actors and their partnership will be central to the success of the FOIP.

Today, India and Japan are collaborating in areas as diverse as space research and agriculture, but this deep bilateral engagement has been built brick by brick on the base of a long and historically close bilateral relationship, and the delivery of tangible projects. For instance, there is much talk of India’s first shinkansen, the Mumbai Ahmedabad High Speed Rail, being built with Japanese support. But we must not forget that the reliable and modern Delhi Metro was initially built with similar Japanese support through the Japan International Cooperation Agency — despite domestic skepticism in India concerning the punctuality, safety and efficiency that we today take for granted in Delhi and other Indian metropolitan cities. Similarly, the ambitious 1,500-km-long Delhi Mumbai Industrial Corridor (DMIC) — a $100 billion project — was developed by both governments with a level of persistence that has again proven naysayers wrong. Encouraged by the DMIC, additional industrial corridors are being developed in India.

These projects demonstrate that complex mega-projects are doable in India, while helping India and Japan build confidence for new and even more ambitious projects within and outside India. Both partners are now looking to plan similar corridor-led initiatives including the Asia Africa Growth Corridor (AAGC) on the African continent, and connectivity projects in South Asia.

While shaping a strategic system such as the FOIP structure is a heavy responsibility for India and Japan, projects in the Association of Southeast Asian Nations have the ability to deliver quick, tangible rewards for all stakeholders.

I propose three concrete steps that could possibly create some quick wins and serve as a blueprint for the Indo-Japan partnership in the FOIP and beyond.

First, leverage the “triple CEPA” (comprehensive economic partnership agreements: enhanced free trade agreements that seek to demolish tariff and nontariff barriers to trade while protecting investments of signatories) environment. India has signed a CEPA with ASEAN, Japan has a CEPA with ASEAN, and Japan and India have a CEPA with each other.

Individually, the utilization rate of the Japan-India CEPA is among the lowest (the India-ASEAN CEPA is similarly bleak). But together, these agreements offer a sweet spot of trade and investment. A quick way to leverage this sweet spot is through including India in the regional value chains of Japanese corporations. For instance, a Japanese company’s technology or source product could be shipped to Thailand or Myanmar (both ASEAN members) for intermediate processing (at an owned facility or a joint venture) and thereon to India (via a subsidiary or joint venture) for finishing and ultimate sale. Leveraging the power of the triple CEPA, this could be done without the penalties of duplicate taxes or duties. Furthermore, if this corporation were to see India as the penultimate destination, Indian ports are perfectly poised to reach markets as diverse as the Commonwealth of Independent States (former Soviet republics), Europe, the Middle East and Africa.

Also, the triple CEPA could act as a shinkansen-speed bridge to an additional 12,000 Japanese companies that are present in the ASEAN but not yet in India to enter the Indian market. This would enhance both the scale and quality of Indo-Japan economic engagement within the FOIP.

Second, co-design trilateral alliances on a case-by-case basis. Japan and India have demonstrated the ability to work well in trilateral structures on security (think the Malabar exercises with the United States), and must now extend this ability to form trilateral alliances on the economic side as well. For instance, economic trilateral agreements with American corporations for equity investments and industrial expertise in projects where both India and Japan need to “import” technology or capital; or with France in Francophone Africa, which has remained an elusive market despite India’s significant diaspora in English-speaking Africa; or local partners in the FOIP, who will be critical in mitigating project-specific risks. This will be vital to ensuring that the FOIP does not become more of a geostrategic security framework devoid of an economic pillar of sustenance.

Third, dovetail existing and planned connectivity projects in India’s northeast and ASEAN into a broader vision for the FOIP. India has been investing (and co-investing) in projects such as the Trilateral Highway (across India, Thailand and Myanmar); the Kaladhan Multi-modal Transit Transport Project (connecting Sittwe port in Myanmar to Kolkata and Zorinpuri in India via marine and surface transport); and the Bangladesh, China, India, Myanmar Economic Corridor (stretching from Kolkata to Yunnan in China via Bangladesh and Myanmar), which was initially proposed by China. These corridors cut across time zones, customs jurisdictions, motor vehicle laws (and standards) and different workweeks. Similarly, Japan is involved in many projects in the region. It may be noted that these projects seamlessly cut across Southeast Asia (ASEAN) and South Asia (e.g. India and Bangladesh).

This is not an exhaustive list and covers only physical infrastructure, but it incidentally addresses all five strategic areas of the Master Plan on ASEAN connectivity 2025: sustainable infrastructure, digital innovation, seamless logistics, regulatory excellence and people mobility. Again, the private sector will play a vital role in ensuring success and sustainability of these critical projects.

The FOIP provides a strategic framework for the growing complementary geopolitical and geo-economic projects among key players in the region. Early wins can catalyze expansion toward a broader, nonexclusive strategic structure that evolves over time. Prime Minister Narendra Modi’s emphasis on “inclusive” in his address at the Shangri La dialogue might well tweak the nomenclature slightly to “FOIIP” — Free, Open and Inclusive Indo Pacific. This would reinforce the FOIP as a mechanism open to all, without antagonizing any particular state. With a clear road map, India and Japan can promote regional stability and economic integration.

Japan and India have demonstrated the ability to articulate bold visions and execute them through connectivity and economic projects. The same blueprint could be extrapolated in FOIP version 1.01, but it will be more important to be “good and first” rather than “best and last.”

Bharat R. Joshi is the chief executive officer of J-Curve Ventures Pvt. Ltd. and director of Joshi Konoike Transport and Infrastructure.

Source: The Japan Times