The emerging Indo-Pacific initiative propagates and promotes stability and prosperity through dynamism triggered by combining 'Two Continents': Asia that is rapidly growing, and Africa that possess huge potential for growth; and 'Two Oceans': free and open Pacific Ocean and Indian Ocean. In a way, these are largely ideas like Shinzo Abe’s 'Confluence of the Two Seas' to form a 'Strategic Global Partnership' and Taro Aso’s 'Arc of Freedom and Prosperity' that are gradually coming into fruition. This Arc area begins with Northern Europe and the Baltic states and through Central and Eastern Europe, Central Asia and the Middle East, and extends into South Asia and the Indochina region.

With Japan and the United States as core partners in Indo-Pacific dynamics, India’s critical operational role is to balance China right at its doorstep. India’s foreign secretary remarked that 'India views the Indo-Pacific as a positive construct of development and connectivity, in which India can play a unique role by virtue of its geographical location and economic gravity... Our Act East Policy is at the heart of our connectivity orientation and a fulcrum of our broader approach to the Indo-Pacific'. Subtly hinting at India’s deep opposition to China’s Belt and Road Initiative, Prime Minister Modi stated, ‘Connectivity is vital... They must empower nations, not place them under impossible debt burden. They must promote trade, not strategic competition. On these principles, we are prepared to work with everyone. India is doing its part, by itself and in partnership with others like Japan—in South Asia and Southeast Asia, in the Indian Ocean, Africa, West Asia and beyond’.

Maritime transport

Even in crucial areas like maritime transport in the Indian Ocean and the connecting routes, a combined Japan-India fleet would be a tremendous match to the growing dominance of China. India does not figure among the top 25 ship owning countries in the world that constitutes 89 percent of the total ownership of ships of all varieties including oil tankers, bulk carriers, general cargo ships, container ships, gas carriers, chemical tankers, offshore vessels and others, whereas Japan owns over 10 percent and China almost 9 percent of the total global ships of 0.91 million.

This dominant transport and communication strength is a major reason why China possibly intends to make a solitary adventure as soon as it is given access to the Indian Ocean through the Bangladesh-China-India-Myanmar route. Therefore, Japan’s partnership in India’s Act East Policy would not only make a significant dent in Chinese dominance, but also deter China from easily converting these instruments into deeper geo-strategic ventures. Besides, India-Japan cooperation could also lead to a drastic improvement in the median time spent in ports, thereby increasing operational efficiency including in Bangladesh and Myanmar. This would provide a formidable competitive base for India vis-à-vis China in terms of both attracting and moving freight. A comparison of median time spent in ports between China, India and Japan demonstrates that Japanese operational efficiency as reflected in port call and number of days by various carriers in its ports is over a half than that of India and China in most cases.

However, China finds India’s postures explicitly ambiguous, confusing and contradictory including in the Belt and Road Initiative and Bangladesh-China-India-Myanmar. Even in its partnership in the China-dominated Asian Infrastructure Investment Bank (AIIB), India, as the second largest shareholder (8.36 percent), exhibits visible contradiction. Its conspicuous opposition to the Belt and Road Initiative while at the same time joining and vigorously borrowing from the AIIB which is supposedly designed to finance the Belt and Road Initiative projects is an example of this ambiguity. Though the Articles of Agreement of the AIIB do not mention its relations with the Belt and Road Initiative, the Office of the Leading Group for Promoting the Belt and Road Initiative clearly mentions that 'in fulfilling its own purposes and missions. The bank (AIIB) has become one of the key multilateral platforms for building the Belt and Road'. With an authorised capital stock of $100 billion, the AIIB membership grew from 50 countries in June 2015 to 103 countries spread across five continents by mid-2020.

India has already started borrowing heavily from the AIIB for federal and province-level projects in various sectors. Even for Covid-19 management, India borrowed $500 million and $750 million from the AIIB in May and June 2020 respectively. Within the course of four years (2016-20) of the AIIB, India had borrowed more than $4.2 billion for 16 projects as of September 15. This means financial dependency on China (the largest shareholder with 29.78 percent) has steadily shown an upward trend along with other fields like trade, investment and technology.

Japan in Act East Policy

At the bilateral level, India and Japan signed a comprehensive economic partnership agreement in 2011 and have several far-reaching projects including Japanese investment in several infrastructure projects, extension of $33.5 billion in public and private investments in areas like infrastructure, connectivity, transport, smart cities, energy and skill development, and also industrial townships and electronic parks. The convergence between India’s Act East Policy and Japan’s Free and Open Indo-Pacific Strategy has helped both nations align their policies on security cooperation and connectivity, and in ensuring that the sea lanes of communication in the region remain open and secure and countries stick to a rules-based order. The Japan-north-eastern region of India cooperation started during 2004-2014. In the process, Japan will acquire hugely unharnessed space and interconnected market to invest through its Expanded Partnership for Quality Infrastructure initiative.

The Japan-India Act East Forum has also been established as a sequel to the Memorandum of Cooperation signed during Prime Minister Abe's visit to India in 2017. After holding several rounds of meetings, it has identified five focused areas, namely connectivity, forest management, bamboo processing, disaster management and people-to-people contact. The Japan International Cooperation Agency (JICA) provided over $610 million for Phase I of the North East Road Network Connectivity Improvement Project focussing in Meghalaya and Mizoram. It has signed another agreement in 2018 to provide ODA of Rs15.7 billion. With this Phase III, JICA’s cumulative ODA loan reaches Rs119 billion. Several Japan-supported projects like the Imphal Peace Museum at the Red Hill are already in place.

The north-eastern region makes an attractive sub-region for the Japanese industrial houses that are relocating from China. The striking similarity in cultural values and social practices could attract these units as such advantages could allow these companies to realise full efficiencies of the hired people with less time and investment.