Editorial: Tariff shadow over Modi’s Asia tour

Prime Minister Modi’s visit to Japan and China carries significant geopolitical implications and provides an opportunity for India to respond to emerging challenges

Prime Minister Narendra Modi’s four-day visit to Japan and China carries significant geopolitical implications, as it comes at a time when India is grappling with the American tariff offensive and seeking trade alternatives to mitigate its impact. In Tokyo for the 15th India-Japan annual summit, Modi is scheduled to meet his Japanese counterpart Shigeru Ishiba, and the two leaders are expected to announce a slew of agreements to deepen bilateral cooperation across defence, technology, and infrastructure sectors. The flow of Japanese investments is expected to cushion the blow of Trump’s tariff onslaught. The partnership for manufacturing the next-generation Shinkansen bullet trains in India, likely to be announced during the trip, will be a big boost for the ‘Make in India’ drive. Japanese companies are also set to invest USD 68 billion in India in the next decade, while Suzuki Motor has pledged to pump in about USD 8 billion over the next five to six years. An economic security pact focusing on semiconductors, critical minerals, and artificial intelligence is expected to be signed. Though India is endowed with vast deposits of rare earths, it lacks the technology to mine and process them extensively. It is here that the Japanese cooperation holds the key. In a significant move hours before Modi’s arrival in Tokyo, Japan cancelled a key trade delegation to Washington, virtually stalling a massive USD 550 billion investment deal with the United States. This represents a significant setback to Donald Trump’s efforts to secure a major economic agreement in Asia.

Tokyo cited unresolved tariff issues and unclear profit-sharing terms as reasons for the last-minute decision. Modi’s visit will provide an opportunity for India to launch new initiatives to build greater resilience in the relationship with Japan and to respond to emerging opportunities and challenges. Tokyo is already India’s most reliable economic partner in Asia. The scheduled Modi-Xi Jinping meeting, on the sidelines of the Shanghai Cooperation Organisation (SCO) summit in China’s Tianjin, also holds significance under the present geopolitical circumstances. The face-to-face meeting comes at a time when the Sino-Indian relations are stabilising. Both countries recognise that the world order is in flux and are aware of the need to create a measure of stability and predictability in their relationship, without expecting major structural breakthroughs. An interesting fallout of Trump’s bullying trade policies is that there is a thaw in the relationship between India and China. The two nations are now exploring direct flights after five years, reopening Himalayan border trade, and easing investment restrictions. Beijing has also agreed to lift curbs on exports of fertilizers, rare earth minerals, and tunnel boring machines to India. Also, Modi’s upcoming meeting with Russian President Vladimir Putin will serve as powerful optics. The three leaders standing together for a photo-op at the SCO summit could send a strong message to Washington.

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