After evaluating the emerging strategic environment in the neighbourhood and beyond, Prime Minister Narendra Modi preferred to visit Bhutan first and thereafter Japan. While the visit to Bhutan underscored his understanding of the crucial strategic importance of Bhutan to India and the need to correct the drift in relationship which had crept in during the UPA’s tenure, Modi’s forthcoming visit to Japan is expected to bring in a paradigm shift in the nature of relationship between the two nations.

Although Japan has been somewhat disappointed with the postponement of his visit scheduled for first week of July to August, the ensuing time gap is expected to provide adequate time for both sides to address some of the constraints that inhibit strengthening further the economic and strategic relationship. For instance, Japan wants India to make its domestic laws including the tax regime investor friendly to enable Tokyo to go in for huge investments in India. And India would like Japan to loosen some of the restrictions and limitations that restrain the cooperation in civil nuclear field, high end technology and defence industry.

The top priority of the Modi-led government is to return to the high growth trajectory that entails developing a robust infrastructure for which according to India’s 12th Five year Plan, the requirement is over 1 trillion US dollars. Japan has been very active in providing Overseas Development Aid (ODA) to India (in terms of grants and soft loans which has been around USD 36 billion till last year). However, with the right investment climate, Tokyo could provide New Delhi a very large proportion of the funds needed for development of infrastructure. While Japan is already involved in development of the Delhi-Mumbai Industrial Corridor (DMIC), many more such projects are needed across the length and breadth of India.

During Prime Minister Shinzo Abe’s visit to India in January, Japan was invited to invest in India’s North East region for development of infrastructure. Japanese companies were also invited to develop a new port in Chennai which would improve connectivity to Dawei port in Myanmar (being developed by Thailand) and beyond. Not only this, there has been a Japanese promise of helping India's Export-Import Bank develop more attractive funding packages for Indian projects in regional countries. All this needs to be given a practical shape in the coming visit to Japan.

While India and Japan have set a target of US dollars 25 billion for 2014, it is much less than the trade figures of both nations with China. Despite the signing of Comprehensive Economic Partnership between the two countries in August 2011, the overall economic relations have not progressed beyond a point. This is more so in the areas of cooperation in strategic industries like defence, cyber security, space and civil nuclear energy. It is here that some of the constraints that could be either political or constitutional in nature need to be attenuated or removed altogether. PM Modi’s massive mandate would be very helpful in ushering in economic reforms and address some of the concerns of Japanese and other international investors. On the other hand, PM Shinzo Abe’s government has also embarked upon certain reforms including changing the pacifist nature of Japanese Constitution that would help in enhancing defence and security cooperation.

What could be a game changer in the evolving Indo-Japan strategic relationship is the likelihood of Japan signing the civil nuclear agreement during the forthcoming visit of Modi. This agreement would also have implications for some of the American nuclear energy companies who have apprehensions in cooperating with India in the civil nuclear sector as they are owned by the Japanese. (For instance, Westinghouse Electricity (Nuclear Energy) Company is owned by Toshiba). Both sides at present are exploring ways and means as to how some of the mutual dissonance in this arena could be overcome.

Both Japanese and Indian political leadership share common perceptions about the evolving security situation in the Indo-Pacific region and understand the need for preserving strategic equilibrium that has been impacted upon negatively by China’s assertive policies. Therefore, it makes strategic sense for both to work together in defence and security areas in order to create a degree of balance that would serve both countries’ national interests.

Realizing this need, both countries had made a joint declaration in 2008 to strengthen defence and security cooperation. Consequent to the declaration, the India- Japan 2+ 2 dialogue mechanism was evolved wherein Foreign and Defence Secretaries meet regularly to discuss foreign policy and security issues such as maritime security, cyber security and space. Even though there has been some progress in these areas so far, much more substantial needs to be achieved.

Japan has also moved forward in revising its pacific outlook and is revitalising its defence capabilities. Besides strengthening its alliance with the US, Japan’s New Defence Policy Guidelines and new security strategy postulates ‘strengthening cooperative relations with countries with which it shares universal values and strategic interests such as Republic of Korea, Australia, the countries of ASEAN and India’. Strengthening bilateral relations with India in broad range of areas including maritime security is one of the cornerstones of the Japanese new defence strategy.

Japan’s relaxing of restrictions on exports of defence technology and weapons and possibilities of joint development in defence industry need to be exploited. Modi’s visit should be used for laying down a comprehensive framework for Indo-Japan defence cooperation something similar to that of the 2005 Indo-US Framework for Defence Cooperation but which is much more substantial. Cooperation in cyberspace and outer space would be critical to meet the challenges arising in these domains. China has been very active in cyber space wherein besides some other nations India and Japan have been at the receiving end of cyber attacks originating from China.

India is keen to acquire ShinMaywa US-2i amphibian aircraft for the Navy to strengthen its naval aviation arm. Some progress has been made on the subject but there are still some reservations on the part of Japan. There is also the question of manufacturing the aircraft jointly. While there is considerable scope for joint research development in high end technologies in both civil and military arena, the political push by both sides is necessary to move forward in these areas. Given the personal equation between both the Prime Ministers, some of the constraints in imparting positive momentum to Indo-Japanese defence relationship could be overcome.

There is also a need to have a candid dialogue on perceptions of regional and international security environment and evolve suitable responses. While India has been pursuing its Look East Policy since early 1990s, Japan has also been strengthening its relations with the ASEAN and East Asian nations. Both India and Japan are well placed to work together and build on many of the existing bilateral and multi-lateral initiatives in the region. There is also a great potential for initiating fresh trilateral frameworks where both nations can cooperate with a third country.

Given the great degree of strategic convergence between Japan and India that is supplemented by the mutually complimentary economies, the forthcoming visit of the Prime Minister to Tokyo could bring in a paradigm shift in the nature of relationship between India and Japan. In the coming days, Indo-Japanese relationship could become critical in contributing to peace and stability in the Indo-Pacific region.