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The India-Japan partnership has never been more important to our two countries than it is today. It is rich with possibilities. A stronger commercial partnership between our two countries should be the corner stone of our relationship. It would not only contribute to each other economic growth, but will also be in the strategic interest of India and Japan. It will also contribute to wider and enduring prosperity in Asia and beyond.
Japan contribution to India economic development has been enormous. For many years, Japan has been our largest bilateral donor and we are grateful for the assistance we have received. Japanese assistance has financed some of our most iconic infrastructure projects such as the Delhi Metro and now the Dedicated Freight Corridor.
Japan has also been a major player in the modernisation of Indian industry in the period after economic reforms. The Maruti-Suzuki partnership is a household name in India. There are other similar examples.
Since my last visit to Japan in October 2010, both our economies have coped with exceptionally difficult situations.
Japan experienced an unprecedented calamity in Fukushima. You met that challenge with characteristic resolve and determination, and your handling of the problem is the subject of much admiration. On the economic side, the latest economic forecasts and the rise in business confidence in Japan are positive developments. India and the world have a strong economic and strategic interest in Japan success.
India too has been affected by the difficult circumstances in the world economy. Our growth rate came down to 5% last year due to a combination of global factors and domestic constraints. We cannot do much about the global economy. But we have reacted with determination to overcome domestic constraints on economic growth.
The 5% growth witnessed last year should be seen as a temporary slow down. The Indian economy grew at an average of 8% per year over the past decade, including the last year of 5% growth. The economic fundamentals which made that possible are still intact. We are confident therefore that we can return to the growth path of 8%.
India Twelfth Five Year Plan outlines the many things we have to do to realise our full growth potential and to make that growth inclusive and sustainable. Our people have tasted the benefits of rapid growth and they will not settle for less. I want to assure you that our government is committed to take hard and difficult decisions in the long term interest of our economy.
In recent months, we have taken a number of steps to revive the economy. We have started to bring the fiscal deficit under control and also outlined a medium term path for fiscal consolidation. We have accelerated the implementation of large infrastructure projects by setting up special mechanisms to ensure that various regulatory clearances do not lead to delays. We have taken tangible steps to enhance incentives for investments. We have liberalised foreign investments in areas like multi-brand retail, power exchanges and civil aviation and further rationalisation and simplification is being planned. We have introduced further reforms in the financial markets. The Central Bank has indicated that it will start the process of expanding grant of new bank licenses.
As a result of these efforts, we expect that growth in 2013-14 will be much better than in the previous year, hopefully around 6% or so. We will do even better in 2014-15.
Our strategy for growth involves heavy investment in infrastructure. Lack of quality infrastructure is the single biggest obstacle to achieving higher levels of competitiveness in India. We have targeted an investment of around 1 trillion US dollars in infrastructure over the Twelfth Plan period, with half of it coming from the private sector and public-private-partnership.
India growth will provide expanding opportunities for foreign investment. We welcome foreign investment in the development of our economy and especially so in the critical infrastructure sector. I hope Japanese business will pick up a large share of the investment opportunities that India offers.
The scope for expanding economic co-operation between our countries is enormous. As Asian democracies, we have shared values. We have a very comfortable relationship between the two governments. There is also great public goodwill in both countries.
Given these commonalities, I believe we should have done much more than we have. I am told that Japanese companies rank India the most promising long term destination. However, India accounts for only 4% of total Japanese outward investment flow into Asia. I am sure you will agree that this percentage should be much higher. We on our part will work hard to turn promise into reality.
Let me touch on some areas where India and Japan are collaborating, and which can be the basis for expanded engagement.
The two ongoing flagship projects of the India Japan partnership are the Western Dedicated Rail Freight Corridor between Mumbai and Delhi and the associated Delhi Mumbai Industrial Corridor. Both are making good progress.
The Western Dedicated Freight Corridor between Delhi and Mumbai is scheduled for completion as planned in 2017. The procurement of civil works for Phase-I of the project is in an advanced stage and construction is to begin soon. The Engineering Service Consultants for Phase-II of the DFC project are already in position. I hope Japanese construction companies will participate strongly in both phases.
The Delhi-Mumbai Industrial Corridor project is also making good progress. It has moved from the planning to the implementation stage. I am happy to say that many of the recommendations you made have been implemented. JICA has committed 1.5 billion dollars for the project and JBIC has committed 3 billion dollars. JBIC has been given 26% equity in the DMIC Development Corporation, making it a global strategic partner in this iconic project. This is a project in which Prime Minister Abe has expressed great interest. I am confident it will develop futuristic, smart and sustainable industrial cities which will help address challenges of industrialisation, urbanisation and creation of job opportunities for our young population.
A number of priority projects for implementation from the first tranche of 4.5 billion US dollars provided by Japan for the project have been listed. We have resolved the issues of priority sector lending treatment to DMIC projects. Restrictions on foreign currency borrowings have been relaxed. I understand a few problems remain relating to long term swap arrangements. We are willing to consider innovative suggestions to resolve these problems. I am also happy to say that Japanese banks are being given licenses to open branches in metropolitan areas.
I understand that Japan has also offered financial and technical support for a Detailed Project Report for the Mumbai-Ahmedabad High Speed Railway route. This is an ambitious project and we will need to take a holistic view, based on our infrastructure needs, commercial viability, overall national priorities and the availability of financial resources. We are willing for Japan and India to co-finance a joint feasibility study on this.
The Chennai-Bengaluru Industrial Corridor is the base for many Japanese companies in India. It provides another focus for expanded Japanese industrial cooperation in future. I am pleased that the Preliminary Study for a Comprehensive Integrated Master Plan for this corridor has been completed, and the second phase of the project is about to commence.
The present bilateral trade of 18 billion US dollars does no justice to our potential. We must harness the full potential of our Comprehensive Economic Partnership Agreement to expand our trade and make it more broad-based and balanced. I hope that Japan would be more open and accessible for Indian companies in our areas of strength, such as pharmaceuticals and IT services. I am happy to say that the Social Security Agreement we concluded in November 2012 would be of great benefit to the growing number of Indian and Japanese professionals who live and work in each other country.
For the past few years, we have been engaged in an India-Japan Energy Dialogue to address some of our shared challenges in the area of energy security, including the issue of access to assured, reliable, secure and affordable supply of hydrocarbons. Japanese investments in India in the areas of solar power generation, clean coal technologies and upgrading of brown coal would be greatly welcome. We also look forward to Japanese involvement in the setting up of a gas hydrate R&D Centre.
One of the outcomes of the Energy Dialogue is that an exhibition on clean and renewable energy technology from Japan will be held in India in September this year. I hope this will be an opportunity for a large number of Japanese companies to display their products and technologies, and for Indian companies to build partnerships in this very important area.
India and Japan are both major importers of Liquified Natural Gas (LNG). I am happy that a study is being conducted by research institutions in India and Japan on LNG pricing for Asian importers and will be ready by the end of the year.
Skill development is a key national priority in India to power our industrial growth and to create opportunities and employment for IndiaÆs vast youth population. We look to closer partnership with Japan in setting up skill development centres in India, just as we are also collaborating on a new generation Indian Institute of Technology in Hyderabad.
I thank Nippon Keidanren for all that you have done in the past to further India Japan co-operation and I urge you to continue to make your contribution to this cause which is of mutual benefit for our two countries.
Address by Prime Minister at the Luncheon hosted by Nippon Keidanren
Asia resurgence began over a century ago on this island of the Rising Sun. Ever since, Japan has shown us the way forward. India and Japan have a shared vision of a rising Asia. Over the past decade, therefore, our two countries have established a new relationship based on shared values and shared interests. Japan rise as a modern, knowledge-based industrial power was a source of inspiration to India great national leaders. The philosopher Swami Vivekananda, the poet Rabindranath Tagore, the engineer M Vishweshwarayya, the patriot Subhas Chandra Bose and the nation builder Jawaharlal Nehru, and many more û were all inspired by Japan great achievements in the 19th and 20th centuries.
More recently, India gradual but sustained economic rise has created new opportunities for both our countries to cooperate and work together. 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.
I was most deeply honoured by the invitation that Prime Minister Shinzo Abe extended to me to be his first guest in Tokyo this year. Unfortunately, I was unable to travel at the time due to my parliamentary commitments.
While I missed the opportunity to visit during the Cherry Blossom season, I am delighted to be here in the season of Spring, which, I am confident, signifies a great future for our relationship. I am also convinced that friendship between our peoples, partnership between our businesses and cooperation between our defence and strategic communities will blossom further under the leadership of Prime Minister Abe.
On this occasion, I am reminded of Prime Minister Abe inspiring and visionary address to the Indian Parliament in August 2007, when he spoke of "the confluence of the two seas the Pacific and the Indian Oceans which has defined the new framework for our bilateral relationship. Prime Minister Abe and I will work together to strengthen our strategic partnership, impart new momentum to our economic cooperation and deepen our dialogue on shared regional and global interests.
The Indo-Pacific region is witnessing profound social and economic changes on a scale and at a speed rarely seen in human history. It has experienced an unprecedented rise in freedom, opportunity and prosperity over the last half century.
At the same time, this region faces multiple challenges, unresolved issues and unsettled questions. Historical differences persist despite our growing inter-dependence; prosperity has not fully eliminated disparities within and between states; and there are continuing threats to stability and security.
It is in this moment of flux and change that we also have the greatest opportunity to chart a new course for Asia in this century. With the weight of the global economy and its drivers of growth shifting to this region, its future will also shape the contours of the world in this century.
India and Japan are among the major actors in this region. Our shared religious, cultural and spiritual heritage embodies the principles of peace, co-existence and pluralism. It is our responsibility to foster a climate of peace, stability and cooperation and to lay an enduring foundation for security and prosperity. I would like to suggest three areas of cooperation in this regard.
First, we should strengthen regional mechanisms and forums that will help develop habits of consultation and cooperation, enable us to evolve commonly accepted principles for managing differences, reinforce congruence in the region and allow us to address common challenges.
Second, we should promote wider and deeper regional economic integration and enhance regional connectivity. This will promote more balanced and broad-based economic development across the region and also contribute to a more balanced regional architecture.
Third, maritime security across the linked regions of the Indian and Pacific Oceans is essential for regional and global prosperity. We should therefore uphold the principles of freedom of navigation and unimpeded lawful commerce in accordance with international law, resolve maritime issues peacefully and work together more purposefully to harness the potential of the seas and address common sea-based challenges such as piracy.
India own deepening engagement in the region is informed by this vision. Our Look East engagement began with a strong economic emphasis, but it has become increasingly strategic in its content. Our political relations have intensified with all countries and groupings like ASEAN. We have developed a web of trade and economic agreements.
We are emphasizing connectivity and participating actively in regional anchors of cooperation and security like the East Asia Summit and the ASEAN Regional Forum.
Our relationship with Japan has been at the heart of our Look East Policy. Japan inspired Asia's surge to prosperity and it remains integral to Asia future. The world has a huge stake in Japan success in restoring the momentum of its growth. Your continued leadership in enterprise, technology and innovation and your ability to remain the locomotive of Asian renaissance are crucial.
India's relations with Japan are important not only for our economic development, but also 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.
Our relations draw their strength from our spiritual, cultural and civilizational affinities and a shared commitment to the ideals of democracy, peace and freedom. We have increasingly convergent world views and growing stakes in each other prosperity. We have shared interests in maritime security and we face similar challenges to our energy security. There are strong synergies between our economies, which need an open, rule-based international trading system to prosper. Together, we seek a new architecture for the United Nations Security Council.
In recent years, our political and security cooperation has gained in salience. Japan is the only partner with whom we have a 2-plus-2 Dialogue between the Foreign and Defence Ministries. We have also begun bilateral exercises with the Japanese Maritime Self Defence Force.
Japan has long been part of important milestones in India economic development efforts.
The Maruti-Suzuki collaboration sparked off a wave of industrial development in India. The Delhi Metro is inspiring a similar revolution in public transportation. Our two flagship infrastructure projects the Western Dedicated Freight Corridor and the Delhi Mumbai Industrial Corridor û are unmatched both in their size and scale. We are also exploring new projects such as an industrial corridor between Chennai and Bengaluru. Our Comprehensive Economic Partnership Agreement was launched in 2011 and last year we signed an agreement for cooperation in the field of rare earths.
All this would suggest that ours is already a rich relationship. However, we have set for ourselves higher ambitions consistent with the vision that we have for this partnership. Going forward, therefore, we should intensify our political dialogue and expand our strategic consultations on regions and issues of mutual interest. Our defence and security dialogue, military exercises and defence technology collaboration should grow. We should consult and coordinate more closely in global and regional forums.
Our relationship should also be anchored in expanded trade and investment relations. As I told business leaders at the Keidanren function earlier today, there should be no doubt about our commitment and confidence that we will soon restore our growth to the 8%-plus levels that we experienced over the past decade.
This confidence stems from the strength of our economic fundamentals, the thriving spirit of enterprise in our country and the steps that we have taken recently to reform policies and accelerate implementation of mega projects.
Greater investment by Japanese companies in India large market will be in our economic as well as strategic interest. This consideration should also guide closer engagement in high technology commerce, clean energy, energy security and skill development.
Prime Minister Abe and I have a rich agenda for discussion before us. Together, we had started the institution of annual summits and many initiatives that have given our relationship such extraordinary depth and diversity. We will seek not only to sustain the rising momentum of our relationship, but add new content and meaning to it, in the interest of our two countries, our region and our world.
Let me conclude by confessing that Japan has been close to my heart ever since I first visited this beautiful country in 1971. It has been my dream to see our relationship grow and prosper, and this is an objective towards which I have worked in the last nine years of my tenure as Prime Minister of India. Today, I am heartened to witness the transformation of India-Japan relations into a durable partnership. I have no doubt your efforts and initiatives will continue to be a source of great strength for the relationship.
Indian Prime Minister address to Japan-India Association, Japan-India Parliamentary Friendship League and International Friendship Exchange Council
Courtesy : Ministry of External Affairs