Prime Minister Shinzo Abe, who says relations with India may become more important than Japan's links with the U.S. or China, will lead his biggest corporate mission to the South Asian country Tuesday.
Abe travels to New Delhi with 243 executives from companies including Toyota Motor Corp. and Canon Inc., more than the 175 he brought with him to the Middle East earlier this year. Japan has 4,757 companies in China and only 216 in India, according to Nomura Securities Co. Ltd.
Japan has been investing in China and other parts of Asia since the late 19th century and now wants to tap growth in the world's second-fastest-growing major economy. Abe says India, as an Asian democracy, is a natural ally. Strengthening links may help both nations counter China's growing global influence.
"Japan has a hot economic relationship and a cold political relationship with China," said John Swenson-Wright, a Japan analyst at Chatham House, a London-based international affairs institute. "A closer partnership with India also maximizes Japan's leverage on the security front."
Japanese companies until now have shied away from investing in India because of the country's poor road, port and other infrastructure, according to a 2006 survey by the Japan Bank for International Cooperation.
That's changing. India plans to invest $475 billion by 2012 to improve its infrastructure. Since 2003, the economy has expanded by an average of 8.6 percent, a pace surpassed only by China among the world's biggest economies.
"India's rapid growth and improving infrastructure has caught the attention of the Japanese," said H. S. Prabhakar, a professor at the Jawaharlal Nehru University in New Delhi. "But Japan's move is in response to a larger reality — a change in the balance of power in Asia with the rise of China."
Japan's trade with India was worth $6.5 billion in 2006, less than 4 percent of its trade with China. Between 1991 and 2006, Japanese companies invested $2.15 billion, or just 6 percent of the total foreign direct investments, into India, according to the Confederation of Indian Industry.
Japan is now taking the lead to build a $90 billion, 1,500-km infrastructure corridor between New Delhi and Bombay, the financial center.
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