By Shreenivas Kunte, CFA, Adjunct Faculty – Incharge Trade/Research Lab, S.P. Jain Institute of Management & Research
The media has been giving prominent coverage to Prime Minister Modi’s Japan trip. Not just news snippets from the media but advertisers including Amul have pitched ads containing Japanese phrases. Notably, Mumbai ex-Mayor Nana Chudasama’s banner at Marine drive, famous for its crisp periodic one-liners, has quipped this week about waiting for pure “Ganga Jal”. It is unclear if the banner is referring to the yet to be completed Japan aided Ganga cleaning project undertaken when India’s then Prime Minister Atal Bihari Vajpayee visited Japan’s PM Koizumi in 2001 or the Modi-Abe, Kyoto-Varanasi twin smart city pact declared a couple of days back.
While it is remarkable that the Japanese have re-asserted their willingness to forge an even stronger partnership with India, it remains to be seen if India is able to execute on the mandate. The commitment this time from the Japanese is significant – Yen 3.5 trillion ($35bn) worth of public and private investment into India over five years. A number as large as $35bn can be daunting to interpret. So to understand better, $7bn a year in Japanese foreign direct investment, would translate to about 3 months of the total foreign direct inflow into India. The US has had a significant foreign direct investment claim into India ($28.4bn in 2012 from the US) but diversifying to other investment sources will setup a robust foundation for India’s economy. As India opens up and the current strategic alliance with the Japanese grows – there may be scope for considerably more Japanese investment. Japan’s Ministry of Finance (and JETRO) websites suggest, the current $7bn investment a year to India, may not even be close to the top foreign direct investment destinations that Japan has viz. USA averaging to about $22bn and China $9.8bn a year.
The Japanese have a rich history and ethos. A war-like Samurai culture shows up in almost everything that the Japanese do. From pursuing hobbies such as the ceremonial rites in preparing tea to the sports world, hard-work, team-work and discipline that the Japanese bring are unparalleled in any society in the world. These attributes may have helped Japan, to rise like a Phoenix from its World War II devastation to a technologically advanced, number 2 economy in the world.
Although all of these traits – hard-work, team-work, discipline – may appear to be alien to many in India, there is a lot in terms of values that the Japanese share with the Indians. Keeping one’s footwear outside before entering a house for instance, is a value that many households both in Japan and India uphold. Some of the Japanese art forms – drama, poetry, are close to what India has. The Sumo fight is different in terms of rules, size and speed from the Indian “Kushti” but both sports carry an identical tradition that spans across centuries. The other striking similarity in between the two cultures is with regard to the Swastika sign. For centuries, many an Indian family have been using the Swastika on their business or household entrances as an embodiment to invite prosperity (it is unfortunate that the Nazis used a similar picture). A Chinese (Japan and China share the same Kanji or picture characters) character – similar to the Swastika – denoting fullness – is on display on the entrance and walls of Japanese temples.
It is easy to refer to the usual barriers that India has on executing projects – bureaucracy/ red tape, slow moving legal system, laws giving undue protection to workers/strikes. Economic forces have been at play and have chipped away on the many closed walls that India had till 1991. Over time, as the considerable disincentives for not keeping up with progress, deprive the society from necessities and practical convenience, the people are bound to act (as they have for the 2014 Loksabha) through political leadership to bring these barriers down.
Buddhism has provided a deep multi-century spiritual bonding between India and Japan. More recently, Rabindranath Tagore has written an exquisite travelogue on Japan comparing modernisation and Japan’s quiet strengths. In practical terms, when needed most, Japan has helped India out of two major foreign exchange crisis situations – 1991 and 2013. The friendship that India shares with Japan has reinforced over time and the latest “Special global and strategic partnership” has added another bright new chapter to this relationship.