India and Japan are forging a promising alliance in Asia’s evolving landscape

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India and Japan are deepening their ties further through a new joint investment fund.

India’s National Investment and Infrastructure Fund is collaborating with Japan Bank for International Cooperation to establish a $600 million fund, primarily focused on renewable energy and various projects. This step aligns with Japan’s commitment to invest around $42 billion in India over the next five years.

As India seeks substantial investments for infrastructure development and green energy transition, the collaboration is crucial. Japanese companies are eager to expand their presence in India, given the vast potential of the emerging market. This development marks a positive shift in India-Japan relations, following previous investment disputes, and signals a growing Japanese corporate presence in India.

India and Japan have the potential to extend their collaboration to more distant horizons. These two nations, ranking as the world’s second and third-largest steel producers, face a significant dependency on China and Russia for over 60% of the coal required for steel production. Sajjan Jindal, the chairman of India’s JSW, has openly discussed the possibility of joint bids with Japanese and South Korean steel mills to acquire Canada’s Teck Resources’ coking coal unit, a venture estimated at $8 billion.

Notably, a successful precedent exists in the realm of commodities, as Nippon Steel and ArcelorMittal, led by Indian-born Executive Chair Lakshmi Mittal, joined forces to acquire India’s Essar Steel in 2018.

Additionally, their joint venture acquired vital port and power assets in the preceding year. While the new investment fund may appear modest in size, the cooperative journey of these two nations appears poised for remarkable growth.

Prime Minister Narendra Modi’s government in India and Prime Minister Fumio Kishida’s administration in Japan are key constituents of the Quad security alliance, which also includes the United States and Australia.

This collaborative partnership has been forged with the primary objective of addressing and mitigating concerns related to Chinese expansionism in the Asian region. The Quad’s strategic significance extends beyond traditional military alliances, encompassing economic, diplomatic, and security dimensions to promote a free and open Indo-Pacific region. It underscores the growing need for a collective response to the evolving dynamics and challenges in the Asia-Pacific, particularly in light of China’s increasing influence in the region.

Through this partnership, the member nations seek to bolster regional stability and uphold shared values, while promoting economic growth and cooperation, maritime security, and a rules-based international order.

(Source: Pranav Kiran | Una Galani | Thomas Shum | Reuters)

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