Despite disappointment over no civil nuclear deal with Japan as it may affect fuel supplies even from the US — two major US nuclear suppliers are now owned by Japanese companies — the growing bilateral relationship is good for both the countries
Though Prime Minister Narendra Modi’s visit to Japan was, by any criteria, a huge success — there was forward movement on a number of other security related issues like defence cooperation, export controls, and membership in international control regimes — there was some disappointment in India on the non-fructification of a bilateral Japan-India agreement on civil nuclear cooperation. It would be useful to analyse the usefulness and significance of each of these subjects.
Nuclear deal
Undoubtedly it is an issue that warrants a serious endeavour plus give-and-take on both sides. There are many reasons for such an agreement between India and Japan. The first is that such a pact is a precondition for nuclear fuel transfers from Japan to India and, more importantly, from the US to India. The two major US nuclear suppliers in America, viz, Westinghouse and General Electric (GE), are now owned by Japanese corporate entities. Toshiba, which has reportedly acquired a 87 per cent stake in Westinghouse and Hitachi, has controlling interest in GE Hitachi. Therefore, under Japanese laws, Westinghouse and GE would require licences from the Japanese Government for any trade in nuclear material, equipment and services. Hence apart from other issues, US supplies of nuclear material, equipment and services would require Japanese concurrence.
Second, an India-Japan civil nuclear cooperation would greatly enhance the global acceptance of India as a responsible nuclear state, notwithstanding, its non-membership in the NPT. Third, as Japan itself is interested in entering global market as supplier of nuclear reactors, an India-Japan nuclear cooperation agreement would expand India’s choice of foreign suppliers of nuclear reactors.
However, there are some constraints which stand in the way of India-Japan civil nuclear deal. The first is on how to handle the issue of a nuclear test by India in future. So far all Japanese nuclear cooperation agreements have included a clause which requires suspension of nuclear cooperation in the event of a nuclear test by a non-NPT nuclear weapon state. India has so far resisted any reference to a test in any of the nuclear cooperation agreements negotiated with other countries through some suitable formulation using words and phrases which exclude the word “test” or “nuclear detonation”. Evidently this impediment has yet to be overcome in India’s negotiations with Japan in formulating an agreement acceptable to both parties. The Joint statement of Modi and Abe skirted this issue with a statement that “They i.e. the two Prime Ministers directed their officials to further accelerate the negotiations with a view to concluding the agreement at an early date.”
A second issue is that of the civil nuclear liability clause in the Indian Nuclear liability Act. It is not clear, not surprising in light of the Fukushima damage, that the Japanese nuclear industry is willing to accept the “Right of Recourse” of the Indian Act.
It is not surprising, therefore, that an India-Japan agreement is yet to be signed. In any case, even if such an agreement is signed, the chances of US supplies of nuclear reactors are very small. As even after more than six years since an exemption was given by Nuclear Suppliers Group (NSG) for NSG members to trade with India in nuclear reactors no commercial agreement has been signed by India with any nuclear reactor supplier, the absence of an India-Japan nuclear cooperation agreement is unlikely to materially affect the Indian civil nuclear programme. And since Japan does not have any major reserves of natural uranium, absence of a cooperation agreement will not affect India’s access to global uranium reserves. (This is unlike the case with Australia, which has large natural uranium reserves and production. The agreement signed is set to assist Indian nuclear programme directly.) An additional factor that should be taken into account is that unlike other nuclear reactor suppliers — Russia, US, France — Japan is yet to export any reactor to any country even though the bulk of its domestic reactors are indigenous in origin.
Therefore, all in all, the delay in signing an India-Japan nuclear cooperation agreement, while disappointing, should not be the cause of any doubt about the continuing strengthening of India-Japan political and strategic relationship. Such an optimism is borne by other initiatives included in the Joint Statement, according to which “The two Prime Ministers affirmed their commitment to work together for India to become a full member in the four international export control regimes: Nuclear Suppliers Group, Missile Technology Control Regime, Wassenaar Arrangement, and the Australia Group with the aim to strengthening the international non-proliferation efforts.” This is a welcome outcome of the Modi’s visit, as there is a form commitment by Japan for India’s longstanding quest for membership in these regimes.
Export Controls
Continuing in the same vein, the Japanese Government has decided to remove six of India’s space and defence-related entities from Japan’s Foreign End Users list. This will leave only four nuclear related entities on the list and even these are entities that are not on the India-IAEA safeguard list. The safeguarded facilities are exempt from the list. Although this is a belated action by the Japanese Government, the US has long ago removed all defence and space related Indian entities from their Entity list, this act should enhance India-Japan trade and collaboration in high technology.
Defence Cooperation
The final positive outcome of the visit is the decision to enhance defence and security partnership between India and Japan. According the Joint Statement, “The two Prime Ministers expressed the hope that this would usher in a new era of cooperation in defence equipment and technology. They recognised the enormous future potential for transfer and collaborative projects in defence equipment and technology between the two countries. They welcomed progress made in discussions in the Joint Working Group on cooperation in US-2 amphibian aircraft and its technology, and directed their officials to accelerate their discussions. They also directed their officials to launch working-level consultations between the two countries with a view to promoting defence equipment and technology cooperation.” Such defence cooperation, specially in co-production and co-development of defence equipment, would not only assist in building up the Indian defence industrial base, it will also help Japan by utilising the strong Indian software capabilities, which is a major component of modern defence equipment, in leveraging its hardware capabilities with Indian software strength. The recent moves to increase the level of foreign direct investment in Indian defence industry along with the increased participation of Indian private industry in defence production should go a long way towards building stronger Japan-India defence and strategic cooperation.
Therefore it can be confidently said that Prime Minister Modi’s visit can prove a positive catalyst for enhancing India-Japan strategic partnership contributing not only to the strengthening of their domestic security but also Asian security in the coming decades.
(Dr G Balachandran is a Consulting Fellow at Institute for Defence Studies and Analysis, New Delhi)