The Indo-Japanese Strategic Partnership: Asia’s Response to China’s Rise

For all the focus on China’s ascendancy, the developing strategic and economic entente between Japan and India may eventually prove to be as important in shaping Asia’s future. In many respects, India and Japan could not be more different: one has more poor people than any other nation on Earth; the other was the first non-Western society to fully modernize. The order and discipline of Japanese society contrast vividly with the hustle-and-bustle of any Indian city. India is the world’s youngest big country, while Japan is aging more rapidly than any other developed society. India, traditionally, has pursued a foreign policy of non-alignment and opposition to Western hegemony in world affairs, while Japan has been a model ally of the United States for over sixty years. Japan remains shackled by its postwar pacifist constitution and normative constraints on the use of military force; India is a nuclear-weapons state engaged in one of the world’s largest arms buildups.

The complementarities between the two powers at opposite ends of the Asian landmass are equally striking. Japan is a capital-rich, technology superpower while India has teeming supplies of human capital and the world’s largest labor pool. Japan has the world’s most advanced infrastructure, while India’s own requirements for modern transportation and urban networks exceed in scale those of any other country. Unlike countries that suffered the effects of militarism, Indians comfortably acknowledge they do not have the kind of “history issues” with Japan that color its relations with countries across East and Southeast Asia.

In many respects, economic, technological, and security partnership with India offer Japan the prospect of renewal as a twenty-first century great power, less dependent on the United States alone and better diversified to compete against China and other emerging economies even as it confronts internal bottlenecks to growth such as its shrinking population. For India’s modernizing leaders, few countries afford a better prospect for a development partnership than the nation that has been at the forefront of the industrial and technological revolutions that have transformed the face of Asia. As rival civilization-states to China, Japan and India have the most to lose from China’s potential hegemony in Asia—and the most to gain from working together and with the United States to ensure that the future Asian order remains pluralistic rather than sinocentric.

Over the past year, Indo-Japanese relations have gained new momentum. Abe Shinzo’s return to power in Japan elevated a leader who believes Tokyo’s relations with New Delhi could ultimately be more consequential than its relations with Washington in shaping the Asian balance of power. Japan’s economic resurgence combined with growing tensions with China over maritime disputes has led Japanese strategists and investors to more fulsomely embrace India as a partner and market. Abe has also found Indians to be sympathetic to his brand of Japanese nationalism, unlike his country’s nearer neighbors. From India’s perspective, the recent drift in relations with the United States has been offset by the progress in economic and diplomatic ties with Japan. Prime Minister Manmohan Singh has sought to deepen Indo-Japan ties as one of his top priorities, prevailing in a series of internal debates over “China school” officials who worry that Indian values-based diplomacy in Asia, centered on a robust strategic partnership with Japan, could produce further tension in relations with Beijing. Senior leaders in Japan and India increasingly view the other as essential ballast in an Asian balance of power that remains friendly to the democracies, while each views the other as an important source of economic renewal. The implications for the region, and the world, could be profound.

India’s Potential

Understanding the possibilities of India-Japan relations requires first exploring India’s own strategic and economic potential, as well as how it sees its regional security environment. India’s rise has been uneven, and many remain skeptical that it will truly emerge as a world power given intense governance challenges and a recent halving of its once double-digit economic growth rates. But the demographic and economic trends propelling India’s geopolitical emergence are powerful. The US National Intelligence Council (NIC) predicts that India will be the leading driver of middle-class growth by 2030.¹ China’s working-age population will peak in 2014, which along with China’s structural economic and political challenges correlates with the slowdown of growth in that country.² By contrast, half of India’s population is under 25 and two-thirds is under 36 years of age, and the country’s average age will actually drop over the next three decades.

According to the NIC, India’s working-age population will continue to expand for decades, creating the same sort of demographic tailwind that boosted East Asian tiger economies during their industrialization. In part for this reason, the OECD predicts that India could account for nearly 20 percent of global GDP by 2060.³ India already possesses one of the world’s biggest armed forces and is the world’s largest arms importer. Ongoing military modernization, military competition with two of the world’s largest armed forces in China and Pakistan, and India’s pivotal geographic position—astride Indian Ocean maritime routes vital to the global economy, on the one hand, and on land anchoring the southern Eurasian landmass, on the other—suggest an increasingly militarily powerful India will be a swing state in the wider Asian balance of power.

India’s Strategic Environment

Even more than Japan, India, arguably, possesses one of the more complicated regional security environments of any great power. It is the poorest of the “rising” powers, with a per capita income of only USD 1500 dollars and more poor people than all of Sub-Saharan Africa, limiting the resources available for military modernization. It has a 2500-mile, militarized border dispute with China, an uneven contest in which the logic of terrain and resources favor China. India possesses a contiguous border with Pakistan, the world’s leading generator of violent Islamic extremism. India is lucky to have emerging partners in its quest for security and development, including the United States, Japan, and European states, all of which have courted it in various ways. It also benefits from its identity as both a land and maritime power, given the room for maneuver and possibilities for trade and commerce implicit in both. With respect to the international system, India is an incomplete great power, given its lack of full integration into a liberal international order that for so long excluded it from membership and status in leading institutions.

India’s security imperatives begin with its development drive. As a country where to most people “security” starts with having enough to eat and a roof for shelter, its spending priorities under the current government include massive (and expensive) welfare schemes to employ and feed the rural poor as well as a bewildering array of affirmative action programs, which, combined, worsen India’s fiscal outlook and leave scarce government resources for the foreign ministry and armed forces. India’s poverty and underdevelopment also create insecurities—for instance, the Naxalite insurgency active in as many as a third of India’s states—that detract from the will and ability to project power abroad. A forward policy of military and diplomatic leadership abroad is not politically sustainable in India’s democratic system unless the government can tie foreign policy partnerships to domestic development goals (as the Indian government in 2005-2008 did with respect to civilian-nuclear cooperation with the United States).

India’s national security establishment increasingly identifies China, rather than Pakistan, as the country’s primary strategic competitor, but China’s economy is more than four times the size of India’s, as is its per capita income, and GDP growth produces a “new India” in economic terms every two years.⁴ India’s northern capital makes it highly vulnerable to a Chinese first strike from nuclear missiles deployed in Tibet—even as Beijing is far from Indian land-based launchers. China lays claim to settled Indian territory the size of Switzerland and has demonstrated little interest in resolving the long-running border dispute dating to both countries’ modern creation in the late 1940s. It controls the high ground of the Tibetan plateau in the border dispute with India. New Delhi’s perception of an imbalance of forces along the contested border has led it to raise a new 40,000-man mountain division, to fast-track construction of high-altitude military infrastructure, and to increase deployment of aircraft and other hardware along the McMahon Line separating India from China.

Despite recent border management accords, Beijing refuses to grant regular visas to Indian residents of Arunachal Pradesh, officially claiming they are somehow “Chinese.” A three-week standoff between the Indian and Chinese armies along the contested border in April was their most significant military confrontation in decades. China continues to strategically encircle India through construction of port facilities along the Indian Ocean littoral and intimate military ties with India’s neighbors, and it has been much more successful in securing access to energy resources in the developing world. More broadly, China appears determined to be Asia’s dominant power and sees little room for power sharing with India—as attested by blocking any UN Security Council reform that would elevate India—or Japan—to membership.

China also enjoys an intimate alliance with Pakistan, which it helped arm with nuclear weapons in order to counterbalance India. Pakistan has been the cause of four hot wars in South Asia since 1947, and a number of other provocations nearly led to full-blown conflict. Its nuclear arsenal in many ways neuters India’s conventional military advantage against it, while the support of elements of the Pakistani state for terrorism in India gives Islamabad an asymmetric card it can play with some impunity, given its nuclear deterrent to Indian retaliation. The prospect of a two-front war against Pakistan to the west and China to the northeast leads India to divide its forces and deprives it of the strategic luxury of focusing on only one geopolitical competitor.

India’s Core Interests and Convergence with Japan

India’s vital interests lie in: (1) securing its territory and autonomy against predatory powers and terrorists; and (2) building a prosperous society through economic growth and productivity enhancements that can pull hundreds of millions out of poverty. Japan shares a compelling interest in helping India meet these objectives through economic and technical collaboration to steepen the slope of India’s development trajectory and strengthen its role as a southern anchor of an Asian balance of power that remains friendly to Tokyo. A review of India’s core interests as a rising power attests to the convergence with those of Japan across a full spectrum of issue areas and highlights how collaboration can help New Delhi achieve its strategic goals.

China’s ascension gives India a strong stake in managing an Asian balance of power that is not controlled by Beijing. Japan has a parallel interest in a plurality of power that prevents hegemonic control of the economic resources of the eastern half of Eurasia. As one of the largest foreign assistance donors in South and Central Asia, Japan shares with India an acute concern over the export of terrorism from Pakistan and Afghanistan. India has a strong interest in sustaining and strengthening the liberal international economic order that will allow it to deepen two-way flows of trade and investment with key markets as a catalyst for development. On October 16, 2013, National Security Advisor Shivshankar Menon gave a speech linking India’s engagement with the world to the “quest to transform India” through economic growth. “In today’s world there is no going back to absolute self-reliance, to autarchy or disengaging from the world,” he maintained, pointing out that over 40 percent of India’s GDP is tied to external markets and foreign investment.⁵

As Prime Minister Manmohan Singh told a Japanese audience in Tokyo last May, “India needs Japanese technology and investment. In turn, India offers increasing opportunities for the growth and globalization of Japanese companies for the overall prosperity and growth of Japan.” He added, Japan and India “have increasingly convergent world views and growing stakes in each other’s prosperity…There are strong synergies between our economies, which need an open, rule-based international trading system to prosper.”⁶ Just as India needs Japanese capital and technology, as encapsulated in Japan’s largest overseas investment project, the Delhi-Mumbai industrial corridor, so too does Japan need India’s vast market and large labor pool to thrive and grow at home.

The Indo-Pacific: Maritime Connectivity

In 2007, during his first stint as prime minister, Abe Shinzo gave a speech to the Indian parliament in which he stressed the “confluence of the two seas.” The Pacific and the Indian Oceans are “now bringing about a dynamic coupling as seas of freedom and of prosperity. A ‘Broader Asia’ that broke away geographical boundaries is now beginning to take on a distinct form”; Japan and India “have the ability—and the responsibility—to ensure that it broadens yet further and to nurture and enrich these seas to become seas of clearest transparence.” Abe’s pitch was for an alliance of values and interests to shape the emerging order of the twenty-first century:

This partnership is an association in which we share fundamental values such as freedom, democracy, and the respect for basic human rights as well as strategic interests. Japanese diplomacy is now promoting various concepts in a host of different areas so that a region called the “Arc of Freedom and Prosperity” will be formed along the outer rim of the Eurasian continent. The Strategic Global Partnership of Japan and India is pivotal for such pursuits to be successful.⁷

India and Japan share a compelling interest in freedom of the seas. China’s challenge to India’s territorial boundary as well as to its suzerainty over its home seas renders it an ally to efforts by Japan and Southeast Asian powers to encourage China to embrace basic international norms regarding freedom of the maritime commons, for instance in the South China Sea.⁸ Both India and Japan are dependent on freedom of passage through the South China Sea for trade flows and access to naval partners in Southeast Asia. (Nearly 60 percent of Japan’s energy supplies are shipped through there.) A hostile power’s chokehold could rapidly cripple both economies—or, at a minimum, require adjustments to their foreign policies in return for secure passage. One-third of all global trade passes through the South China Sea. The Indian armed forces’ exchanges and joint-exercises with not only Japan but also with Vietnam, Indonesia, and South Korea require unimpeded access through these waters. China’s 2012 warning not to penetrate the South China Sea littoral for an Indian Navy vessel’s port call in Vietnam was seen as unwarranted interference in India’s relationship with a third country with which it has long enjoyed ties.⁹

The Western Pacific is another maritime domain of vital concern to both India and Japan. These waters connect both nations to their principal military partner, the United States, and its major hubs of power projection in Guam and Hawaii, while carrying exports to North America. Chinese dominance of these waters would put at risk the security of the air and sea lanes and the US military’s ability to operate freely in waters that bind together the economies of East Asia and North America. New Delhi has demonstrated its strategic interest in the freedom of these distant sea lanes by holding naval exercises with both Japan and the United States east of Okinawa.

The third maritime domain of special interest to both India and Japan is the Indian Ocean, which carries a majority of both nations’ energy imports from the Persian Gulf and is, therefore, intrinsically important. It is the home sea of India, whose balancing role in East Asia is growing, as attested by the development of security partnerships with Japan, Vietnam, Indonesia, and other regional powers. India cannot play the balancing role in East Asia that Japan, the United States, and other partners would like it to play—a role which these countries can leverage to provide themselves greater strategic autonomy vis-à-vis China—if its access to the region is constrained by contested maritime commons.

The Evolution of Japan-India Relations since 2000

Japanese officials credit the US-India strategic rapprochement of 1999-2000 as establishing the basis for the strategic cooperation between India and Japan that emerged several years later.¹⁰ A groundbreaking visit by Prime Minister Mori Yoshiro in 2000 launched a “Global Partnership between Japan and India,” upgraded to a “Global and Strategic Partnership” in 2006.¹¹ In 2005, the same year that India and the United States inked their plans for wide-ranging strategic partnership grounded in long-term cooperation on defense and energy, Japanese officials worked with like-minded governments to include India as a founding member of the East Asia Summit. This diluted China’s ability to dominate the organization and laid the foundation for open Asian regionalism that is not sinocentric. Around the same time, India replaced China as the largest recipient of Japanese ODA for reasons Japanese diplomats identified as strategic, to promote India’s rise as a counterweight to China in Asia.¹²

In 2006, Abe declared that Japan’s relations with India could overtake those with America in breadth and quality, and called them “the most important bilateral relationship in the world.”¹³ Singh argued in Tokyo in 2006 that Japan must play its “rightful and commensurate role in the emerging international order,” with strong Indo-Japanese ties “a major factor in building an open and inclusive Asia and in enhancing peace and stability in the Asian region and beyond.”¹⁴ Abe’s successor, Fukuda Yasuo, declared, “India will become one of the pillars supporting the future of Asia” and expressed Japan’s goal of supporting that development.¹⁵

In October 2008, the prime ministers of India and Japan inked a bilateral security pact that operationalized a new level of defense and strategic cooperation,¹⁶ only the second security pact Japan had signed apart from the United States, following its agreement with Australia in 2007. Japanese and Indian officials highlighted the strategic implications of Asia’s biggest democracies conducting regular joint exercises and military planning, and confirmed that their defense agreement was explicitly modeled on the Japan-Australia pact, both made possible by Japan following America’s strategic lead in strengthening security ties.¹⁷

Despite the DPJ taking power in 2009, successive prime ministers sustained the momentum behind the India-Japan strategic partnership, even as Hatoyama Yukio distanced Tokyo from the US alliance for a time. In July 2010, Japan and India deepened security cooperation by launching an annual 2+2 dialogue bringing together senior defense and foreign ministry officials, as in the US-Japan and US-Australia 2+2 meetings.¹⁸ Beijing’s concerns that the two had formed a “military alliance” directed at China led to denials from both.¹⁹ While not going so far, Indian commentators highlighted the role Indo-Japan ties could play “in countering the rapidly growing economic and geopolitical influence of China—a common rival to both in the region.”²⁰

Since the mid-2000s, India has ranked as the top recipient of Japanese ODA, replacing China. This shift mirrored changing threat assessments of China’s growing power, and of the strategic dividends to be gained by investing in India’s rise as a potential counterweight. Tokyo is the largest donor after America to Afghanistan and is a significant donor to Pakistan, both bases for the export of terrorism into India. Japan is also the top ODA provider to Burma, on India’s other flank, and a source of strategic concern on account of Chinese penetration and insurgent spillover there. Tokyo has lifted restrictions on arms exports and expanded military capacity-building in Southeast Asia, including in Indonesia and the Philippines with which India enjoys defense ties.

“Looking East”: India’s Strategic Outreach to Japan

New Delhi has turned its “Look East” rhetoric into a policy of “Acting East,” particularly with regard to forging the foundations of a potentially far-reaching economic and strategic partnership with Japan. As Singh recently put it, “Our relationship with Japan has been at the heart of our Look East Policy.”²¹ In addition to their bilateral economic synergies and wariness of Chinese power, New Delhi and Tokyo have found mutual reinforcement in their engagement of Southeast Asia. Both are working actively to support Burma’s political and economic opening, investing in regional trade frameworks for open economic exchange with member states of ASEAN, and engaging strategically important Indonesia and Vietnam. Both are playing a greater role in ASEAN-led institutions not only to boost regional webs of economic connectivity, but, importantly, to prevent regional clubs from tilting in a sinocentric direction.

While the Indo-US strategic rapprochement after 2000 garnered the most headlines, New Delhi has been making important progress in building new security partnerships with Australia, South Korea, Southeast Asian nations, and Japan in particular. As Singh said during his May 2013 trip to Tokyo, India’s relations with Japan matter not only for economic reasons but “because we see Japan as a natural and indispensable partner in our quest for stability and peace in the vast region in Asia that is washed by the Pacific and Indian Oceans.” This constituted “an unambiguous signal to China…of India’s strategic preference,” in the words of one Indian analyst.²²

At Tokyo’s urging, India agreed to join a regular US-Japan-India trilateral strategic dialogue, which grew out of Track 2 dialogues among the three sponsored by the Center for Strategic and International Studies, the Confederation of Indian Industry and Aspen Institute India, and the Japan Institute for International Affairs. During the unofficial workshops from the mid-2000s, strategists, experts, and business leaders from the three countries discovered a striking convergence of interests and outlook with regard to Asia’s strategic evolution, the imperative of closer economic integration, the future of international institutions, and other issues.

In 2011, the three held their first official strategic conclave, mirroring the US-Japan-South Korea and US-Japan-Australia trilaterals linking US partners in minilateral webs of security cooperation. It had multiple objectives: aligning the major Indo-Pacific powers more closely in the management of China’s rise, bringing India more fulsomely into the East Asian security and economic architecture, spreading Japan’s strategic and economic horizons, and improving US-Japan alliance cooperation out-of-area. As one US official noted after the first meeting, the trialogue “brings India into East Asia and Japan into the Indian Ocean and it does that at a very low cost to the United States.”²³ Subsequent meetings of the trilateral strategic grouping in 2012-2013 have helped cement Japan-India ties while more effectively building their bilateral security cooperation into US calculations for its strategic rebalance in Asia; a separate biannual Indo-US dialogue on East Asian security dating to 2010 has helped Washington and New Delhi synchronize views on East Asian security issues, including on deepening bilateral and trilateral cooperation with Japan. The trilateral has created further opportunities for New Delhi and Tokyo to systematically pursue strategic cooperation—including defense exercises and military exchanges—with like-minded centers of strength in Asia in order to stabilize the regional balance of power.

Looking Ahead: India-Japan Relations in 2014

Abe will be the featured guest at India’s January 2014 Republic Day celebrations. The symbolism of his review from the VIP box, alongside the Indian prime minister and cabinet, of India’s armed forces moving in formation down New Delhi’s imperial parade ground will be rich: as India’s leading business daily explains the visit’s significance, “Shinzo Abe wants [a] larger Indian presence in East Asia to check China.”²⁴ He will also review the biggest overseas investment in India—Japan’s stake in the Delhi-Mumbai industrial corridor—and take steps to deepen the 2011 Economic Partnership Agreement between the two countries. He will discuss with Singh the future of Afghanistan, where Japan and India are the leading non-Western donors, and India’s vulnerability to the terrorism and militancy that could emerge out of the Western drawdown in 2014. Abe will also discuss civilian-nuclear cooperation with Indian officials, a sensitive topic given strong Japanese public opposition following the Fukushima disaster, but one where Abe views the export of Japanese reprocessing technology as an important new area for cooperation with India.

The two leaders will also discuss a united front to deter Chinese territorial revisionism in Asia. India and Japan are the primary regional states suffering active territorial conflicts with China; both are boosting their national military capabilities and revising their defense doctrines in order to deal with the challenge. New Delhi is subtly strengthening ties with Taiwan, and tying the opening of a new Chinese consulate in South India to Beijing’s willingness to allow it to open a consulate in Lhasa, to demonstrate that it, too, can place pressure on China in sensitive areas. Abe and Singh will discuss coordination in Myanmar, where both countries are investing heavily in the economic and political opening as a further opportunity to diversify against Chinese influence there, while putting in place the infrastructure for a set of new land-and-sea connections for commerce between East and South Asia. In short, Abe’s visit to India will demonstrate that the new map of Asia is not being drawn by China alone.

Conclusion: Implications for the United States

During the Cold War, the United States favored a hub-and-spokes alliance model in Asia. Washington’s perspective has changed, and its policy in Asia increasingly favors the construction of groupings combining like-mindedness with meaningful capabilities to shape a new regional security architecture that remains grounded in the US alliance system, but adds a new layer of multilateral cooperation.

Trilateral groupings—US-Japan-Korea; US-Japan-Australia; and US-Japan-India —are a new feature of US security policy. Operationally, Washington has also found quadrilateral groupings to be useful, delivering relief to Indonesia with the Indian, Japanese, and Australian navies following the December 2004 tsunami, for instance, or conducting joint exercises with Japan, India, and Australia in the Quadrilateral Partnership arrangement in 2007. However one looks at these combinations, India’s presence stands apart as a game changer. Yet, centering on US ties or US orchestration of minilateral groupings does not suffice when it comes to India’s calculations.

Japan-India cooperation is an example of how the United States has encouraged regional partners to institutionalize security coordination with each other even when it excludes the United States— on the principle that stronger ties between them complement US relations. The United States played a handmaiden role in the 2008 Japan-Australia security arrangement and encouraged Tokyo to follow Washington’s lead, in the wake of the US-India strategic breakthrough of 2005-2008, by signing a far-reaching Indo-Japanese security cooperation agreement. US officials have also encouraged India’s outreach to South Korea and Japan’s strategic assistance programs in Central and Southeast Asia. In short, Washington now understands that developing new networks of security providers in Asia could make a critical contribution to the provision of regional public goods as American primacy comes under pressure.

As uncontested US primacy in Asia gives way to intensified geopolitical competition with China, Washington has a strategic interest in the development of friendly centers of power in the Indo-Pacific capable of sustaining a non-sinocentric order. India and Japan are the major non-Chinese Asian powers whose scale and potential aggregate capabilities will most decisively determine the future Asian regional order. To the extent that the US strategic priority is preventing Chinese domination of mainland and littoral Asia, India’s trajectory and orientation, including deepening strategic ties with US allies starting with Japan, assume an overriding importance to US national interests. The future of US leadership in Asia, therefore, will be impacted directly by India’s ability to assume the responsibilities of a great power, by Japan’s evolution into a more active regional security provider, and by the partnership between these countries to sustain a non-Chinese axis that maintains a pluralism of power in Asia.