Japanese PM in India, calls for stronger economic ties

Agencies/New Delhi

Japanese Prime Minister Yoshihiko Noda shakes hands with Minister of State for External Affairs Preneet Kaur after his arrival at the Palam Air Force Station in New Delhi yesterday

Japanese Prime Minister Yoshihiko Noda yesterday called for stronger economic ties with India as he began a two-day visit here.“I look forward to talks with Prime Minister Manmohan Singh to strengthen bilateral ties,” Noda said at a function organised by the India Centre Foundation to unveil the second India-Japan Global Partnership summit to he held in 2013. Underlining “mutual economic complementarity” between the two countries, Noda pitched for stronger economic relations saying: “Japan has capital and technology and India has a young population and an abundant demand for infrastructure.” This is Noda’s first visit to India since he became the prime minister in September this year.In a lighter vein, Noda said although the Himachali cap he was presented by the organisers did not fit him, his large head was full of dreams for stronger India-Japan relations. Railways Minister Dinesh Trivedi, Haryana Chief Minister Bhupinder Singh Hooda and Jharkhand Chief Minister Arjun Munda were also present at the function and spoke about the need for developing stronger bilateral relations between India and Japan. Munda is expected to meet Noda and press for Japanese financial assistance for infrastructure projects in his state. Describing India as an engine of growth for global economy, Trivedi pushed for closer collaboration with Japan in the development of the Indian rail infrastructure. India is expected to press Japan, which has played a key role in building the Delhi Metro, for access to bullet trains technologies. Coming hard on the heels of a trip to China where the main talking points were geopolitical - particularly in the aftermath of the death of North Korean leader Kim Jong-Il - Noda’s visit to India will be heavy on business. In a meeting today with Singh, the two are expected to sign a dollar-swap accord worth up to $10bn, through which Tokyo would provide capital when the rupee falls against the US unit. The deal would allow the two countries to tap into each other’s foreign exchange reserves to protect the value of their own currencies. Japan would buy rupees from India in return for dollars, and India would buy yen from Japan in exchange for dollars. The Indian rupee has plunged about 15% against the dollar this year, making it the worst performing currency in Asia, “Emerging economies overall are being shaken by the eurozone sovereign debt crisis,” said Tsuyoshi Ueno, a senior economist at NLI Research Institute. “Currencies in emerging economies get volatile when European banks pull out capital. A dollar swap arrangement can help emerging economies as it promises a supply of dollars in an emergency.” Japan, which already has a similar accord with South Korea, has seen its exports tumble for two straight months to November, with sales to the key European market floundering as the debt crisis grips. “India, as much as South Korea, is a very significant market for Japan. Such a dollar swap accord is ultimately aimed at stabilising Japan’s own economy,” Ueno said.  Japan is trying to widen and deepen its trade and financial partnerships as it looks to catch up with export rival South Korea, and after China overtook it as the world’s second-largest economy. Noda’s predecessor Naoto Kan met Singh in October last year and stressed the warm ties linking two of Asia’s biggest democracies at a time of high diplomatic tensions between Japan and communist China. Relations between Tokyo and Beijing sharply deteriorated last year following Japan’s arrest of a Chinese fishing boat captain near a disputed island chain in the East China Sea. Beijing reacted furiously, cancelling high-level talks and civilian exchanges while suspending exports of rare earth minerals, which are crucial for Japan’s high-tech products - from computer components to hybrid cars. Japan has since tried to diversify rare earth supplies, more than 90% of which are controlled by China, and is looking to jointly develop rare earth mineral deposits in India. Noda and Singh are also expected to discuss a Japanese loan for a mega project to build a freight railway between New Delhi and Mumbai and a key deal on civilian nuclear co-operation.