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Japan in India’s Northeast: The Indo-Pacific Connect

Dr Titli Basu is Associate Fellow at the Manohar Parrikar Institute for Defence Studies and Analyses. Click here for detailed profile.
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  • April 19, 2022

    Major powers often leverage infrastructure financing as a consequential geo-economic tool of statecraft. China’s grand design of Belt and Road Initiative prompted high power politics, and the competitive space of infrastructure financing has seen alternative solutions, including Japan’s Expanded Partnership for Quality Infrastructure (EPQI), US-led Blue Dot Network, G7’s Build Back Better World (B3W) Partnership and the European Union’s Global Gateway.  

    Making its mark, Japan’s instrumental role in global norm-setting vis-à-vis quality infrastructure1 is effectively demonstrated, be it in the G7 Ise-Shima Principles2 or the G20 Principles for Quality Infrastructure Investment endorsed at the Osaka Summit. Openness, transparency, economic efficiency taking into account life-cycle cost, and debt sustainability drive Japan’s quality infrastructure strategy as it responds to Beijing’s global infrastructure agenda.3

    Much before the COVID-19 pandemic, the Asian Development Bank (ADB) in its 2017 projections indicated that developing Asia requires to invest US$ 1.7 trillion every year in infrastructure until 2030 to maintain its economic growth and to manage poverty alleviation and climate change. Infrastructure financing in emerging economies of South and Southeast Asia serves the dual objectives of generating new growth frontiers for Japanese economy by seizing the global infrastructure market on the one hand and buttressing strategic partnerships to manage the rise of a Sino-centric order on the other.4

    Quality Infrastructure: Positioning Japan in Global Norm-setting

    Japan’s global pitch for quality infrastructure is embedded in five principles which entails: (a) effective mobilisation of financial resources through public–private partnerships; (b) alignment with development strategies of emerging economies; (c) maintaining high-quality rules for environmental and social standards; (d) ensuring quality infrastructure by way of economic efficiency, low life-cycle cost, inclusiveness, resilience, sustainability; and (e) contribution to the local economy.5

    In policy conversations, infrastructure export has remained a central pillar in Japanese economic growth strategy. The “Infrastructure System Overseas Promotion Strategy (2021–2025)” not only advances the strategic objectives of Japan’s Free and Open Indo-Pacific (FOIP) and strives to promote Sustainable Development Goals (SDGs) in partner countries, but also pursues the objective of economic growth through carbon neutrality and digital transformation. The aim is to co-create development models with partner countries that share Tokyo’s FOIP vision.6 It advocates involvement in operation and maintenance (O&M) of infrastructure rather than just one-off sales.

    Additionally, the concept of “quality growth” constitutes the mainstay of Japan’s 2015 Development Cooperation Charter.7 Meanwhile, Japan Business Federation (Keidanren) in its policy proposal “Towards Strategic Promotion of the Infrastructure Export” simultaneously argued the case of leveraging high-quality and disaster-resilient features of Japan's infrastructure systems while identifying Asia, and especially countries like Indonesia, Vietnam, India and Myanmar as the priority regions.8

    Mapping Japan in India’s Infrastructure Modernisation

    The External Affairs Minister, Dr S. Jaishankar has underscored that economic development is propelled by 3Cs: connectivity, commerce and contacts. The latest Economic Survey estimates suggest that for India to realise the goal of US$ 5 trillion Gross Domestic Product by 2025, it has to spend roughly US$ 1.4 trillion on infrastructure.9 To this end, Gati Shakti, the National Master Plan for Multi-modal Connectivity will be a force multiplier as India aims to streamline implementation of infrastructure connectivity. As India mobilise resources, the goal is to plug into the regional value chains and production networks.

    However, Asian Infrastructure Investment Bank’s 2021 Asian Infrastructure Finance Report underscored that India stands 7.4 per cent below the average global value chain participation rate for emerging economies.10 Participation in global value chains will be contingent on improved infrastructure, bolstering institutional quality, capacity, connectivity and competitiveness.

    Japan’s infrastructure export policy aligns perfectly with Prime Minister Narendra Modi’s ‘Make in India’ policy as it seeks to be the epicentre of global manufacturing. This necessitates offering world-class infrastructure and improving investment climate. Japanese Official Development Assistance (ODA) has been an enabler in advancing quality infrastructure and modernising connectivity within India and beyond. India has been a beneficiary of Japan’s EPQI initiative which committed financing of about US$ 200 billion in 2016 for a period of five years.11

    Japanese ODA not only played an instrumental role in mega-infrastructure projects, be it Mumbai–Ahmedabad High-Speed Rail, Delhi–Mumbai and Chennai–Bengaluru Industrial Corridors, Dedicated Freight Corridor and urban mass rapid transport systems, it is also a force multiplier in India’s strategic peripheries. Furthermore, Japan features as the right fit in India’s regional infrastructure and connectivity pursuit, be it the Indo-Pacific Oceans Initiative (IPOI) or Coalition for Disaster-Resilient Infrastructure (CDRI) announced at the UN Climate Action Summit in 2019.

    Japan in India’s Northeast

    Building beyond the history of “Imphal Campaign”, today Japan is an indispensable partner as India advances regional infrastructure and connectivity corridors, especially in the Northeast strategic frontier over the Bay of Bengal to the Indo-Pacific. As India connects with Southeast Asia, Northeast is the crucial geostrategic plank bordering China and Bhutan in the north and Bangladesh and Myanmar to the west and east. It is the key theatre where India’s Act East traverses with Japan’s FOIP vision.

    Driven by Northeast’s strategic significance, Prime Minister Modi has turned around the discourse on ‘tyranny of distance’ and mainstreamed the region in Delhi’s Act East Policy.12 The discussion on Northeast industrial corridor from Dawki (on Bangladesh border), Shillong via Guwahati to Nagoan and from Golaghat via Dimapur via Imphal to Moreh (on Myanmar border)13 paves the gateway to Southeast Asia, as it would facilitate seamless connectivity, and position India favourably in regional value chains and production networks. Meanwhile, the NITI Forum for Northeast is geared towards inclusive and sustainable economic growth in the region. As such, the Department for Promotion of Industry and Internal Trade (DPIIT) has set up the Make-In-North-East Initiative with a dedicated Northeast Desk within Invest India.14

    Northeast is being prioritised in the developmental agenda since it holds the potential to emerge as the growth engine of India. However, this demands significant infrastructure investment. As India seeks support from multilateral and bilateral funding agencies to drive innovation and imbibe international best practices, Japan has emerged as a trusted partner. Prioritising Northeast in India–Japan relations is driven by the constructive leadership of Prime Minister Modi and former Prime Minister Abe Shinzo keeping the broader Indo-Pacific strategic vision into consideration. Japanese ODA is playing a crucial role in advancing connectivity in the strategic periphery of Northeast India.

    Moreover, Japan’s engagement with Northeast India remains steadfast, and sometimes as argued by Japanese scholars, shaped by “common history”. 15 The World War II connects Northeast India with Japan in a “personal and emotional way” drawing from the “shared historical experience” as many Japanese soldiers not only arrived but also lost their lives in the Northeast.16 Today, Japan’s role in the Northeast is not restricted to infrastructure and connectivity but a greater investment in deepening people-to-people contact, from skill development, IRIS programme and capacity building to peace museum demonstrates the importance Tokyo attaches to this region of India.

    Institution of the Act East Forum in 2017 has delivered effectively in positioning Northeast India as a strategic priority in India–Japan strategic partnership. The recent launch of the Sustainable Development Initiative for the North Eastern Region during Prime Minister Kishida’s visit to India adds qualitative depth to India–Japan cooperation as it not just prioritises connectivity projects and capacity building for the maintenance of resilient mountainous highways but also developing agro-industries mainly through small and medium enterprises (SMEs), supporting bamboo value chain, advancing skill development, strengthening quality healthcare, renewable energy and conservation.17 Japan’s current ODA projects in this region amounts to around ¥ 246 billion.

    India’s Northeast: Gateway to Indo-Pacific

    India is acting east with a sense of urgency to accelerate regional connectivity corridors, particularly via Bangladesh and Myanmar. As India and Japan make concerted efforts towards promoting regional connectivity and infrastructure through Northeast India (see Map 1), it would be practical to further create synergy with complementary ADB projects.18

    Map 1. Mapping Japan in India’s Regional Connectivity and Infrastructure Projects
    Source: Prepared by GIS Lab, MP-IDSA based on data drawn from Act East Forum, Japan International Cooperation Agency and Asian Development Bank. [Click on Image for Larger View]

    ADB supports India’s regional connectivity agenda, especially linking North Bengal and Northeast of India under South Asia Subregional Economic Cooperation (SASEC) programme. SASEC aims to connect Kathmandu (Nepal)–Kakarbhitta (Nepal)–Panitanki (India)–Phulbari (India)–Banglabandha (Bangladesh)–Mongla/Chittagong (Bangladesh), and Thimphu (Bhutan)–Phuentsholing (Bhutan)–Jaigaon (India)–Changrabandha (India)–Burimari (Bangladesh)–Mongla/Chittagong (Bangladesh). Some SASEC corridors in Bangladesh and India connect with some parts of the Asian Highway 1 and 2 to Myanmar.19 In the period 2011–2020, 66.2 per cent of Japanese ODA was directed towards the transportation sector.20 The transportation sector is being prioritised both by JICA and ADB, thus creating synergy will reinforce the goal of linking India to South and Southeast Asian markets.21 Working together with Japan will buttress global standards of transparency and economic sustainability.

    India’s aim is to facilitate deeper economic linkages and integration between Northeast India and Southeast and East Asian economies through various cross-border infrastructure corridors such as SASEC, Asian Highways, the Kaladan Multi-Modal Project, and the India–Myanmar–Thailand Trilateral Highway and its potential eastward extension. Furthermore, Japan’s own infrastructure and connectivity projects in Southeast Asia, the East–West Economic Corridor and the Southern Economic Corridor could be effectively utilised to reach regional markets.

    Advancing regional connectivity and infrastructure development would be a shot in the arm amid COVID-19 recovery driving productivity, competitiveness, market access, economic growth and employment amongst developing Asian economies. Japanese ODA complements India’s North Eastern Region Vision 2020, and reinforces intra-regional and inter-regional connectivity both from geostrategic and geo-economic perspective. In future, Japan will play a significant role in addressing the infrastructure-deficit, and help India alleviate the development gap by positioning Northeast as a powerhouse through improved connectivity, opening up trade corridors and driving better economic integration.

    Views expressed are of the author and do not necessarily reflect the views of the Manohar Parrikar IDSA or of the Government of India.