ABENOMICS + MODINOMICS = ABEMODI DYNAMICS

By Ruma Dubey

The best part about Modi’s visit to Japan – our foreign policy might now look ahead of China and Pakistan. Japan, the land of the rising sun, is an opportunity, a goldmine and this visit should ideally go beyond rhetorics, witty quotes and pledges of pumping in money into India. After looking at only China persistently; which as such seems like a losing battle; this new found love for Japan should ideally blossom into a long lasting marriage, based on trust and growth. Modi has sent out the message to the world – India is now sitting down with Japan and standing up to China.

Modi did all the right things – having chai, playing the taiko drums and feeding koi fish in the guest-house pond. Yet, a look at the trade numbers put out by our Commerce Ministry shows that this relationship had kind of grown cold with China instead topping the list. Our imports from China rose 60% over past five years while that from Japan rose by a measly 12%; a story which runs across all over Asia with China enticing all with low prices.

But what we should not forget is that the largest selling car in India is Japanese – Maruti Suzuki and till some time ago, till Honda split with Hero, it was Hero Honda which ruled the roost in two-wheelers. And Honda, on its own too is doing exceedingly well, giving Bajaj and TVS some sleepless time. Daikin is presently the number two AC maker of India and is aiming to soon become the number one. According to the Japan External Trade Organization, currently there are some 1,500 Japanese companies operating 2,500 enterprises in India.

The most interesting aspect here which we should look at – Modi and Abe have a lot in common. Both won on the mandate of reforms and growth. Both have set themselves on the task of transforming their countries through economic development. Just as Modi has set himself on the task of projecting India as the best market, throwing open the red carpet with promises to cut the red tape, Abe too has been a very aggressive salesman, visiting some 50 countries since he took over in Dec’12.  Both, Modi and Abe emote being very formal and stiff but when they both met, Abe actually hugged Modi; a true ‘Kodak’ moment.  Both want to counter China and together, they can do it better.

This is an ideal match – Japan is the second largest economy in the world and India is number three. Japan has the money, technology and mindset while India needs to build its crumbling infrastructure which Japan can help build. On the other hand, Japan’s economy has been tottering over the past few years and this tie-up with India, will give it the much needed impetus. Japan has a falling population while India is growing with 1.2 billion and more. Japan and India together can stand up to China – there is tension brewing between China and Japan over the disputed islands in the East China Sea and India is facing the same in Ladakh and across NE states bordering China. Together and with tie-ups with other countries, maybe a force can be built to counter assertive China.

There is no doubt, love between India and Japan has grown over a cup of tea. Foreign journalists are viewing this as an infatuation and more of a psychological comfort. Tie-up between India and Japan has even been labeled as a ‘crazy fantasy’ which will hold no good for facing Beijing.

Well, political reasons apart, this is a good move and for India Inc, over $30 billion coming into infrastructure is no crazy fantasy. More Suzuki’s and Honda’s and Daikin’s are welcome.

The epilogue to watch here – Chinese President is due to visit India this month; let’s see how warm a hug Modi receives from Xi.