IJFP Delegation Visit to Japan, March 21-27, 2006

A multi-party India-Japan Forum of Parliamentarians (IJFP) delegation visited Japan from March 21 to March 27, 2006. The Forum's Co-chairman and former Cabinet Minister, Mr. Suresh Prabhu, led the IJFP delegation. Other members of the delegation comprised Mr. Sukhbir Singh Badal, MP, Shiromini Akali Dal; Mr. Sachin Pilot, MP, INC; Mr. R.C.S. Reddy, MP, Telugu Desam Party; Dr. P.S. Rana, Housing and Urban Development Corporation Ltd. (HUDCO) CMD; and Mr. Ramesh Chandran, Executive Director, IJFP.

With a view to enhance Indo-Japanese bilateral relations, the delegation members met prominent members of the National Diet of Japan and other important government officials. They met with the leader of the Democratic Party of Japan, Seiji Maehara and members of the New Komeito Party, including Mr. Takenori Kanzaki (Party President), Mr. Akihiro Ota (Acting Secretary General), and Mr. Hiroshi Takano (Chairperson, International Affairs Committee).

The delegation members attended a round-table meeting with the Japan-India Business Cooperation Committee (JIBCC). Besides a meeting with the Japan-India Parliamentary League, the members of the delegation also held a media interaction at the Foreign Correspondents Club of Japan (FCCJ).

The visit began with a briefing on parliamentary procedures by Mr Shinzo Abe, Chief Cabinet Secretary, which allowed delegates to familiarise themselves with Japanese Parliamentary practice.

The delegates spoke at length about the future of Indo-Japanese relations as well as the fast paced emergence of China in the region. They also commented on the marked difference of opinion that they encountered when they discussed this subject with parliamentarians from other countries.

During this meeting, the delegates also expressed their enthusiasm for the India-Japan Comprehensive Economic Cooperation Agreement (CEPA), which was yet to be signed between the two countries. They also talked about India's inclusion in the ITER and the Indo-US nuclear deal, and what this might hold for the future of India-Japan relations.

Next on their itinerary was a luncheon meeting with the Japan India Parliamentary League. The discussion focused on a variety of topics including the furthering of Japanese trade and investment in India, the future of East Asia and Japan-India relations. During the course of discussion, members also exchanged views on the use of alternative energy sources and mutual health and social care issues, with special emphasis on the scope of India-Japan Partnership in these areas. Former FM Machimura also attended the meeting.

Acknowledging the fact that India and Japan enjoy a long history of cultural relations, the Parliamentarians emphasized that a significant feature of India-Japan cultural exchange was that it was no longer confined to government initiatives alone. Highlighting that efforts were also made at private level to boost cultural relations between the two countries, the Parliamentarians expressed their gratitude to Japan for extending cultural grant aid to research institutes and universities in India. Tourism, which is also an important medium for promoting cultural understanding between the two countries, was also discussed.

The delegates also attended a dinner reception hosted by Deputy Chief of Mission, India in Japan Mr. S K Mandal in their honour.

The following day the delegates met with the Leader of the Democratic Party of Japan, Mr. Seiji Maehara. They discussed the emergence of India on the global economic scenario and the need for enhanced India-Japan cooperation in the fields of power, steel, human resources, and imports and exports.

Offering words of encouragement, Co-chairman of the Forum Mr. Suresh Prabhu, said that he had great hopes for the DPJ, as a party containing many young professionals.

During the discussions that followed, Mr. Prabhu communicated that India was aiming to raise its economic growth from 8% to 10% using investment from Japan and elsewhere as leverage.

Adding to Mr. Prabhu's inputs, Mr. Maehara commented on the importance of strengthening bilateral relations between Japan and India. He said that in the face of estimates that India would become the most populous nation in the world by 2030, it was likely that Asia's energy demands would increase further in the future, and that the two nations needed to work together to resolve such energy and environmental issues. Addressing the delegation's concerns Mr. Maehara further expressed the opinion that Japan would be able to provide cooperation in the field of energy conservation in particular.

Regarding the issue of nuclear energy, Mr. Maehara said that a major problem was the management of plutonium, a byproduct of nuclear power generation. He called on India, as a regional power, to take the lead in maintaining the non-proliferation regime.

Responding to Mr. Maehara's suggestions Mr. Prabhu threw light on the situation facing India, explaining that most of the country's energy requirements were currently obtained from fossil fuels. He said while attention needed to be paid to the safety aspects of nuclear energy, India needed to incorporate more of such resources to increase energy efficiency and aim for economic growth.

The delegates also had an opportunity to meet the leaders of the New Komeito Party. The meeting was attended by Mr Takenori Kanzakim, Party President; Mr Akihiro Ota, Acting Secretary General, Mr Hiroshi Takano, Chairperson, International Affairs Committee. They discussed India's position within the ASEAN group of countries and the group's relationship with its surrounding larger neighbours; enhancement of people-to-people contacts and exchanges as major components of the proposed India-Japan strategic partnership.

Admitting that the population structure of India is relatively young, both sides, acknowledged the fact that an estimated population aged between 15 and 59 will make up 47 percent (35 percent for now) of the total population by 2020. The Parliamentarians from both the countries also recognized that by then India will be a country with the largest working population and the biggest number of consumers in the world. This may become a very important reason for the possibility of India's economy to maintain a fairly fast growth in the future as well as a vital factor that gives rise to economic complementarity among Japan and India in the sense of time- coordinates.

The Parliamentarians also discussed the immense potential for enhanced Japanese investment in India. Japanese firms operating in sectors like automobiles, pharmaceuticals, chemicals, construction and confectionery are outlining plans to increase investments in India. Highlighting that there already were a number of successful Japanese investments in India including the Suzuki Maruti Joint Venture, the Hero Honda Motorcycle Plant, the Mitsubishi Chemicals investment in Kolkata, and the Toyota-Kirlosker Joint Venture in Bangalore, they said these success stories needed to be replicated manifold.

However, the Parliamentarians agreed that despite the positive background, much of the potential for mutually beneficial cooperation in different fields remains untapped. India - Japan bilateral trade at less than US$ 4 billion a year was much below potential, and they emphasized that there was much scope for improvement in this area.

The visit concluded with a meeting with members of Japan-India Business Cooperation Committee during a round-table hosted by Mr. Isamu Nltta, Chairman, JIBCC.

During the discourse of the round-table the CEOs of the various companies in Japan discussed that Japanese companies would be interested in using India mainly as a base of production for exports and not for the Indian domestic market because of the Indian consumer's greater sensitivity to price than to quality.

Acknowledging the aid that India had been receiving from Japan delegates emphasized that Yen loans constituted 95 per cent of the total ODA, and only five per cent comprised grant-in-aid and technical cooperation. Although no other country receiving Japanese aid had such a high ratio of Yen loans, the delegates underlined the need to shift from an ODA based relationship to an FDI based one.

Both sides also discussed that with India set to become a leading economic player along with China and Japan, a major objective of Japanese ODA now should be to create an environment similar to what was seen in East and South-East Asian countries in which ODA promoted the development of economic relations at the level of the private sector

The two sides shared the view that Japan's Special Terms for Economic Partnership (STEP) scheme could be one of the effective means for carrying out large-scale priority projects in infrastructure sector in India. They also discussed their respective country's intention to examine the feasibility of proposals for dedicated multimodal high-axle load freight corridors with computerized train control system on Mumbai-Delhi and Delhi- Howrah routes utilising the STEP Loan scheme and with the inputs of Japanese technology and expertise. The delegates also expressed their gratitude to the Japanese government for financing the feasibility study of the freight corridor through the Japan International Cooperation Agency.

On the topic of investment, the CEOs highlighted that Japan had mainly invested in India's car and consumer durables markets, but now wanted Indian companies to look for investments in Japan. Some key areas where Japan was expecting Indian investment to flow in were pharma, biotechnology and IT they stressed. Japan also wanted the retail sector in India to open up for foreign investment. On the other hand, India wanted Japan to invest in infrastructure - power, roads and ports.

The other area discussed was management of food - fresh produce and processed food. India is one of the largest producers of fresh produce. Yet India has almost zero percent share in the world market. Thus India can draw heavily from Japan's experience. It was emphasized that India can produce for world tables at a fraction of the cost of developed countries. While on the other hand, Japan can engage in cold chain management, and also help in exports of food especially marine products. The opportunity is of the order of tens of billions of dollars. Illustrating the example of Mitsubishi projects where they were looking at logistics for handling fresh produce is remarkable in that aspect, but all agreed more needed to be done.

This visit was the first periodic visit to Japan carried out by the IJFP. The delegation held consultations with national authorities and with representatives of non-governmental organisations and other persons active in areas of concern to the IJFP.

The delegation's meetings with the national authorities at both the start and the end of the visit took place in a spirit of close co-operation. The detailed discussions held on matters of substance served to develop the ongoing dialogue, which began with the Japanese Parliamentarians first meeting with the IJFP.