India and Japan in $75 Bn Bilateral Currency Swap Agreement

The Governments of Japan and India have entered into a Bilateral Swap Arrangement (BSA) of USD 75 billion. The swap agreement, according to India’s Finance Ministry will enable the agreed amount of foreign capital being available to India for use as and when need arises.

In 2013, when the rupee had been under stress, India and Japan had worked out a swap agreement, increasing it from $15 billion to $50 billion.

The Prime Minister of India Narendra Modi visited Japan on October 28–29, 2018 for the India-Japan Annual Summit with Prime Minister of Japan Shinzo Abe.

They welcomed the expansion of Japan’s Foreign Direct Investment in India under the “India-Japan Investment Promotion Partnership”, the progress made in Japan Industrial Townships (JIT) and other initiatives included in the Japan-India Roadmap for Investment Promotion. With a view to enhancing financial and economic cooperation, With regard to External Commercial Borrowing (ECB), no mandatory hedging will be required for infrastructure ECB of more than 5 years minimum average maturity.

While Modi expressed his appreciation for the significant contribution of Japan’s ODA to the socio-economic development of India, Abe expressed Japan’s intention to continue to support India’s efforts for social and industrial development, including through key quality infrastructure projects and capacity building. The two leaders reviewed with satisfaction the progress made, including the signing of the Exchange of Notes for yen loan, on the Mumbai-Ahmedabad High Speed Rail project, which is an important symbol of India-Japan collaboration marked by the 75th anniversary of India’s independence. They also welcomed the continued cooperation on Metro Projects which support smarter development of Indian cities. India further appreciated Japan’s role in promoting connectivity through quality infrastructure projects such as the Western Dedicated Freight Corridor and the Delhi-Mumbai Industrial Corridor.

With respect to the signing of the India-Japan Joint Declaration on Security Cooperation in 2008, they reaffirmed their desire to further deepen bilateral security and defence cooperation and institute Foreign and Defence Ministerial Dialogue (2+2), in addition to existing mechanisms, including the Annual Defence Ministerial Dialogue, Defence Policy Dialogue, the National Security Advisers’ Dialogue, Staff-level Dialogue of each service. The two leaders welcomed the joint exercise between each of the three services and the commencement of negotiations on the Acquisition and Cross-Servicing Agreement (ACSA), which will enhance the strategic depth of bilateral security and defence cooperation.

Cooperation between India and Japan on defence equipment and technology

Both leaders have reaffirmed the promotion of interaction between Indian and Japanese defence industries and relevant authorities, and welcomed the commencement of the cooperative research in the area of Unmanned Ground Vehicle (UGV) and Robotics. The two sides will continue to make efforts with regard to cooperation on US-2 amphibian aircraft.

On 29 October 2018, private sector investment projects proposed by about 60 Japanese companies were showcased to Prime Minister Modi, which would be facilitated by Invest India and JETRO. These projects include the sectors providing greater impetus to “Make in India” such as automobile, steel, electronics, IoT and AI, chemical, food processing, etc. The total investment is projected to be approximately 280 billion JPY with creation of over 29,000 additional jobs in India.

Both leaders acknowledged the significant progress in maritime security cooperation, as seen in the high frequency of bilateral naval exercises and deepening level of the Malabar exercises, as well as long standing dialogues and training between the Coast Guards. Recognizing that enhanced exchanges in expanding maritime domain awareness (MDA) in the Indo-Pacific region contributes to regional peace and stability, they welcomed the signing of the Implementing Arrangement for deeper cooperation between the Indian Navy and the Japan Maritime Self-Defense Force (JMSDF).