In the current volatile global geostrategic framework, India and Japan seem to find a unique congruence of views—both economic and strategic—reflected in a slew of bilateral agreements and the vision document released at the recent India-Japan summit in Tokyo, by Prime Minister Narendra Modi and his Japanese counterpart Shinzo Abe, who called himself “a friend of India for life.” The two leaders vowed not only to actively cooperate in several infrastructure projects of immense importance for India’s growth story, but also to join hands to foster shared interests in the sensitive and strategic domains.
The two areas of particular interest and importance to Abe’s Japan are maritime security and strategic connectivity, obliging it to raise its Indian Ocean profile, which, in fact, synergises Modi’s Act East outreach and Abe’s vision of a Free and Open Indo-Pacific.
Committing to a ‘2+2’ strategic dialogue—akin to the recent dialogue held between the defence and foreign ministers of India and the United States (US)—the Japan Maritime Self-Defense Force and the Indian Navy could enhance their security cooperation, from Yokosuka to Port Blair to Djibouti. They would impart a thrust to the Platform for Japan-India Business Cooperation in Asia-Africa Region for Asia-Africa Growth Corridor, and the India-Japan Act East Forum for the development of India’s Northeast. Among other matters of interest to India, the bilateral $75 billion currency swap agreement is, indeed, significant.
In the new emerging global industrial and economic architecture, from Japan’s point of view, acceleration in economic growth in India will provide cushion for any downturn in the Chinese economy. As Japan moves increasingly to higher value chain manufacture, India’s corporate sector may upgrade its capital stock in Japan, especially in the field of telecommunication, machinery and equipment. The world’s second largest market for pharmaceutical products—its per-capita annual spending on medical expenses about $8,000—offers another area of promise in biotechnology and medical sector.
Japan offers a template of economic miracle it created over the post-war era, 1946 to 1976, when the Japanese economy increased 55-fold. By the end of the period, Japan accounted for 10% of the world’s economic activity, with only 0.3% of the world’s area and supporting just 3% of the global population. Just a few years ago, China’s economy, which has now overtaken Japan’s, was only half as big as Japan’s. No doubt, some emaciated Japanese companies emerged as “zombies” kept on life-support system by wobbly banks.
Then came, in 2013, the “Abenomics”, Prime Minister Abe’s “three-arrow” economic doctrine aimed at jolting the economy out of its two-decade-long slumber. Buffeted by a wall of resistance from labour unions, farmers, giant corporations and their supporters among politicians and bureaucrats, he sought the “three arrows” of change—the first is a jolt of fiscal stimulus for the economy; the second an unprecedented monetary boost through massive quantitative easing; and the third a set of radical structural reforms towards boosting the economy’s long-run rate of growth.
Of late, there is a clear shift in emphasis from a monolithic, monocultural society to a dynamic and diverse Japan. It is growing old fast, catapulting the 65-year-old-plus population share to 19%—the world’s highest—and predicted to be 30% by 2025 and 36% by 2050, up from 5% half a century ago. Its median age of around 50 years is surpassed only by Monaco, a Mediterranean retreat for wealthy pensioners. Centenarians are the fastest-growing population segment in the country. Some 900 municipalities, or half of its total, will have disappeared by 2040, as women of childbearing age migrate to big cities.
Japan’s working-age population, by 2050, will be smaller than it was in 1950. The much-celebrated post-war job-for-life system is in a shambles. Nearly 40% of Japan’s workers are now on contract; in fact, more in the services sector. With fast shrinking workforce, Japan’s xenophobic elite is discussing subjects such as higher immigration and encouraging women’s employment. Even considering the pool of 3 million Japanese descendants worldwide, the replacement of the workforce would not nearly be enough, especially in areas such as construction, services and high-end professional jobs in education, health and hospitality sectors.
Today, as Abe’s book Utsukushii Kuni E (Towards a Beautiful Nation) aims at Japan being viewed by the world as a place where they want to come to work and invest, Japan is outreaching for foreign blue-collar workers, to the extent of half a million. Japan hosts around 1.28 million overseas workers, twice as many as a decade ago.
From the Indian perspective, Japan offers opportunities for absorption of technical and skilled manpower. Some four score Indian IT companies already have a presence in Japan. Indians are also employed in basic research in some of the high-tech companies and government research institutes.
To do business with Japan in the coming decades, the importance of its social and cultural evolution cannot be overstated. India would need to make an effort to understand and comprehend Japanese psyche, their traits and sensitivities, their penchant for details, and their obsession with quality, punctuality and discipline. Japan honours the hyper-skilled laureates with the title of supaa ginosha, or “super technicians”.
Despite varying cultural strands, India and Japan need to foster strengths of commonality. India is a deeply-stratified hierarchical society, in contrast to the Japanese society’s much more egalitarian ethos. India is as heterogeneous as Japan is homogeneous. A land that has long liked to work in small spaces, think haiku and bonsai, it considers wa (harmony) to be its bedrock. So much like in India, where centuries coalesce the old juxtaposed with the new, Japan deftly blends tradition with modernity.
India has a great opportunity to wrest, but with abundant caution, that immigrants, in no way, offend Japanese sensitivities. They must perforce be appropriately skilled, tutored and disciplined. They must also imbibe requisite-level proficiency in Japanese language and cultural strands. Here, the two countries have far more to do by way of a liberal exchange of their people through tourism, cultural festivals, scholarships, student exchange schemes, language courses, and deeper interaction between entrepreneurs and intellectuals. As Japan and India recognise each other’s IT engineers’ qualifications, they need to likewise determine professional qualifications certified by institutions in the two countries.
Notwithstanding the two peoples constituting a “confluence of the two most deep-rooted democracies,” blessed with numerous complementarities, Japan’s advantages of capital and technology, and India’s strengths of demography, a burgeoning market and hunger for infrastructural wherewithal, a clear onus lies with India to ensure a conducive environment in real terms for, as Prime Minister Modi claimed, “low-cost manufacture” and “competitive labour costs” in tandem with the avowed economic matrix of “skill, speed and scale”. When Modi wooed Japan’s MSMEs to explore business opportunities in India, he couldn’t be unaware of the lacklustre performance of the country’s own MSMEs as well as its archaic and inflexible labour laws impeding industry’s competitiveness, besides endemic shortages of skilled workforce.