FE Editorial : Corridor of cooperation

Written by The Financial Express | Updated: Dec 30 2009, 06:41am hrs
Maruti Suzuki and the Delhi Metro are perhaps the most visible signs of the modern India-Japan partnership. The first was inked in the pre-liberalisation era in the 1980s. With the likes of Volkswagen and Renault demanding high equity to manufacture a small car for India, Suzuki came on board with a willingness to begin with just 26% equity. Today, Maruti Suzuki sells half of all cars in Indiaan increasingly important market in global terms. As for the Delhi Metro Rail network, over a billion commuters have used it in the last seven years. This showcase of the wonders that public infrastructure projects can deliver when they work to deadlines and within budgets owes a big debt to the Japanese, tooin terms of both financing and know-how. Japan has also been Indias largest aid donor since 1986. Its against such a backdrop that the Japanese PM Yukio Hatoyamas current visit to India assumes significance. This visit provides both sides an opportunity to take stock of whether or not they have been optimising strong, historical linkages.

An important agreement that Hatoyamas delegation has signed concerns funding for the Delhi-Mumbai industrial corridor development project, which is being galvanised along the sides of the 1,480-km dedicated freight corridor between the two cities. This rail link is one of the most ambitious projects ever undertaken by Indian Railways. Its beneficiaries range across power houses, mines, ports, manufacturing units, agriculture, services and the people of various states like Gujarat, Maharashtra and Rajasthan. Also worth noting is Hatoyamas assurance to Indian industrialists that he will be seriously considering the option of directly linking the rupee and yen. This would allow Japanese companies to invest in India directly, something that India should pursue given that Japans investments here are 1/20th of those in China. This is not to deny that FDI from Japan trebled to $5.4 billion in 2008 as compared to $1.8 billion in 2007, but to emphasise that India and Japan can forge much stronger ties today given that their relationship predates liberalisation. For its part, India has announced that Japan is one of the five countries for which its considering a visa-on-arrival scheme. Other measures that will streamline bilateral ties and cut through existing red tapes must be expedited as well, especially as the Delhi-Mumbai corridor promises a big multiplier effectcreating employment, wealth and so on. The Japanese are even promising state-of-the-art technologies that will help the region develop into both a globally competitive and an eco-friendly manufacturing and trading centre.