Millennium Post

In India, Japan PM Abe hopes to conclude first defence sale in 40 years

Abe’s visit to India will underline growing business and political ties between the two nations as they close ranks against mutual rival China, with the initial focus on the sale of amphibious search and rescue aircraft to India.

Japan and India are also trying to finalize an agreement on civilian nuclear energy that would open up the Indian market to Japanese players, officials said, reflecting another shift in Tokyo’s policy on a sensitive issue. However, a Japanese official said a signing was unlikely during the visit. Japanese officials say the proposed sale of ShinMaywa US-2i planes would not infringe Japan’s self-imposed ban on arms exports because the aircraft to be given to India will be unarmed and can be used for civilian purposes. Still, it will give India considerable aviation reach across the seas and could raise China’s ire.

‘We have been discussing with Japan the possibility of purchase of the aircraft. ‘It will take a bit of time because defence equipment is difficult to transfer, and also the terms and conditions take time to work out,’ said Gautam Bambawalle, top Indian foreign ministry official dealing with North Asia. The plane, built by ShinMaywa Industries (7224.T), could be outfitted for firefighting or as a kind of amphibious hospital and costs an estimated $110 million per unit. ShinMaywa estimates that there could be a global market of about 100 amphibious planes for which it could compete.

Abe is seeking a more assertive military and national security posture for Japan, whose post-war constitution, written by U.S.-led occupation forces, renounces war and a standing army. Abe’s government vows to review Japan’s ban on weapons exports, a move that could reinvigorate struggling defence contractors like Mitsubishi Heavy Industries Ltd (7011.T) and Kawasaki Heavy Industries Ltd (7012.T). Mitsubishi Heavy will be represented on the business delegation accompanying Abe on the India visit. The current ban did not formally take effect until the fast-growth era of the 1960s and the evolution of Japan’s Self Defense Forces put the issue on the agenda.

India has been the world’s top arms importer for three years running, the Stockholm International Peace Research Institute said in its report last year, accounting for 12 percent of global arms imports. Security ties between India and Japan were virtually non-existent until a few years ago. But Abe has pushed for a stronger relationship with Asia’s third largest economy to balance a rising China.
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