Meanwhile, Indian Prime Minister Narendra Modi’s Indo-Pacific vision aims at empowering India as a leading power, instead of a balancer, in a multipolar Asia. Policy pronouncements suggest that New Delhi seeks to be a stabilizing power bringing its capacities to bear on the international system for global good – a net-security provider rather than a disruptive power in the Indo-Pacific. Shaking off hesitations of history, India aspires to be a rules-shaper, “a decider and not an abstainer”, as External Affairs Minister S Jaishankar put it in remarks at the Raisina Dialogue in Delhi in January 2020.
New Delhi has set about pursuing a collaborative agenda to shape a free and open Indo-Pacific. This has entailed the structural reorganization in its external affairs ministry and the institution of 2+2 ministerial dialogues with key Indo-Pacific powers including the US, Japan and Australia. India and its Quad partners elevated talks to the ministerial level. Quad Plus meetings and Indo-Pacific trilaterals in various combinations (India-Japan-US, India-Japan-Australia, India-Australia-France, and India-Indonesia-Australia) demonstrate Delhi’s determination to engage in a collaborative and cooperative agenda to shape a free and open Indo-Pacific.
Mapping the gaps in the regional economic architecture
In 2015, building on the strategic congruence in securing a stable rule-based order, New Delhi and Tokyo engaged in forward thinking, together weaving a joint Indo-Pacific Vision 2025 aimed at synergizing capabilities while navigating the risks and rewards that the region offers. But as India and Japan have joined forces to tap into the complementarities and advance mutual strategic interests, it is also important to mind the gaps and nuances in each side’s approach.
Japan, for instance, has emerged as a rule-maker and champion of free trade. It has positioned itself strategically within both the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP), driven by the responsibility to play a productive role in influencing the regional architecture-building process. Tokyo has been at the forefront of rule setting whether it was marshalling the TPP-11 to come together following the US exit, concluding an Economic Partnership Agreement (EPA) with the European Union (EU) following Brexit, or leading the conversation at the G20 meeting in Osaka on the Data Free Flow with Trust initiative aimed at building rules for data governance.
New Delhi’s opting out of RCEP even before the Covid-19 outbreak underlines the pressing need for India to accelerate structural reforms and boost competitiveness. Building a US$5 trillion economy is contingent on enabling India to endure international competition and seize the benefits from export opportunities that external markets offer and that multilateral agreements create.
Action agenda in the post-Covid-19 Indo-Pacific
Despite differences in some areas, India and Japan, along with other strategic stakeholders in the Indo-Pacific including the US, Australia and partners from ASEAN and Europe, have joined forces in building issue-based winning combinations and tapping collective capacities to deliver on the shared responsibility of securing global goods.
The dividends of an India-Japan “Special Strategic and Global Partnership” have matured and both countries are working together on several initiatives including the Resilient Supply Chain Initiative (RSCI), the Quad Tech Network, the Global Partnership on Artificial Intelligence, the Democracy-10 coalition, the G20 Principles for Quality Infrastructure Investment, and the International Solar Alliance. India is inching towards joining the Blue Dot Network. Moreover, New Delhi’s recent involvement along with Tokyo in the Five Eyes intelligence-sharing framework to navigate tensions between law enforcement and the encryption policies of tech companies shows an expanding stake in international partnerships for security.
This cooperative action agenda prioritizes strategic risk management in global supply chains across critical sectors, governance of advance technologies, advancing quality infrastructure through responsible debt financing, managing maritime global commons in accordance with international law, global health governance, resurrecting multilateralism, and steering reforms within international institutions such as the United Nations Security Council, of which India became a non-permanent member for a two-year term on January 1.
The conversation on building resilient supply chains is unfolding against the backdrop of altering cost structures across nations and the rapid implementation of digital technologies in manufacturing. Tracing the intricate supply-chain structures, recognizing latent vulnerabilities and knowledge gaps, gauging policy choices and augmenting international coordination are important for re-engineering supply chains. Policy elites are brainstorming on making supply chains more resilient without weakening competitiveness.
The RSCI advanced by India, Japan and Australia is aimed at restructuring supply chains, production networks, and trade balances mainly influenced by geostrategic developments. Businesses would need to be provided incentives to diversify their bases. Tokyo has extended subsidies for relocating production from China back to Japan – and also to Southeast Asia, India and Bangladesh.
So far, two Japanese companies, Sumida and Toyota Tsusho, have diversified into India, while most other companies have favored Southeast Asia, given Japan’s deep investments and already existing value-chain network in the region. As India aspires to become a competitive hub for manufacturing, it has to plug into the global supply chain and become an integral part of the global ecosystem. The government is pushing initiatives such as production-linked incentives in critical sectors to help make Indian manufacturing globally competitive.
The success of the RSCI is contingent on the ability of India, Japan and Australia, along with Southeast Asian economies, to outline common rules to advance supply chains, preferential investment rules, agreement on key tariffs specific to supply chains, quality standards, rules of origin for determining value addition, cross-border data flow rules, and dispute settlement mechanisms. Advancing cooperation in information and communication is a priority, and discussion is underway on key issues such as advancing 5G networks, promoting global standardization of 6G technology, and sourcing submarine fiber-optic cables from Japan. Japan’s Rakuten 5G network, based on Open Radio Access Network technology, has enlisted the help of Indian tech companies and is collaborating with Sterlite Technologies for hardware and HCL, Wipro and Tech Mahindra for software. Rakuten and Jio of India are poised to collaborate on 5G and the development of a telecom supply chain.
Japan is also a key partner on the connectivity pillar of India’s Indo-Pacific Oceans Initiative. Island nations across the Indo-Pacific should be accorded primacy in the strategic thinking. Japan has supported connectivity in India’s strategic peripheries and beyond with the aim to connect the economic growth poles and advance economic linkages, production networks and value chains on the one hand and build strategic leverage in the great power game on the other. India-Japan third-country projects are underway in Bay of Bengal states including Bangladesh, Myanmar and Sri Lanka.